Infratil Limited Results for the Year Ended 31 March 2018
Infratil Limited 5 Market Lane, PO Box 320, Wellington, New Zealand Tel +64-4-473 3663 www.infratil.com
17 May 2018
Infratil Limited Results for the Year Ended 31 March 2018
Infratil’s consolidated Underlying EBITDAF
1
was $552.4 million, up 6.3% from the $519.5 million
reported in 2017. Underlying EBITDAF
1
was above the guidance level as a result of associate
investment valuations. Net parent surplus was $60.5 million compared to $66.1 million in the prior
period.
While the higher Underlying EBITDAF
1
resulted in higher operating cash flow (up 21% to $295.8
million from $245.0 million), the net surplus was impacted by higher depreciation, tax and
minorities, partially offset by lower interest costs.
Infratil had a positive year of operating performance and capital allocation and is well placed to
provide good returns going forward. For the year ended 31 March 2018, Infratil invested $325.9
million through its businesses and platforms. These investments provide the source of future
income and value growth.
Each of last year’s new investments, Canberra Data Centres, Longroad Energy and ANU Student
Accommodation, performed above expectations. Wellington Airport and Trustpower delivered
record results. Additional capital was provided to RetireAustralia to enable a doubling of its rate of
development, and Tilt Renewables commenced construction of a wind farm in Victoria and
contracted the electricity output.
As at 31 March 2018, Infratil net debt was $780 million and represented 31% of capital. Infratil
has undrawn bank facilities of $269 million.
Infratil has declared a final ordinary dividend of 10.75 cps, fully imputed, payable on 18 June
2018 to shareholders recorded as owners by the registry as at 5 June 2018, bringing the full year
dividend to 16.75 cps. Infratil’s capital structure and confidence in outlook are positive for
continued growth in dividends per share, with potential for a higher dividend as Longroad
development gains are realised. Based on current portfolio composition, the imputation credit
forecast supports ~9 to 10 cps fully imputed annually.
Infratil has provided normalised Underlying EBITDAF
1
guidance of $500 – $540 million for the
2019 financial year, compared to $478 million normalised Underlying EBITDAF for the 2018
financial year.
Contact:
Mark Flesher, Investor Relations, Infratil Limited mark.flesher@infratil.com
1
Underlying EBITDAF is a non-GAAP measure of financial performance, presented to show management’s view of the underlying business
performance. Underlying EBITDAF represents consolidated net earnings before interest, tax, depreciation, amortisation, financial derivative
movements, revaluations, gains or losses on the sales of investments, and includes Infratil’s share of its associates’ underlying profits (Canberra
Data Centres, Longroad Energy, RetireAustralia and ANU Student Accommodation). Underlying profit for RetireAustralia removes the impact of
unrealised fair value movements on investment properties and impairment of property, plant and equipment. A reconciliation from Net Parent
Surplus to Underlying EBITDAF is provided in Infratil’s Annual Report 2018.
---
Infratil
2018 Full Year Result
17 May 2018
Full Year Overview
New platforms gathering momentum while core businesses deliver strong results
InfratilFull Year results presentation 20182
•Strong performances from Trustpower, Wellington Airport and Canberra
Data Centres sees Underlying EBITDAF of $552.4 million, up $32.9 million
(6.3%) on the prior year of $519.5 million
•Significant capital expenditure as the group positions itself for earnings
growth
•Proprietary platforms now in place and are a critical indicator of future
success
-New renewables and data infrastructure platforms firmly established
and delivering
-Eldercare platform development pipeline repositioned to include care
apartments and an integrated continuum of care offering
-Core platforms likely to generate in excess of $1 billion of capital
deployment opportunities over the next three years
•Net Asset Value poised for strong growth with accretive returns
•$533 million of cash and undrawn bank facilities remain on hand
•Final dividend of 10.75cps, up 7.5% on the prior year
•Total shareholder return for the year was 13.2%
Financial Highlights
6.3% growth in Underlying EBITDAF drives a strong full year result
InfratilFull Year results presentation 20183
1
Underlying EBITDAF is a non-GAAP measure of financial performance, presented to show management’s view of the underlying business performance. Underlying EBITDAF represents consolidated net
earnings before interest, tax, depreciation, amortisation, financial derivative movements, revaluations, gains or losses on the sales of investments, and includes Infratil’s share of RetireAustralia’s
underlying profits (and Metlifecare in the prior year). Underlying profit is a common performance measure used by retirementcompanies and removes the impact of unrealised fair value movements on
investment properties, impairment of property, plant and equipment, one-off gains and deferred taxation, and includes realised resale gains and realised development margins. A reconciliation of
Underlying EBITDAF is provided in Appendix I
Full Year ended 31 March ($Millions)20182017Variance% Change
Underlying EBITDAF
1
552.4519.532.96.3%
Underlying EBITDAF (continuing operations)
1
525.8 488.0 37.8 6.5%
Net Parent Surplus
60.5 66.1 (5.7)(8.5%)
Net Operating Cash Flow
295.8 245.0 50.8 20.7%
Capital Expenditure
292.8 198.7 94.140.7%
Investment
30.6529.3(498.7)(94.2%)
Earnings per share (cps)
10.8 11.8 (1.0)(8.5%)
Results Summary
Higher NPAT but lower net parent surplus from slightly lower consolidated revenues
InfratilFull Year results presentation 20184
•Operating revenue decreased 3.2% largely as a result of contract losses in
NZ Bus and lower wind volumes for Tilt’s New Zealand and Australian
assets, offset by higher generation revenue in Trustpower
•Operating expenses decreased 7.6% predominately due to a 17.5%
($66.2 million) reduction at Perth Energy as it reduced the size of its
Retail book
•Increase in depreciation and amortisation reflects growth in asset base and
impact of prior year revaluations
•Net interest decreased $9.4 million (5.8%) as a result of non-recurring
termination costs in the prior year and lower rates achieved in refinancings,
partially offset by a decline in the Group’s average cash balance
•Increased tax expense largely as a result of the impact of a release of
deferred tax in the prior year
•Discontinued operations relate to Trustpower’s disposal of Green State
Power on 29 March 2018
Final ordinary dividend of 10.75 cps fully imputed payable on 18 June 2018 to shareholders
recorded as owners by the registry as at 5 June 2018 (last year final ordinary of 10.0 cps).
The DRP remains suspended for this dividend.
31 March ($Millions)20182017
Operating revenue
1,730.1 1,786.5
Operating expenses
(1,280.5)(1,374.7)
Depreciation & amortisation
(193.8)(183.7)
Net interest
(153.5)(162.9)
Tax expense
(52.2)(15.7)
Revaluations
20.3 (27.1)
Discontinued operations
15.4 18.0
Net profit after tax
139.2 130.4
Minority earnings
(78.7)(64.3)
Net parent surplus
60.5 66.1
Underlying EBITDAF
Strong Underlying EBITDAF from core portfolio as new platforms gain momentum
InfratilFull Year results presentation 20185
•Trustpowerdelivers strong result from both Generation and Retail
activities
•For Tilt Renewables Australian and particularly New Zealand wind
conditions were below long-term expectations and materially below
the prior year
•Increased passenger numbers and commercial revenue for Wellington
Airportresulted in continued strong performance
•NZ Bus reflects the loss of South Auckland services and reorganisation
and re-contracting expenses, partially offset by production efficiencies
•Canberra Data Centres reflects a full year contribution and valuation
uplift in its data centres
•Perth Energy Retail performance significantly improved in the second
half of the year, with support from its generation to hedge against high
balancing prices
•Industry headwinds for RetireAustralia, combined with lower unit price
increases and higher care-related expenditure, impact performance
•Longroad Energy loss reflects a full year of development expenditure
together with interest costs and depreciation from the acquisition of
operating assets during the year
Underlying EBITDAF ($Millions)20182017
Trustpower243.1203.0
Tilt Renewables112.3131.7
Wellington Airport95.490.5
NZ Bus33.443.7
Perth Energy(5.8)(14.1)
Canberra Data Centres56.110.6
Metlifecare-14.9
RetireAustralia18.331.4
ANU Student Accommodation14.47.0
Longroad Energy(13.8)(2.9)
Corporate and Other(27.6)(27.8)
Continuing operations525.8488.0
Discontinued operations26.631.5
Total552.4519.5
Group Capital Expenditure and Investment
Reinvestment opportunities continue to provide compelling investment returns
InfratilFull Year results presentation 20186
•Tilt Renewables construction of Salt Creek wind farm well
underway, with expected commercial operation date in July
2018
•Wellington Airport land transport hub, onsite Rydges Airport
Hotel and taxiway resurfacing result in significant capital
deployment
•NZ Bus fleet investment, including 14 double decker buses for
West Auckland and deposits on a further 63 double decker
buses
•RetireAustraliaspend represents 50% share of acquisition of
Sydney site and reflects shift in focus to urban villages and care
apartments
•Canberra Data Centres represents 48% share of spend on the
Fyshwick2 facility (a 21MW data centre)
•Longroad Energy capital provided to acquire wind and solar
operating assets and the funding of early stage development
activities
($Millions)
20182017
Trustpower27.926.7
Tilt Renewables90.56.3
Wellington Airport85.179.3
NZ Bus19.116.2
Canberra Data Centres22.0-
RetireAustralia35.937.8
Other14.832.4
Capital Expenditure295.3198.7
Canberra Data Centres-411.5
ANU Student Accommodation-84.8
LongroadEnergy30.633.2
Investment30.6529.5
Total325.9728.2
InfratilFull Year results presentation 20187
•Cash position of $263.9 million and wholly owned subsidiaries bank facilities drawn of $42.1 million as at 31 March 2018
•Senior debt facilities have maturities up to 4.5 years and 4 years (for bus finance export credit facility)
•$111.4 million of Infrastructure Bonds maturing in November 2018
•Infratil continues to target duration of its borrowings consistent with the profile of its assets and long-term ownership
Maturitiesin period to 31 March ($Millions)Total2019202020212022>4yrs>10 yrs
Bonds
1,001.5 111.4 149.0 -93.9 415.3 231.9
Infratilbank facilities
1
269.0 71.0 33.0 85.0 30.0 50.0 -
100% subsidiariesbank facilities
2
42.1 12.7 12.7 10.4 6.3 --
1
Infratil and wholly-owned subsidiaries exclude Trustpower, Tilt, WIAL, Perth Energy, CDC, RetireAustralia, ANU and Longroad
2
NZ Bus export credit guarantee fleet procurement facility
Debt Capacity & Facilities
Duration & debt capacity remains consistent with long-term ownership of assets
Funds Available for Investment
Confidence remains that deployment opportunities continue to outweigh available capital
InfratilFull Year results presentation 20188
31 March ($Millions)201320142015201620172018
Net bank debt (cash on hand)36472(228)(661)(92)(222)
Infratilinfrastructure bonds667754754724773770
Infratilperpetual bonds
235 235 235 233 232 232
Market value of equity1,3821,2691,7861,8441,6291,734
Total capital2,6582,3302,5472,1402,5422,514
Gearing (net debt/total capital)48% 46% 30% 14%36%31%
Gearing (net debtexcl. PiiBs/total capital)
39% 36% 21% 3% 27% 22%
Infratil undrawn bank facilities354624276276246269
100% subsidiaries cash5450309729147264
Proceeds from Metlifecare
(1)
----238-
Funds Available4086745851,005631533
1
Metlifecareholding sold on 11 April 2017
Distributions
Growth in dividend per share maintained and supported by operating cashflows
InfratilFull Year results presentation 20189
FINAL ORDINARY DIVIDEND
Final ordinary dividend of 10.75 cps, fully
imputed, payable on 18 June 2018 to
shareholders recorded as owners by the registry
as at 5 June 2018 (last year final ordinary of
10.0 cps)
The DRP remains suspended for this dividend
0
5
10
15
20
25
30
35
2012201320142015201620172018
Dividend per share profile FY 2012-2018
InterimFinalSpecial
Ordinary
DIVIDEND OUTLOOK
Capital structure and confidence in outlook are
positive for continued growth in dividends per
share, with potential for higher dividend as
Longroad development gains are realised
Imputation credit forecast supports ~9 to 10 cps
fully imputed annually
Book ValueComparable
Trustpower
794 1,139
Tilt Renewables
309 389
Wellington Airport
386 792
NZ Bus
155 181
Perth Energy
63 63
Canberra Data Centres
453 512
RetireAustralia
319 350
ANU PBSA
96 96
Longroad Energy
16 16
Other
9292
Total
2,683 3,630
Net wholly owned debt
(780)(780)
Corporate costs
(214)(214)
Net Equity Value
1,688 2,636
NAV per share
$4.71
Asset Values
Comparable valuation metrics highlight underlying value of the portfolio
InfratilFull Year results presentation 201810
1x NTA (comparable: MetlifecareNTA x 0.8 and SUM NTA x 2.1)
19x Multiple of current run rate EBITDA (comparable: NextDC19-23x)
Total Tangible Assets as at 31 March reflecting ongoing strategic review
16x Multiple of forecast FY19 EBITDA (comparable: Auckland Airport > 20x)
Market ($2.03) + 20% control premium
Market ($5.94) + 20% control premium
ASIP, Infratil Infrastructure Properties and Envision
Broker consensus
Trustpower
Substantial lift in earnings from both retail and generation
InfratilFull Year results presentation 201811
Financial
•EBITDAF from continuing operations of $243.1 million was $40.1 million (19.8%) above the
prior year. EBITDAF for total operations including Australia was $269.7 million
•Trustpower’s diverse and flexible fleet of generation assets, together with sound operating
decisions, allowed it to capitalise on above average prices and deliver a strong result
•Increased Retail EBITDAF of $60 million up $15 million (33%) from the prior year, indicating
that the investment in providing bundled offers is paying off
Customers
•Overall customer growth (3% increase in total utility accounts on prior year) was modest,
however bundled customer numbers increased, leading to improved margins
•Total accounts with two or more products up 11% to 100,000 accounts
Generation
•Generation revenue of $246.6 million was 15% up on the prior year
•New Zealand generation production of 2,235GWh, up 11% from the prior year due to
favourable hydrological conditions
•Sale of Australian operations for A$168 million, a substantial increase from the 2014
purchase price of A$72 million
Tilt Renewables
Results clouded by low wind volumes while sun shines on development pipeline
InfratilFull Year results presentation 201812
Financial
•EBITDAF of A$103.8 million was A$20.3 million (16.4%) below the prior year of A$124.1 million
•Revenue of A$158.0 million was A$15.5 million (9%) below the prior year, primarily due to
lower NZ production
•New Zealand production 15% belowlong-term expectations (worse than 1-in-10 wind year)
•Lower generation costs due to savings on production-linked maintenance and landholder
contracts,and increased maintenance capitalisation for component replacements
Construction and development
•Construction remains on schedule at Salt Creek Wind Farm (July 18 Completion Date)
•Dundonnell Wind Farm bid into the Victorian Renewable Energy Auction Scheme, potentially
enabling a 50% increase in Tilt Renewables’ asset base
•The development pipeline has been expanded to 3,500MW and several projects have
progressed toward execution, with planning approvals attained for:
-465MW of solar projects in Queensland and South Australia
-130MW Waverley Wind Farm in New Zealand’s North Island
-300MW Rye Park Wind Farm in New South Wales
•The pipeline has been broadened to include firming/storage technologies that assist flexibility
and value to the portfolio, with options including battery and pumped hydro energy storage
systems
Salt Creek Wind Farm, Victoria
InfratilFull Year results presentation 201813
LongroadEnergy
Expanded development of renewables in the U.S.
Longroad today
•Business model and strategy focussed on development, ownership of operating assets and a
scaled services business
•Secured Production Tax Credit qualified wind turbines which can be deployed into ~600MW of
new developments or the repowering of existing sites by the end of CY20
•Total operating portfolio now 684MW. Longroad Services now providing operating and
maintenance services to a further 1,236MW of third party owned operating assets
Development business on track
•First wave of projects (Phoebe 315MW solar and RioBravo 238MW wind) are close to reaching
financial close and provide material investment optionality
•Realised development gains may result in IFT special dividend or higher ordinary dividend
U.S. Market presents a mixture of headwinds and tailwinds
•U.S. decision to impose tariffs on imported solar cells and panels was anticipated -Longroad
secured 880MW of exempt panels from First Solar, insulating it from the immediate effect of the
tariff changes
•Continuing decline in the cost of wind and solar developments, while coal fired assets are being
retired and demand from corporates, municipalities and utilities for clean energy sources
increases
Milford Wind, Utah
InfratilFull Year results presentation 201814
Financial
•Delivering a contracted EBITDAF run rate of A$69 million as at 31 March
•Forecasting 20% year-on-year EBITDAF run rate growth in FY19 from a pipeline
of diverse opportunities with new and existing clients
Growth and Development
•Strategic relationship with Microsoft –opening up CDC’s addressable market
to include more National Critical Infrastructure sectors
•CDC now has 4 out of the 5 certified “protected” cloud providers as clients in
its ecosystem
•Whole of portfolio weighted average lease expiry (WALE) of 4.2 years, and
10.9 years with options, providing confidence in forward outlook
•FY19 forecast capital expenditure of A$100 million; completing Fyshwick 2 and
commencing construction of Hume 4
Valuation
•Listed comparablesand recent transactions suggest an enterprise value of
19-23x forecast EBITDAF, implying a value of ~A$540 million for Infratil’s
investment
Canberra Data Centres
EBITDAF run rate growth delivered while capacity additions and development continues
Hume 3, Canberra
InfratilFull Year results presentation 201815
Financial
•EBITDAF of $95.4 million, 5.4% growth on last year
•Over 6 million passengers with +3.0% or 180,000 increase on last year
•Retail and trading activities revenue +8.7% on prior year from increased passenger numbers,
introduction of new services including Uber, Valet partnership with Air NZ and retail growth
Growth & Development
•Ground transport hub nears completion whilst the onsite Rydges Airport Hotel development
and Taxiway resurfacing remain on track
•Well positioned for international traffic growth and with significant future capital spend
planned ($250 million over the next five years), revenue and EBITDAF growth expected to
continue
•Wellington City Council-Wellington Airport project to extend the runway progressing:
-December 2017 Supreme Court decision provided welcome clarification around how
Civil Aviation Authority (CAA) should apply Runway End Safety Area (RESA) rules
-Reapplication to the CAA on RESA length using Supreme Court’s guidance (CAA
decision expected Sept 2018)
-Environment Court resource consent on hold to allow time for CAA decision
Wellington Airport
Strong earnings growth while significant capital projects near completion
InfratilFull Year results presentation 201816
Financial
•Revenue down 4.0%, largely due to the end of South Auckland services
•Expenses up 0.6% reflecting the end of South Auckland services and a continued focus on
productivity, offset by one-off reorganisation costs
•FY18 EBITDA normalised for one-off reorganisation and re-contracting costs is $38.2 million
Contracting market and forecast update
•Geographically diversified revenues secured, with 20 Auckland units, 5 Wellington units,
2 Tauranga/BOP units and Wellington Airport Flyer (exempt service)
•Long-term contracts with average contract lives of 8.3 years for Auckland, 10.8 years for
Wellington and 9 years for Tauranga
•Well invested with relatively young fleet of approximately 710 contracted buses, and a network
of 13 depots (8 Auckland, 3 Wellington, 2 Tauranga)
•Strong organic growth expected, particularly in the Auckland market, and opportunities for
further industry consolidation
•Normalised EBITDA for FY19 (transition year of PTOM contracts) of $36-$38 million
Capital expenditure outlook
•Fleet investment of $65-70 million over the next 12 months in line with PTOM contractual
requirements, returning to ~$5-10 million per annum stay-in-business capex thereafter
NZ Bus
Long-term scale and stability secured for Auckland, Wellington and Tauranga
InfratilFull Year results presentation 201817
RetireAustralia
Industry headwinds sees lower rate of resales, long-term demographic tailwinds remain
Financial
•Underlying profit A$34.5 million, a decrease from A$59.1 million in FY17 with key drivers:
-Resales cashflow down from A$36.4 million to A$31.1 million, consistent with lower
resale volumes across the sector as a result of current industry headwinds
-Lower development margin in FY18 (A$8.3 million vs A$14.9 million) due to a lower
volume of new units sold (51 vs 105), partially offset by a higher average sale price
($621.6k vs $571.5k)
•Despite current industry headwinds, the rapidly ageing population, combined with new Federal
Government policy towards the delivery of care, create a significant market opportunity for
high quality retirement living, with a built-in continuum of care
•Average entry age of new residents has increased to 79.0 years (FY17: 77.9)
Development
•2 urban villages currently under construction
•260 new dwellings in the planning phase, bringing the total development pipeline to 1,100
Care
•Transitioning existing portfolio of more than 400 serviced apartments to care apartments
•Staged rollout of home care business model commenced, with home care accessible to more
than 1,500 residents
InfratilFull Year results presentation 201818
Financial
•FY18 EBITDAF loss A$5.3 million, A$8.0 million improvement on FY17
•FY19 forecast includes a positive contribution from both Retail and Generation
Retail
•Perth Energy’s Retail business has made significant progress in stemming losses
as unprofitable legacy customer contracts are replaced with new arrangements
based on prevailing wholesale prices
•Medium term wholesale supply arrangements currently being negotiated
•Perth Energy’s generation asset has been run effectively to hedge the Retail
portfolio against high balancing prices
Generation
•Generation continues to provide valuable peaking capacity to the market and will
benefit from the announced removal of excess capacity
•One of the few fast-start turbines in Western Australia which continues to play an
important role in supporting the deployment of intermittent renewables
Perth Energy
Back on course to play an important part in the Western Australia energy market
KwinanaSwift Power Plant, Perth
Core assets and new platforms combine to enable sustained earnings growth
InfratilFull Year results presentation 201819
Normalised 2018 Underlying EBITDAF 2018
$M
2018 Underlying EBITDAF
552
Normalisations:
Trustpoweraverage hydrology and pricing
(25)
Sale of Green State Power
(27)
Tilt Renewables average wind volumes
8
Canberra Data Centres revaluation
(25)
NZ Bus reorganisationcosts
(5)
Normalised 2018 Underlying EBITDAF
478
2018/2019 Outlook
2019 Guidance2018
Actual
$M
2019
Outlook
$M
Normalised Underlying EBITDAF
478500-540
Operatingcashflow
295210-250
Netinterest
153155-165
Depreciation& amortisation
194200-210
Capital expenditure
326415-455
2019 Guidance reflects
•Long run average weather conditions and house price inflation
•TrustpowerFY19 EBITDAF guidance of $205-$225 million
•Tilt FY19 EBITDAF guidance of A$120-A$127 million
•WIAL FY19 EBITDAF guidance of $100 million
•Completion of one Longroad project
•CDC 20% year-on-year EBITDAF run rate growth (excl. revaluation)
•Positive contribution from both Perth Energy Retail and Generation
Group Capital Expenditure and Investment
Reinvestment opportunities continue to provide compelling investment returns
InfratilFull Year results presentation 201820
2019 Guidance reflects
•Trustpower-generation capex in addition to its operational and
maintenance programme
•Tilt -completion of construction of the Salt Creek Wind Farm
but excludes the development of 360MW Dundonnell Wind
Farm
•Wellington Airport -completion of the land-transport hub and
onsite hotel and the internal optimisation of the main terminal
building
•NZ Bus capex -purchase of ~70 double decker buses and other
fleet costs
•CDC -growth capex (construction of new data centres),
expansion capex (PODs, chillers and generators) and
maintenance capex
•RetireAustralia-primarily relates to construction of new
dwellings
•Longroad capex represents Infratil’s capital contribution to a
single development project
($Millions)
20182019 Outlook
Trustpower2840-45
Tilt Renewables9125-30
Wellington Airport8590-95
NZ Bus1965-70
RetireAustralia3665-70
Canberra Data Centres2250-55
Longroad 3155-60
Other 1525-30
Total327415-455
FY19 plan -harvesting options and tightening the portfolio
Several catalysts for re-rating as options are exercised and pipeline converts into cash
InfratilFull Year results presentation 201821
Extract the value from our platforms:
•We are well progressed in the multi-year re-positioning of the Infratilportfolio
following several material divestments
•While at different levels of maturity, the renewables, data and retirement platforms
are all converting previously undervalued pipelines into strong development gains
•Expecting the first set of greenfield development outcomes from the Longroad
platform in the near term
•Valuation discounts likely to narrow as key platforms achieve independent scale
Tightening the portfolio and reducing complexity:
•Prioritisediscretionary capital for existing platforms
•Review long-term position of certain assets in the portfolio and close out several
options –e.g. NZ Bus strategic review and Australian PPP’s (ASIP)
•Core cash generating assets continue to perform an important role in the portfolio
•Ongoing performance management and capital management, including share
buybacks
For more information
www.Infratil.com
InfratilFull Year results presentation 201822
Results Summary
Appendix I –Reconciliation of NPAT to Underlying EBITDAF
InfratilFull Year results presentation 201823
•Underlying EBITDAF is a non-GAAP measure of financial
performance, presented to show management’s view of the
underlying business performance
•Underlying EBITDAF represents consolidated net earnings
before interest, tax, depreciation, amortisation, financial
derivative movements, revaluations, gains or losses on the
sales of investments, and includes Infratil’sshare of
RetireAustraliaand Metlifecareunderlying profits
•Underlying profit for RetireAustraliaand Metlifecare
removes the impact of unrealised fair value movements on
investment properties, impairment of property, plant and
equipment, excludes one-off gains and deferred taxation,
and includes realised resale gains and realised development
margins
•Underlying profit provides a better benchmark to measure
business performance
•The Group’s investment in Metlifecarewas sold on 7 April
2017 but has no impact on the current period result
31 March ($Millions)20182017
Net profit after tax139.2 130.4
less: share of MET & RA associate earnings(18.3)(46.3)
plus: share of MET & RA underlying earnings(4.5)82.5
Trustpowerdemerger costs-16.7
CDC transaction costs -5.6
Net loss/(gain) on foreign exchange and derivatives(7.4)(29.0)
Net realisations, revaluations and (impairments)(12.5)55.2
Discontinued operations11.0 14.5
Underlying earnings153.0 157.1
Depreciation and amortisation193.8 183.7
Net interest153.4 162.9
Tax52.2 15.7
Underlying EBITDAF552.4 519.4
---
Notes20182017
$000$000
Dividends received from subsidiary companies80,00060,000
Subvention Income10,327-
Operating Revenue27,84023,267
Total revenue118,16783,267
Directors' fees740664
Other operating expenses27,02928,228
Total operating expenditure 427,76928,892
Operating surplus before financing, derivatives, realisations and impairments90,39854,375
Net gain/(loss) on foreign exchange and derivatives4,3496,102
Net realisations, revaluations and (impairments)-568
Financial income38,50256,940
Financial expenses(68,574)(69,650)
Net financing expense(30,072)(12,710)
Net surplus before taxation64,675.0 48,335.0
Taxation expense6(5,610.0)(2,139.0)
Net surplus for the year 59,065.0 46,196.0
Other comprehensive income, after tax
Fair value movements in relation to executive share scheme(237)43
Total other comprehensive income after tax(237)43
Total comprehensive income for the year58,82846,239
The accompanying notes form part of these financial statements.
Infratil Limited
Statement of Comprehensive Income
For the year ended 31 March 2018
1
NotesCapitalOther reservesRetained Total
$000$000$000$000
Balance as at 1 April 2017356,96257643,459400,997
Total comprehensive income for the year
Net surplus for the year--59,06559,065
Other comprehensive income after tax
-(237)-(237)
Total other comprehensive income
-(237)-(237)
Total comprehensive income for the year
-(237)59,06558,828
Contributions by and distributions to owners
Share buyback
(2,410)--(2,410)
----
Conversion of executive redeemable shares
----
Dividends to equity holders
3--(89,608)(89,608)
Total contributions by and distributions to owners
(2,410)-(89,608)(92,018)
Balance at 31 March 2018
354,55233912,916367,807
Balance as at 1 April 2016363,43353380,160444,126
Total comprehensive income for the year
Net surplus for the year--46,19646,196
Other comprehensive income after tax
-43-43
Total other comprehensive income
-43-43
Total comprehensive income for the year
-4346,19646,239
Contributions by and distributions to owners
Share buyback
(7,023)--(7,023)
----
Conversion of executive redeemable shares
552--552
Dividends to equity holders
3--(82,897)(82,897)
Total contributions by and distributions to owners
(6,471)-(82,897)(89,368)
-
Balance at 31 March 2017
356,96257643,459400,997
The accompanying notes form part of these financial statements.
Infratil Limited
Fair value movements in relation to executive share scheme
Treasury Stock reissued under dividend reinvestment plan
Fair value movements in relation to executive share scheme
Treasury Stock reissued under dividend reinvestment plan
Statement of Changes in Equity
For the year ended 31 March 2018
Statement of Changes in Equity
For the year ended 31 March 2017
2
Notes20182017
$000$000
Cash and cash equivalents--
Prepayments and sundry receivables1,097764
Income tax receivable--
Advances to subsidiary companies 14936,013974,409
Current assets937,110975,173
Deferred tax 616,60818,503
Investments 14585,529585,529
Non current assets602,137604,032
Total assets1,539,2471,579,205
Bond interest payable5,6376,329
Accounts payable2,8792,665
Accrual and other liabilities2,255339
Infrastructure Bonds 7111,202147,177
Derivative financial instruments 81,607-
Loans from group companies 14153,897153,897
Total current liabilities277,477310,407
Infrastructure Bonds 7652,094620,359
Perpetual Infratil Infrastructure bonds 7231,152230,769
Derivative financial instruments 810,71716,673
Non current liabilities893,963867,801
Attributable to shareholders of the Company367,807400,997
Total equity367,807400,997
Total equity and liabilities1,539,2471,579,205
Approved on behalf of the Board on 16 May 2018
Director Director
The accompanying notes form part of these financial statements.
As at 31 March 2018
Statement of Financial Position
Infratil Limited
3
Notes20182017
$000$000
Cash flows from operating activities
Cash was provided from:
Dividends received from subsidiary companies80,00060,000
Subvention receipt10,327-
Interest received38,50256,940
GST refund received--
Operating revenue receipts27,50823,289
156,337140,229
Cash was dispersed to:
Interest paid(67,069)(67,826)
Payments to suppliers(27,280)(29,015)
Taxation (paid) / refunded(3,715)(3,532)
(98,064)(100,373)
Net cash flows from operating activities
1058,27339,856
Cash flows from investing activities
Cash was provided from:
Net movement in subsidiary company loan38,164250,638
38,164250,638
Cash was dispersed to:
Acquisition of shares in subsidiary-(248,000)
Cash outflow for group company loan--
-(248,000)
Net cash flows from investing activities
38,1642,638
Cash flows from financing activities
Cash was provided from:
Proceeds from issue of shares-548
Issue of bonds143,413150,000
143,413150,548
Cash was dispersed to:
Repayment of bonds(147,396)(100,927)
Infrastructure bond issue expenses(2,068)(2,195)
Repurchase of shares(778)(7,023)
Dividends paid
3(89,608)(82,897)
(239,850)(193,042)
Net cash flows from financing activities
(96,437)(42,494)
Net cash movement --
Cash balances at beginning of year--
Cash balances at year end--
The accompanying notes form part of these financial statements.
For the year ended 31 March 2018
Note some cash flows above are directed through an intercompany account. The cashflow statement above has been prepared on the assumption that these
transactions are equivalent to cash in order to present the total cashflows of the entity.
Infratil Limited
Statement of Cash Flows
4
(1) Accounting policies
(A) Reporting Entity
(B) Basis of preparation
Accounting estimates and judgements
Valuation of investments
Accounting for income taxes
(C) Taxation
(D) Derivative financial instruments
Preparation of the financial statements requires management to make estimates as to, amongst other things, the amount of tax that will ultimately be payable,
the availability of losses to be carried forward and the amount of foreign tax credits that it will receive. Actual results may differ from these estimates as a result
of reassessment by management and/or taxation authorities.
Income tax comprises both current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of the differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts used for taxation purposes.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits or
deferred tax liabilities will be available within the Company against which the asset can be utilised.
When appropriate, the Company enters into agreements to manage its interest rate, foreign exchange, operating and investment risks. In accordance with the
Company's risk management policies, the Company does not hold or issue derivative financial instruments for speculative purposes. However, certain derivatives
do not qualify for hedge accounting and are required to be accounted for at fair value through profit or loss. Derivative financial instruments are recognised
initially at fair value at the date they are entered into. Subsequent to initial recognition, derivative financial instruments are stated at fair value at each balance
sheet date. The resulting gain or loss is recognised in the profit or loss immediately unless the derivative is designated effective as a hedging instrument, in which
event, recognition of any resultant gain or loss depends on the nature of the hedging relationship.
Notes to the Financial Statements
For the year ended 31 March 2018
Infratil Limited ('the Company') is a company domiciled in New Zealand and registered under the Companies Act 1993. The Company is listed on the NZX and ASX,
and is an issuer in terms of the Financial Market Conducts Act 2013.
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (‘NZ GAAP’) and comply with New Zealand
equivalents to International Financial Reporting Standards ('NZ IFRS') and other applicable financial reporting standards as appropriate for profit-oriented
entities. The presentation currency used in the preparation of these financial statements is New Zealand dollars, which is also the Company's functional currency,
and is presented in $ thousands unless otherwise stated. The principal accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Comparative figures have been restated where
appropriate to ensure consistency with the current period.
The financial statements comprise statements of the following: comprehensive income; financial position; changes in equity; cash flows; significant accounting
policies; and the notes to those statements are contained on pages 5 to 15 of this report. The financial statements are prepared on the basis of historical cost,
except financial derivatives valued in accordance with accounting policy (D).
The preparation of financial statements in conformity with NZ IFRS requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Future outcomes
could differ from those estimates. The principal areas of judgement in preparing these financial statements are set out below.
Infratil completes an assessment of the carrying value of investments at least annually and considers objective evidence for impairment on each investment taking
into account observable data on the investment, the fair value, the status or context of capital markets, its own view of investment value, and its long term
intentions. Infratil notes the following matters which are specifically considered in terms of objective evidence of impairment of its investments, and whether
there is a significant or prolonged decline from cost, which should be recorded as an impairment, and taken to profit and loss: any known loss events that have
occurred since the initial recognition date of the investments, including its long term investment horizon, specific initiatives which reflect the strategic or
influential nature of its existing investment position and internal valuations; and the state of financial markets. The assessment also requires judgements about
the expected future performance and cash flows of the investment.
5
Notes to the Financial Statements
For the year ended 31 March 2018
(E) Impairment of assets
(F) Borrowings
(G) Foreign currency transactions
(H) Adoption status of relevant new financial reporting standards and interpretations
(2) Nature of business
At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets, to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at amortised cost with any
difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the borrowing using the
effective interest rate. Fees and other costs incurred in arranging debt finance are capitalised and amortised over the term of the relevant debt facility.
Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of the transactions. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. The foreign
currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for interest
and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and
liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair
value was determined. Foreign currency differences arising on translation are recognised in profit or loss.
The Company is the ultimate parent company of the Infratil Group, owning infrastructure & utility businesses and investments in New Zealand, Australia and the
United States. The Company is a limited liability company incorporated and domiciled in New Zealand. The address of its registered office is 5 Market Lane,
Wellington, New Zealand.
The following new standards, amendments to standards and interpretations are issued but not yet effective and have not been applied in preparation of these
consolidated financial statements.
NZ IFRS 9 Financial Instruments, published in July 2014, replaces the existing guidance in NZ IAS 39 Financial Instruments: Recognition and Measurement. NZ IFRS
9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on
financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments
from NZ IAS 39. NZ IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Company's preliminary
assessment of adopting NZ IFRS 9 is that it will not have a material impact on the financial statements. However, a limited number of additional disclosures will be
required in the notes to the financial statements.
NZ IFRS 15 Revenue from Contracts with Customers, establishes a comprehensive framework for determining whether, how much and when revenue is
recognised. It replaces existing revenue recognition guidance, including NZ IAS 18 Revenue, NZ IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty
Programmes. NZ IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Company's preliminary
assessment of adopting NZ IFRS 15 is that it will not have a material impact on the financial statements.
NZ IFRS 16 Leases, removes the classification of leases as either operating leases or finance leases – for the lessee – effectively treating all leases as finance leases.
Lessor accounting remains similar to current practice – i.e. lessors continue to classify leases as finance and operating. The standard is effective for annual
reporting periods beginning on or after 1 January 2019. The Company's preliminary assessment of adopting NZ IFRS 16 is that it will not have a material impact on
the financial statements.
6
Notes to the Financial Statements
For the year ended 31 March 2018
(3) Infratil shares and dividends
Ordinary shares (fully paid)
20182017
Total issued capital at the beginning of the year
560,053,166562,325,645
Movements in issued and fully paid ordinary shares during the year:
Share buyback
(775,000)(2,510,000)
Treasury Stock reissued under dividend reinvestment plan
--
Conversion of executive redeemable shares
-237,521
Total issued capital at the end of the year
559,278,166560,053,166
Dividends paid on ordinary shares
2018201720182017
cents per sharecents per share
$000$000
Final dividend prior year (paid 15 June 2017)
10.00 9.00 56,005 50,608
Interim dividend current year (paid 15 December 2017)
6.00 5.75 33,603 32,289
Dividends paid on ordinary shares
16.00 14.75 89,608 82,897
Executive redeemable shares
20182017
$000
$000
Balance at the beginning of the year 990,500827,500
Shares issued
-
528,000
Shares converted to ordinary shares
-
(237,521)
Shares cancelled
(557,500)
(127,479)
Balance at end of year 433,000990,500
(4) Other operating expenses
20182017
$000
$000
Fees paid to the Company auditor365 175
Directors’ fees740 664
Administration and other corporate costs5,411 7,563
Management fee (to related party Morrison & Co Infrastructure Management)1521,253 20,490
Total other operating expenses27,769 28,892
20182017
Fees paid to the Company auditor
$000
$000
Audit and review of financial statements 158 175
Other assurance services - -
Taxation services - -
Other services 207 -
Total fees paid to the Company auditor 365 175
During the year no shares were forfeited by executives leaving the Group (2017: nil).
All fully paid ordinary shares have equal voting rights and share equally in dividends and equity. At 31 March 2018 the Group held 775,000 shares as Treasury
Stock. 7,010,000 shares held as Treasury stock in the prior year were cancelled on 29 March 2017.
The audit fee includes the fees for both the annual audit of the financial statements and the review of the interim financial statements. Other services relate to
due diligence work.
7
Notes to the Financial Statements
For the year ended 31 March 2018
(5) Net realisations and (impairments)
(6) Taxation
20182017
$000$000
Surplus before taxation64,67548,335
Taxation on the surplus for the period @ 28%18,10913,534
Plus/(less) taxation adjustments:
Exempt dividends(22,400)(16,800)
Losses offset within Group8,202-
Subvention payment(2,892)-
Timing differences not recognised-16
Over provision in prior years4,4344,755
Other permanent differences157634
Taxation expense5,6102,139
Current taxation 3,7154,053
Deferred taxation 1,895(1,914)
5,6102,139
There was no income tax recognised in other comprehensive income during the period (2017: nil)
Recognised deferred tax assets and liabilities
20182017
$000$000
Derivatives3,4514,668
Tax losses carried forward13,30714,100
Deferred tax assets16,75818,768
20182017
$000$000
Other items(150)(265)
Deferred tax liabilities(150)(265)
Derivatives
3,4514,668
Tax losses carried forward13,30714,100
Other items(150)(265)
Net deferred tax assets/(liabilities)16,60818,503
Changes in temporary differences affecting tax expense
2018201720182017
$000$000$000$000
Derivatives(1,217)(1,709)--
Tax losses carried forward(793)3,729--
Other items11534--
(1,895)1,914--
Tax Expense
Liabilities
Net Assets/(Liabilities)
Other Comprehensive Income
At 31 March 2018 the Company reviewed the carrying amounts of loans to Infratil Group companies to determine whether there is any indication that those
assets have suffered an impairment loss. The recoverable amount of the asset was estimated by reference to the counterparties' net asset position and ability to
repay loans out of operating cash flows in order to determine the extent of any impairment loss. As a result the Company did not impair any loans to Infratil Group
companies in 2018 (2017: nil).
Assets
8
Notes to the Financial Statements
For the year ended 31 March 2018
(7) Infrastructure Bonds
20182017
$000$000
Balance at the beginning of the year998,305949,771
Issued during the year143,413150,000
Exchanged during the year(32,739)(49,517)
Matured during the year(114,657)(50,483)
Purchased by Infratil during the year-(1,489)
Bond issue costs capitalised during the year(2,069)(2,195)
Bond issue costs amortised during the year2,1952,218
Balance at the end of the year994,448998,305
Current111,202147,177
Non-current fixed coupon 652,094620,359
Non-current perpetual variable coupon231,152230,769
Balance at the end of the year994,448998,305
Repayment terms and interest rates:
IFT160 maturing in June 2017, 8.50% p.a. fixed coupon rate-66,285
IFT170 maturing in November 2017, 8.00% p.a. fixed coupon rate-81,112
IFT180 maturing in November 2018, 6.85% p.a. fixed coupon rate111,418111,418
IFT200 maturing in November 2019, 6.75% p.a. fixed coupon rate68,50068,500
IFT090 maturing in February 2020, 8.50% p.a. fixed coupon rate80,49880,498
IFT220 maturing in June 2021, 4.90% p.a. fixed coupon rate93,88393,883
IFT190 maturing in June 2022, 6.85% p.a. fixed coupon rate93,69693,696
IFT240 maturing in December 2022, 5.65% p.a. fixed coupon rate100,000-
IFT210 maturing in September 2023, 5.25% p.a. fixed coupon rate122,104122,104
IFT230 maturing in June 2024, 5.50% p.a. fixed coupon rate56,11756,117
IFT250 maturing in June 2025, 6.15% p.a. fixed coupon rate43,413-
IFTHA Perpetual Infratil infrastructure bonds231,917231,917
less: Bond issue costs capitalised and amortised over term
(7,098)(7,225)
Balance at the end of the year994,448998,305
Throughout the period the Company complied with all debt covenant requirements as imposed by the bond trustee.
The fixed coupon bonds the Company has on issue are at a face value of $1.00 per bond. Interest is payable quarterly on the bonds. 25 days prior to the maturity
date of the IFT090 series, Infratil can elect to convert all of the bonds in that series to equity by issuing the number of shares calculated by dividing the $1.00 face
value by 98% of the market price of an Infratil share. The market price is the average price weighted by volume of all trades of ordinary shares over the 10
business days up to the fifth business day before the maturity date.
The Company has 231,916,000 (31 March 2017: 231,916,000) PIIBs on issue at a face value of $1.00 per bond. Interest is payable quarterly on the bonds. For the
period to 15 November 2018 the coupon was fixed at 3.50% per annum (2017: 3.63%). Thereafter the rate will be reset annually at 1.5% per annum over the then
one year bank rate for quarterly payments, unless Infratil's gearing ratio exceeds certain thresholds, in which case the margin increases. These infrastructure
bonds have no fixed maturity date. No PIIBs (2017: 1,489,000) were repurchased by Infratil Limited during the period.
At 31 March 2018 the Infratil Infrastructure bonds (including PIIBs) had a fair value of $989.6 million (2017: $943.8 million).
Fixed coupon
Perpetual Infratil infrastructure bonds ('PIIBs')
9
Notes to the Financial Statements
For the year ended 31 March 2018
(8) Financial instruments
The Company has exposure to the following risks due to its business activities and financial policies:
• Credit risk
• Liquidity risk
• Market risk (interest rates and foreign exchange)
2018
Accounts
payable, accruals
and other
liabilities
Infrastructure
bonds
Perpetual Infratil
Infrastructure
bonds
Derivative
financial
instruments
Total
$000$000$000$000$000
Balance sheet
164,668763,296231,15212,3241,171,440
Contractual cash flows
164,668936,511290,42813,6221,405,229
6 months or less
164,66823,9674,0594,124196,818
6-12 month
-132,5224,0593,547140,128
1 to 2 years
-186,7108,1173,321198,148
2 to 5 years
-359,11424,3512,630386,095
5 years +
-234,198249,842-484,040
2017
Balance sheet
163,235767,536230,76916,6731,178,213
Contractual cash flows
163,235939,488292,60117,7151,413,039
6 months or less
163,23590,5104,2093,200261,154
6-12 month
-101,7294,2093,219109,157
1 to 2 years
-148,1698,4195,474162,062
2 to 5 years
-309,66225,2565,822340,740
5 years +
-289,418250,508-539,926
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board also has a function
of reviewing management practices in relation to identification and management of significant business risk areas and regulatory compliance. The Company has
developed a comprehensive, enterprise wide risk management framework. Management and Board participate in the identification, assessment and monitoring
of new and existing risks. Particular attention is given to strategic risks that could affect the Company.
Credit risk
Liquidity risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Company. The Company is exposed to
credit risk in the normal course of business including those arising from financial derivatives and transactions (including cash balances) with financial institutions.
The Company has adopted a policy of only dealing with credit-worthy counterparties, as a means of mitigating the risk of financial loss from defaults. Derivative
counterparties and cash transactions are limited to high-credit-quality financial institutions and other organisations in the relevant industry. The Company’s
exposure and the credit ratings of counterparties are monitored. The carrying amounts of financial assets recognised in the Statement of Financial Position best
represent the Company’s maximum exposure to credit risk at the reporting date. No security is held on these amounts.
Liquidity risk is the risk that assets held by the Company cannot readily be converted to cash to meet the Company's contracted cash flow obligations. Liquidity risk
is monitored by continuously forecasting cash flows and matching the maturity profiles of financial assets and liabilities. The Company's approach to managing
liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due and make value investments, under both normal
and stress conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
The tables below analyses the financial liabilities into relevant maturity groupings based on the earliest possible contractual maturity date at the year end date.
The amounts in the tables below are contractual undiscounted cash flows, which include interest through to maturity. Perpetual Infratil Infrastructure Bond cash
flows have been determined by reference to the longest dated Infratil Bond, maturing in the year 2025.
10
Notes to the Financial Statements
For the year ended 31 March 2018
Interest rates
20182017
$000$000
At balance date the face value of interest rate contracts outstanding were:
Interest rate swaps in place at year end
145,000145,000
Fair value of interest rate swaps
(12,324)(16,673)
The termination dates for the interest rate swaps are as follows:
Between 0 to 1 year
50,000-
Between 1 to 2 years
50,00050,000
Between 2 to 5 years
45,00095,000
Over 5 years
--
Interest rate sensitivity analysis
20182017
$000$000
Profit or loss
100 bp increase9392,386
100 bp decrease(1,023)(2,526)
There would be no material effect on equity.
Foreign currency
Fair values
20182017
$000$000
Assets
Derivative financial instruments - foreign exchange--
--
--
Split as follows:
Current --
Non-current --
--
Liabilities
Derivative financial instruments - foreign exchange--
Derivative financial instruments - interest rate12,32416,673
12,32416,673
Split as follows:
Current 1,607-
Non-current 10,71716,673
12,32416,673
Market risk
Interest rate risk is the risk of interest rate volatility negatively affecting the Company's interest expense cash flow and earnings. The Company mitigates this risk
by issuing borrowings at fixed interest rates or entering into Interest Rate Swaps to convert floating rate exposures to fixed rate exposure. Borrowings issued at
fixed rates expose the Company to fair value interest rate risk which is managed by the interest rate profile and hedging.
The following table shows the impact on post-tax profit and equity of a movement in bank interest rates of 100 basis points higher/lower with all other variables
held constant.
The Company has exposure to currency risk on the value of its assets and liabilities denominated in foreign currencies, future investment obligations and future
income. Foreign currency obligations and income are recognised as soon as the flow of funds is likely to occur. Decisions on buying forward cover for likely foreign
currency investments is subject to the Company’s expectation of the fair value of the relevant exchange rate.
Foreign exchange sensitivity analysis
At 31 March 2018, if the New Zealand dollar had weakened/strengthened by 10 percent against foreign currencies, with all other variables held consistent, post-
tax profit would not have been materially different. There would have been no material impact on balance sheet components.
The carrying amount of financial assets and financial liabilities recorded in the financial statements is their fair value, with the exception of bond debt held at
amortised cost which have a fair value at 31 March 2018 of $989.6 million (2017: $943.8 million) compared to a carrying value of $994.4 million (2017: $998.3
million).
Derivative financial instruments - interest rate
11
Notes to the Financial Statements
For the year ended 31 March 2018
Estimation of fair values
Valuation InputSource
Interest rate forward price curvePublished market swap rates
Discount rate for valuing interest rate derivatives
Fair value hierarchy
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
Capital management
The Company's capital includes share capital, reserves, and retained earnings. From time to time the Company purchases its own shares on the market with the
timing of these purchases dependent on market prices, an assessment of value for shareholders and an available window to trade on the NZX. Primarily the
shares are intended to be held as treasury stock and may be reissued under the Dividend Reinvestment Plan or cancelled. During the year the Company bought
back 775,000 shares (2017: 2,510,000).
There were no changes to the Company's approach to capital management during the year.
The Company seeks to ensure that no more than 25% of its debt is maturing in any one year period, and to spread the maturities of its facilities. The Company
manages its interest rate profile so as to minimise net value volatility. This means having interest costs fixed for extended terms. At times when long rates appear
to be unsustainably high, the profile may be shortened, and when rates are low the profile may be lengthened.
The selection of variables requires significant judgement and therefore there is a range of reasonably possible assumptions in respect of these variables that could
be used in estimating the fair value of these derivatives. Maximum use is made of observable market data when selecting variables and developing assumptions
for the valuation techniques.
All financial instruments measured at fair value in the statement of financial position are valued either directly (that is, using external available inputs) or indirectly
(that is, derived from external available inputs) and are classified as level 2 under NZ IFRS 7.
The Company has interest rate swap derivatives that are classified as Level 2 and have a fair value liability of $12.3 million at 31 March 2018 (2017: $16.7 million).
There were no transfers between derivative financial instrument assets or liabilities classified as level 1 or level 2, and level 3 of the fair value hierarchy during the
year ended 31 March 2018 (2017: none).
• discount rates.
Published market interest rates as applicable to the remaining life of
the instrument.
The key factors in determining the Company's optimal capital structure are:
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived
from prices) (level 2)
The analysis of financial instruments carried at fair value, by valuation method is below. The different levels have been defined as follows:
• Capital needs over the forecast period
The fair values and net fair values of financial assets and financial liabilities are determined as follows:
• The fair value of financial assets and liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted
market prices.
• The fair value of other financial assets and liabilities are calculated using market-quoted rates based on discounted cash flow analysis.
Where the fair value of a derivative is calculated as the present value of the estimated future cash flows of the instrument, the two key types of variables used by
the valuation techniques are:
• forward price curve (for the relevant underlying interest rates, foreign exchange rates or commodity prices); and
• Available sources of capital and relative cost
• Nature of its activities
• Quality and dependability of earnings/cash flows
• The fair value of derivative financial instruments are calculated using quoted prices. Where such prices are not available, use is made of discounted cash flow
analysis using the applicable yield curve or available forward price data for the duration of the instruments.
12
Notes to the Financial Statements
For the year ended 31 March 2018
(9) Investment in subsidiaries and associates
The significant investments of the Company and their activities are summarised below:
SubsidiariesHoldingHolding
20182017
New Zealand
Infratil 1998 Limited100%100%InvestmentNew Zealand
Infratil 2016 Limited100%100%InvestmentNew Zealand
Infratil Australia Limited100%100%InvestmentNew Zealand
Infratil Energy Limited100%100%InvestmentNew Zealand
Infratil Finance Limited100%100%FinanceNew Zealand
Infratil Gas Limited100%100%InvestmentNew Zealand
Infratil Infrastructure Property Limited100%100%InvestmentNew Zealand
Infratil Investments Limited100%100%InvestmentNew Zealand
Infratil No 1 Limited100%100%InvestmentNew Zealand
Infratil No 5 Limited100%100%InvestmentNew Zealand
Infratil Outdoor Media Limited100%100%InvestmentNew Zealand
Infratil PPP Limited100%100%InvestmentNew Zealand
Infratil Renewables Limited100%100%InvestmentNew Zealand
Infratil RV Limited100%100%InvestmentNew Zealand
Infratil Ventures II Limited100%100%InvestmentNew Zealand
Infratil Ventures Limited100%100%InvestmentNew Zealand
NZ Airports Limited100%100%InvestmentNew Zealand
Swift Transport Limited 100%100%InvestmentNew Zealand
The financial year-end of all the significant subsidiaries is 31 March.
(10) Reconciliation of net surplus with cash flow from operating activities
20182017
$000$000
Net surplus for the year 59,06546,196
Less items classified as investing activity:
Loss/(profit) on investment realisations and impairments-(568)
Add items not involving cash flows:
(4,349)(6,092)
(1,636)-
Amortisation of deferred bond issue costs2,1952,217
Movements in working capital
Change in receivables(332)22
Change in trade payables215190
Change in accruals and other liabilities1,220(706)
Change in taxation and deferred tax1,895(1,403)
Net cash inflow from operating activities58,27339,856
(11) Share Scheme
Infratil Staff Share Purchase Scheme
Principal activity
Country of
incorporation
Movement in financial derivatives taken to the profit or loss
Unsettled share buybacks
In 2008 Infratil commenced a staff share purchase scheme ('the Staff Share Scheme'). Under the Staff Share Scheme participating employees have a beneficial title
to the ordinary shares, which are held by a trustee company. Staff are provided a loan in respect of the shares which is repayable over a period of three years.
Upon repayment of the loan and three years’ service by the participating employee, the ordinary shares will transfer from the trustee company to the
participating employee, and the shares become unrestricted. Other than in exceptional circumstances, the length of the retention period before the shares vest is
three years during which time the ordinary shares cannot be sold or disposed of.
During the year 42,091 shares were transferred to employees under the scheme (2017: 44,557 shares).
13
Notes to the Financial Statements
For the year ended 31 March 2018
Infratil Executive Redeemable Share Scheme
(12) Commitments
There are no outstanding commitments (2017: nil).
(13) Contingent liabilities
(14) Related parties
Related Party2018201720182017
$000$000$000$000
Advances
Infratil Finance
38,42856,852935,680973,844
Aotea Energy Holdings Limited
--(153,897)(153,897)
Investments in
Infratil Investments Limited
87,66587,665
Infratil 1998 Limited
12,00012,000
Infratil Finance Limited
153,897153,897
Infratil No. 1 Limited
78,02378,023
Infratil PPP Limited
5,9425,942
Infratil No. 5 Limited
248,001248,001
Interest income/(expense)
Intercompany
Certain Infratil Directors have relevant interests in a number of companies with which Infratil has transactions in the normal course of business. A number of key
management personnel are also Directors of Group subsidiary companies and associates.
Morrison & Co Infrastructure Management Limited ('MCIM') is the management company for the Company and receives management fees in accordance with the
applicable management agreement. MCIM is owned by H.R.L. Morrison & Co Group Limited Partnership ('MCO'). Mr M Bogoievski is a director of Infratil and is a
director and Chief Executive Officer of MCO. Entities associated with Mr Bogoievski also have beneficial interests in MCO.
No new Infratil Executive Redeemable Shares were granted during the current year. On 17 June 2016, 528,000 Infratil Executive Redeemable Shares were granted
at a price of $3.3107, the volume weighted average market price over the 20 business days immediately preceding the date on which the shares were issued to
each executive. One cent per Executive Share was paid up in cash by the executive with the balance of the issue price payable when the executive becomes
eligible to receive the long term incentive bonus.
Note 9 identifies significant entities in which the Company has an interest. All of these are related parties of the Company. The Company has the following
significant loans and investments to/from/in its subsidiaries:
The Determination Date for the 2014 Scheme was 23 December 2017. The performance hurdles for the 2014 Scheme were not met and, accordingly, the shares
did not vest. On 17 December 2016, the 2013 Executive Scheme matured having met certain share performance thresholds. Pursuant to this and the Trust Deed,
the Company converted 237,521 Executive Shares into Infratil Ordinary Shares on 22 December 2016.
The Company and certain wholly owned subsidiaries are guarantors of the bank debt facilities of Infratil Finance Limited under a Deed of Negative Pledge,
Guarantee and Subordination and the Company is a guarantor to certain obligations of subsidiary companies.
The Company has a contingent liability under the international fund management agreement with Morrison & Co International Limited in the event that the
Group sells its international assets, or valuation of the assets exceeds the performance thresholds set out in the international fund management agreement.
The Company has agreed to guarantee certain obligations of Infratil Trustee Limited, a related party, that is the Trustee to the Infratil Staff Share Scheme. The
amount of the guarantee is limited to the loans provided to the employees.
From time to time selected key eligible executives and senior managers of Infratil and certain of its subsidiaries are invited to participate in the Infratil Executive
Redeemable Share Scheme ('Executive Scheme') to acquire Executive Redeemable Shares (‘Executive Shares’). The Executive Shares have certain rights and
conditions and cannot be traded and do not convert to ordinary shares until those conditions have been met. The Executive Shares confer no rights to receive
dividends or other distributions or to vote. Executive Shares may be issued which will convert to ordinary shares after three years (other than in defined
circumstances) provided that the issue price has been fully paid and vesting conditions have been met. The vesting conditions include share performance hurdles
with minimum future share price targets which need to be achieved over the specified period. The number of shares that “vest” (or LTI bonus paid) is based on
the share price performance over the relevant period of the Infratil ordinary shares. If the executive is still employed by the Group at the end of the specified
period, provided the share performance hurdles are met the executive receives a long term incentive bonus ('LTI') which must be used to repay the outstanding
issue price of the Executive Shares and the Executive Shares are then converted to fully paid ordinary shares of Infratil.
14
Notes to the Financial Statements
For the year ended 31 March 2018
Management and other fees paid by the Company to MCIM, MCO or its related parties during the year were:
20182017
$000$000
Management fees21,25320,490
Directors fees110100
Financial management, accounting, treasury, compliance and administrative services1,2501,250
Investment banking services1,1601,289
Total management and other fees23,77323,129
At 31 March 2018 amounts owing to MCIM of $2,160k (excluding GST) are included in trade creditors (2017: $1,872k).
(15) Management fee to Morrison & Co Infrastructure Management Limited ('MCIM')
The management fee to MCIM comprises a number of different components:
(16) Segment analysis
During the year, the Company operated in predominantly one business segment, that of investments.
Geographical segments
(17) Events after balance date
Dividend
There have been no other significant events subsequent to balance date.
A New Zealand base management fee is paid on the "New Zealand Company Value" at the rates of 1.125% per annum on New Zealand Company value up to $50
million. 1.0% per annum on the New Zealand Company Value between $50 million and $150 million, and 0.80% per annum on the New Zealand Company Value
above $150 million. The New Zealand Company Value is:
• the Company's market capitalisation as defined in the management agreement (i.e. the aggregated market value of the Company's listed securities, being
ordinary shares, partly paid shares, infrastructure bonds and warrants):
• plus the Company and its wholly owned subsidiaries' net debt (excluding listed debt securities and the book value of the debt in any non-Australasian
investments):
• minus the cost price of any non-Australasian investments: and
• plus/minus an adjustment for foreign exchange gains or losses related to non-New Zealand investments.
An international fund management fee is paid at the rate of 1.50% per annum on:
• the cost price of any non-Australasian investments: plus
• the book value of the debt in any wholly owned non-Australasian investments.
The Company operated in one geographical area, that of New Zealand. Certain subsidiaries of the Company invest in Australia and the United States.
On 16 May 2018, the Directors approved a fully imputed final dividend of 10.75 cents per share to holders of fully paid ordinary shares to be paid on 18 June 2018.
15
Notes to the Financial Statements
For the year ended 31 March 2018
Directors
Mark Tume (Chairman)
Marko Bogoievski
Alison Gerry
Paul Gough
Humphry Rolleston
Peter Springford
Company Secretary
Nick Lough
Registered Office - New ZealandRegistered Office - Australia
5 Market LaneC/- H.R.L. Morrison & Co Private Markets
PO Box 320 Level 37
WellingtonGovernor Phillip Tower
Telephone: +64 4 473 36631 Farrer Place
Internet address: www.infratil.comSydney
NSW, 2000
Telephone: +64 4 473 3663
Manager
Morrison & Co Infrastructure Management
5 Market Lane
PO Box 1395
Wellington
Telephone: +64 4 473 2399
Facsimile: +64 4 473 2388
Internet address: www.hrlmorrison.com
Share Registrar - New ZealandShare Registrar - Australia
Link Market ServicesLink Market Services
Level 7, Zurich HouseLevel 12
21 Queen Street680 George Street
PO Box 91976Sydney
AucklandNSW 2000
Telephone: +64 9 375 5998Telephone: +61 2 8280 7100
E-mail: enquiries@linkmarketservices.co.nzE-mail: registrars@linkmarketservices.com.au
Internet address: www.linkmarketservices.co.nzInternet address: www.linkmarketservices.com.au
Auditor
KPMG
Maritime Tower
10 Customhouse Quay
PO Box 996
Wellington
Bankers
Bank of New Zealand
Level 4
80 Queen Street
Auckland
Directory
16
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Independent Auditor’s Report
To the shareholders of Infratil Limited
Report on the financial statements
Opinion
In our opinion, the accompan ying financial
statements of Infratil Limited (the company) on
pages 1 to 15:
i.present fairly in all material respects the
company’s financial position as at 31 March 2018
and its financial performance and cash flows for
the year ended on that date; and
ii.comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying financial
statements which comprise:
— the statement of financial position as at 31
March 2018;
— the statements of comprehensive income,
statement of changes in equity and cash flows
for the year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ ISAs (NZ)’) . We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the company in accordance with Professional and Ethical Standard 1 (Revised) Code of
Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code),
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
financial statements section of our report.
Our firm has also provided other services to the company in relation to other assurance engagements and due
diligence services. These matters have not impaired our independence as auditor of the company. The firm has
no other relationship with, or interest in, the company.
Use of this independent auditor’s r eport
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
2
Responsibilities of the Directors for the financial statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the financial statements in accordance with generally accepted
accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting
Standards);
— implementing necessary internal control to enable the preparation of a set of financial statements that is fairly
presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objective is:
— to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of these financial statements is located at the External
Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-2/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Ross Buckley
For and on behalf of
KPMG
Wellington
16 May 2018
---
Infratil Limited 5 Market Lane, PO Box 320, Wellington, New Zealand Tel +64-4-473 3663 www.infratil.com
Infratil Limited
Results for announcement to the market
Reporting Period 12 months to 31 March 2018
Previous Reporting
Period
12 months to 31 March 2017
Amount (000s) Percentage change
Revenue from ordinary
activities
$NZ 1,783,500 (5.0%)
Profit (loss) from
ordinary activities after
tax attributable to
security holder
$NZ 60,500 (8.5%)
Net profit (loss)
attributable to security
holders
$NZ 60,500 (8.5%)
Interim/Final Dividend Amount per security Imputed amount per
security
Final 10.75 cps 4.1806 cps
Record Date 5 June 2018
Dividend Payment Date 18 June 2018
Comments: This announcement should be read in conjunction
with the attached Infratil Annual Report 2018, the
financial statements for the year ended 31 March
2018 contained in that Annual Report, Infratil 2018
Full Year Results Presentation, Infratil Limited
Parent Audited Financial Statements 2018 and
media release.
31 March 2018 31 March 2017
Net tangible assets per
security
$NZ 3.17 $NZ 3.19
Audit This report is based on financial statements which
have been audited. Infratil’s auditors have issued
an unqualified audit opinion, and a copy of the
audit report is included in the attached Annual
Report.
---
APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumber
Date
Nature of event
BonusIf ticked,
Rights Issue
Tick as appropriate
Issue
state whether:Taxable
/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change
X
whether:
InterimYear
X
SpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per security
Payment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
Supplementary
Amount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceWithholding Tax(Give details)
Foreign
FDP Credits
Withholding Tax(Give details)
Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date. In the case
of applications this must be the
last business day of the week.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
EMAIL: announce@nzx.com
Notice of event affecting securities
Infratil Limited
Phillippa HarfordDirectors Resolution
64 4 473366364 4 473238817052018
Ordinary sharesNZIFTE 0003S3 / ASX IFT
In dollars and cents
Retained earnings
$0.1075
Enter N/A if not
applicable
$$0.007465$0.041806
$
NZ Dollars$0.018971
Date Payable
Monday, 18 June 2018$60,122,403
Tuesday, 5 June 2018Monday, 18 June 2018
---
1
CAPITAL
GROWTH
Infratil Annual Report 2018
2
ANNUAL REPORT 2018
1
Infratil owns infrastructure businesses
that provide essential facilities and
services to individuals and
communities. Shareholders receive
good risk-adjusted returns if the
businesses provide satisfactory
services, are efficient, and risks are
well managed.
Infrastructure comprises the basic
physical and organisational structures
and facilities needed for the operation
of a society or enterprise. In the 24 years
since Infratil was established, what
constitutes infrastructure has evolved.
In 1994, ports, power plants, wires and
airports were infrastructure; today the
scope has widened in response to
changes in society, technology, and
consumer preferences.
Data storage and transmission is
increasingly sourced from specialist
infrastructure providers.
Social infrastructure includes
accommodation and care for those for
whom society has recognised
responsibility.
Airports have become regional gateways
with a much wider mandate than
offering passengers shelter and airlines
a safe airfield.
Energy providers were vertically
integrated entities which offered “take
it or leave it” service. They are now
segmented, specialist and closely
focussed on consumer preferences.
Along with changes to what constitutes
infrastructure has been the evolution of
business models and sources of capital.
Throughout, Infratil has maintained a
consistent approach to its goal of
providing its risk-adjusted returns by
seeking to invest:
•
Where demographic or core societal
factors are driving long-term demand.
•
Where Infratil has expertise and
influence.
•
Where Infratil has a competitive
advantage as an operator and a capital
provider, and where demand growth,
market structures and regulation
supports further investment in
capacity and capability.
Although the core features of Infratil’s
approach have not changed, some
aspects have. In part because of the
changes to the investment environment
and in part because of changes in the
priorities of Infratil’s shareholders. Infratil
invests in a portfolio of businesses. Some
are mature and strongly cash generative
(e.g. Trustpower, Wellington Airport),
some are early stage (e.g. Longroad
Energy). The portfolio approach reduces
risk through diversification, creates
stability of cash flows, and enables
Infratil to take a long-term approach to
early-stage developments.
A consistent feature of infrastructure
is its reliance on capital. Energy,
airports, data storage/transmission,
accommodation/care; all require
assets, buildings, structures,
equipment, and land.
Reflecting this, Infratil and its
businesses have invested
$3,993 million over the last decade.
This creates a distinct pattern of
earnings and capital growth. Capital is
deployed, structures are erected,
utilisation rises, earnings increase,
capital grows.
This annual report covers Infratil’s
operations, capital deployment, and
how the goal of capital growth is
being realised.
CAPITAL
GROWTH
ANNUAL REPORT 2018
2
ANNUAL REPORT 2018
3
ANNUAL REPORT 2018
4
Equity
Shareholders
Debt
BondholdersBoard
Control/GovernanceManagement
H.R.L. Morrison & Co
Cash/DebtBanks
Infratil
Financing
Subsidiaries
Envision Fund
Longroad Energy
51% Infratil
27% Tauranga Energy
Consumer Trust
Perth Energy
Snapper
ASIP
Infratil Infrastructure
Property
66% Infratil
34% Wellington
City Council
48% Infratil
48% Commonwealth
Superannuation Corporation
50% Infratil
50% New Zealand
Superannuation Fund
45% Infratil
45% New Zealand
Superannuation Fund
51% Infratil
27% Tauranga Energy
Consumer Trust*
100% Infratil50% Infratil
50% Commonwealth
Superannuation Corporation
CORPORATE
STRUCTURE
* Subsequent to balance date TECT sold 19.9% of its shareholding
5
INFRATIL CORPORATE STRUCTUREANNUAL REPORT 2018
Tilt Renewables
Infratil Infrastructure Property
ANU Student Accommodation
RetireAustralia
Wellington Airport
Canberra Data Centres
Trustpower
Longroad Energy
Perth EnergyNZ Bus
6
ANNUAL REPORT 2018
GOVERNANCE
& DIRECTION
Left to right: Humphry Rolleston, Alison Gerry, Mark Tume, Marko Bogoievski, Peter Springford and Paul Gough.
7
Infratil’s shareholders elect directors for three
year terms to represent them and to look
after their interests. Directors:
•
maintain a dialogue with shareholders;
•
participate in the formulation and
articulation of the Company’s strategy for
long-term value creation;
•
monitor strategy implementation, the
pathway to financial performance, risks
and legal compliance, and the evolution of
the strategy as circumstances change;
•
ensure effective articulation to external
stakeholders of strategy, goals, risks and
performance;
•
maintain awareness of societal and market
developments relevant to the Company’s
performance; and
•
offer diversity of perspective and
knowledge relevant to the Company.
Infratil has six directors of whom five are
independent of management. They have been
on the board for between two and 12 years.
Infratil’s directors also have an area of particular
responsibility monitoring the performance of
Infratil’s manager H.R.L. Morrison & Co
(“Morrison & Co.”).
Morrison & Co is a specialist manager of
infrastructure investments and performs this role
for Infratil under an investment management
agreement. Infratil benefits from having a
management team with great breadth and depth
of skills, however the board must be vigilant
about potential conflicts of interest and satisfied
that the cost is reasonable relative to alternatives.
During the last year the board’s monitoring of
Morrison & Co included commissioning an
external review of the management agreement,
which concluded that the current arrangements
remain fair to Infratil shareholders. In addition,
when the board undertook its annual externally-
facilitated review of its own capabilities and
performance it prioritised the issues of
independence and governance over potential
conflicts of interest. This review raised no
material concerns.
Further commentary on the role of the board,
the credentials of directors and their
remuneration are set out on pages 101-104
of this annual report.
MARK TUME
Chair. Independent. Appointed 2007.
Due for re-election in 2018
My obligation is to maintain ties with Infratil’s
diverse range of stakeholders and to ensure that
the board is delivering on the responsibilities set
out above.
My experience in finance and on the boards of
infrastructure companies (Transpower, Kiwi Rail,
NZ Refining) has given me an appreciation of the
sectors in which Infratil operates and the
operational, regulatory and financial risks it faces.
PETER SPRINGFORD
Director. Independent. Appointed 2016.
Last elected 2017
I have been the leader of a major industrial
company based in New Zealand and Australia
and of industrial businesses in Asia, as well as
the chair or director of companies which operate
in New Zealand and in international markets.
People are important; their safety; the need to
act with integrity in offshore markets just as we
would in New Zealand; and that top operational
performance and strong customer relationships
are key to long-term returns for shareholders.
PAUL GOUGH
Director. Independent. Appointed 2012.
Due for re-election in 2018
As a Kiwi who works in London I’m very aware of
how global events impact in New Zealand and
Australia.
In London I manage investments in similar fields
to Infratil’s, but with more development risk.
Achieving the best outcome requires the best
from people. The focus on performance and
people is consistent with what I see at Infratil.
ALISON GERRY
Director, Chair of the Audit &
Risk Committee. Independent.
Appointed 2014. Last elected 2016
My experience in finance and risk management
helps me appreciate Infratil’s strategic
opportunities and threats; from financial
markets, technology, regulation and the natural
environment.
Executing strategy is in part about allocating
capital and in part about developing a culture
which reflects the value we place on our own
people, our customers, and our communities.
MARKO BOGOIEVSKI
Director. Chief Executive. Appointed 2009.
Last elected 2017
Managing Infratil requires awareness of external
markets, a thorough understanding of each of
our businesses, an ability to develop and
articulate strategy, and discipline around risk.
In so many of our businesses I see change
accelerating and it’s not possible to anticipate all
the outcomes. But this is a backdrop that creates
opportunities.
HUMPHRY ROLLESTON
Director. Independent. Appointed 2006.
Last elected 2017
I have business experience in start-ups, property,
and a diversity of geographies and sectors.
I have been a director of large and small listed
New Zealand companies, and involvement in
charitable organisations.
I have a good appreciation of practicalities and how
to get the best from the people you work with.
GOVERNANCE & DIRECTION
8
ANNUAL REPORT 2018
MANAGEMENT
Left To Right
Infratil’s management
comprises people employed
by Infratil’s manager,
Morrison & Co, and those
employed by Infratil’s
subsidiaries and investee
companies.
Morrison & Co is an investment manager with
a specialist focus on the infrastructure
sector. In addition to managing Infratil it also
manages investments on behalf of a number
of superannuation funds; including the
New Zealand Superannuation Fund and the
Commonwealth Superannuation Corporation
which have both made investments in
partnership with Infratil.
Infratil benefits from its management having the
expertise of a larger and more experienced group
of individuals than a company of Infratil’s scale
could normally retain and from the manager’s
contacts and relationships.
MARKO BOGOIEVSKI
Chief Executive. Director of Infratil and
Longroad Energy
PHILLIPPA HARFORD
Chief Financial Officer. Director of Snapper
KEVIN BAKER
Chair of NZ Bus and Director of Canberra Data
Centres and Infratil Infrastructure Property
GREG BOORER
CEO Canberra Data Centres
JASON BOYES
Legal and commercial oversight. Director of
Wellington Airport and NZ Bus
TIM BROWN
Capital markets, and economic regulation
Chair of Wellington Airport
FIONA CAMERON
Group Treasurer and Risk Manager
DEION CAMPBELL
CEO Tilt Renewables
KELLEE CLARK
Legal, compliance, transaction structuring
and execution
PETER COMAN
Property and social infrastructure
Director of Infratil Infrastructure Property
HARRY COMINOS
Investment strategy
ROGER CRAWFORD
Australian energy sector activities
Director of Perth Energy
9
Left To Right
STEVEN FITZGERALD
Chair of Perth Energy, Director of RetireAustralia,
Trustpower and ANU Student Accommodation
MARK FLESHER
Capital markets and investor relations
ZANE FULLJAMES
CEO NZ Bus
PAUL GAYNOR
CEO Longroad Energy
BRUCE HARKER
Energy team. Chair of
Tilt Renewables
VINCE HAWKSWORTH
CEO Trustpower
MICHAEL HRUBY
Acquisition management and investment
performance
ANDREW LAMB
Development Director Infratil Infrastructure
Property
NICK LOUGH
Company Secretary and legal, compliance,
transaction structuring and execution
DAVID MCKINNON
Social infrastructure. Director ANU Student
Accommodation
MARK MUDIE
Social infrastructure. Director ANU Student
Accommodation
ANTHONY MUH
Asian operations and investment activities
PAUL NEWFIELD
Strategy, sector analysis and transaction
execution. Director Tilt Renewables
ALISON QUINN
CEO RetireAustralia. President of the Australian
Retirement Living Council
PAUL RIDLEY-SMITH
Chair of Trustpower
MATTHEW ROSS
Infratil Financial Controller
STEVE SANDERSON
CEO Wellington Airport
WILLIAM SMALES
Private markets investment activity. Director of
RetireAustralia and Canberra Data Centres
MIKI SZIKSZAI
CEO Snapper
VIMAL VALLABH
Energy team. Director Tilt Renewables
and Longroad Energy
MANAGEMENT
10
ANNUAL REPORT 2018
Each of Infratil’s businesses provides
services that are critical to its community
and customers. In addition to these
responsibilities, each also recognises its
obligations to its own people and to the
physical environment. A business is not an
end in itself. It represents a coming together
of people and resources with the intention of
delivering benefits to all stakeholders. Set
out below are four short case studies of how
Infratil’s businesses have recognised and are
delivering on their responsibilities.
EMPLOYEES,
CUSTOMERS,
ENVIRONMENT,
COMMUNITY
WELLINGTON AIRPORT & THE ENVIRONMENT
“Lyall Bay is an escape as much as a playground.
We would come for sunrise surfs before a school
day and for the evening swims and burgers by
the sea. Sometimes, even if the surf wasn’t
pumping we would just mess around in the
water, but either way, we always have a fun time.
The beach is a great part of our lives.“ Geena
Belle Lloyd Sanders and Isabelle Cushman.
Wellington Airport operates on a site created
by flattening hills and reclaiming sea. The
extension of the runway into Cook Strait now
under consenting involves the creation of
10 hectares of land using two million cubic
metres of fill. In addition to its physical impact
on the environment, the Airport hosts
approximately 100,000 aircraft movements a
year and the associated ancillary services of
refuelling, passenger embarkation, and so on.
An environmental impact is inevitable, so there is
a high level of commitment to reduce adverse
effects and to provide offsets. For instance, by
working with the local community to reduce the
effects of noise, including through an active
programme of home insulation, and by working
with local surfers to ensure they are fully
informed about the impact of extending the
runway seawall and about possible benefits as
well as costs, and through sponsorship of the
Lyall Bay Surf Club.
11
TILT RENEWABLES & ITS COMMUNITY
”What I love about the wind farm is that we
can go on farming, producing 500 bales of
fine merino wool a year and meanwhile
producing enough electricity to power a town
the size of Warrnambool. Its also been a boon
for the area, its brought people here and lifted
incomes, including mine.” Peter Coy, farmer
and landowner.
Tilt Renewables worked to ensure that
local people benefitted from the construction
and operation of the Salt Creek wind farm.
Construction contractors have been
encouraged to maximize their use of local
people and services and the project has
actively supported volunteer groups such
as the local fire service. In addition, the
operational project will provide annual
funding for an educational scholarship
programme and a community sponsorship
initiative, which elsewhere has contributed
to projects ranging from native vegetation
restoration, to local sports facilities and to
mental health improvement.
TRUSTPOWER & ITS STAFF
“I love working for a company whose values
align so closely with my own, especially our
community involvement. Coming to work every
day with the aim of engaging with, and making
a difference in, the lives of the people in our
communities is pretty special. The Trustpower
Community Awards are definitely a highlight too
– being able to celebrate and say thank you to
New Zealand’s volunteering community is very
humbling and rewarding”. Alice Boyd, Trustpower
Community and Communications Advisor.
Trustpower invests in both its local communities
and its employees. Annually it works in
EMPLOYEES, CUSTOMERS, ENVIRONMENT, COMMUNITY
24 communities across New Zealand to celebrate
their volunteers in a national award programme.
Its employees value the connection to the
community this programme provides. Trustpower
also prioritises investment in its Trustpower
employee community, increasing internal
capability via tailored training opportunities and
creating development opportunities for cross
functional work to share ideas and create impact
across traditional hierarchical lines for its
customers. Its people are proud to be part of the
Trustpower team of 780 people nationwide and
with 530 in its head office, Trustpower is one of
Tauranga’s largest employers.
CANBERRA DATA CENTRES & ITS CUSTOMERS
Canberra Data Centres was established with the
primary objective of meeting the data storage
and transmission requirements of government
agencies.
Its data halls are secured to government
standards along with 24 hours a day, 7 days
a week on-site security guards and CCTV
monitoring.
To compliment Canberra Data Centres’
Top Secret building classification, it operates
the SecureNetLINK service to supplement
customers’ internal network security and
governance mechanisms.
12
ANNUAL REPORT 2018
13
Underlying EBITDAF from continuing operations
increased 8%, operating cash flows rose 21%.
Total Underlying EBITDAF including
contributions from assets sold during the
year was $552.4 million.
The net surplus was down 8%. Depreciation, tax
and minorities were up $60.9 million. Interest
was down $9.4 million and revaluations were up
$47.4 million.
Reflecting the good operating and financial
performance and a strong balance sheet, the
dividend was increased for the seventh year in
succession.
Infratil undertook $325.9 million of internal
investment. Last year $231.9 million was
invested within platforms, $411.5 million was
invested buying 48% of Canberra Data Centres
and $84.8 million was invested in ANU Student
Accommodation.
Net debt at the end of the period was down
$133.6 million. Infratil retains a significant
capacity to undertake investment.
Trustpower delivered a 20% uplift in EBITDAF.
Wellington Airport hosted more than six million
passengers for the first time and is approaching
the end of its five year $300 million capital
investment programme.
Canberra Data Centres lifted its EBITDAF run rate
from A$50 million to A$69 million and started
construction of a new A$150 million data centre.
Tilt Renewables started construction of a
54MW wind farm in Victoria and progressed over
$3 billion of other generation projects.
Longroad Energy purchased 684MW of solar
and wind generation and established a
generation management capability.
NZ Bus recontracted two thirds of its services for
up to 12 years and won new service contracts in
the Bay of Plenty.
Perth Energy Holdings returned to EBITDAF
profitability after a very difficult period.
RetireAustralia progressed its provision of a
full-continuum of accommodation and care,
which is now available to 30% of residents.
HIGHLIGHTS
ANNUAL REPORT 2018
YEAR ENDED 31 MARCH20182017
Net surplus$60.5m$66.1m
Underlying EBITDAF (Continuing operations)$525.8m$488.0m
Net operating cash flow$295.8m$245.0m
Capital expenditure$325.9m$728.2m
Net debt (Net debt fell to 31% of capital)$779.7m$913.3 m
Dividends declared
16.75 cps15.75 cps
1. Underlying EBITDAF is a non-GAAP measure of financial performance, presented to show management’s view of the underlying business performance. Underlying EBITDAF represents consolidated
net earnings before interest, tax, depreciation, amortisation, financial derivative movements, revaluations, non-operating gains or losses on the sales of investments, and includes Infratil’s share of
its associates’ underlying profits (Canberra Data Centres, Longroad Energy and RetireAustralia). Underlying profit for RetireAustralia removes the impact of unrealised fair value movements on
investment properties.
14
ANNUAL REPORT 2018
As always, when we report on
Infratil’s performance we look
through two lenses; one
focused on operations and
strategy and the other on
capital values, investment and
shareholder returns.
More widely, the environment in which we
operate is at an interesting juncture. While all the
core themes that underpin our investments are
solid (decarbonisation, aging, data, air travel), it
seems that the period of “unconventional”
monetary policy is ending, the new New Zealand
Government is embarking on a programme of
infrastructure building, and technology
continues its transformation of markets for
consumers and utilities alike.
These developments mean uncertainty and
opportunity. The strength of our portfolio and
access to capital means that Infratil is well
positioned to benefit from financial markets
volatility. It is also well equipped to assist
Government with its plans for future
infrastructure requirements and the urgent need
to reduce greenhouse gas emissions and to
invest in mitigations.
Not only do we feel positive about Infratil’s
positioning for future developments, we have
high conviction that our existing businesses are
delivering earnings, dividend and capital growth
for Infratil’s shareholders.
OPERATIONS & FUNDING
Operationally, FY2018 was highly successful.
Trustpower produced an exceptional result care
of some unusual weather and its capable
management of the resulting opportunity.
Wellington Airport broke through the six million
passenger mark and is knocking on the door of
$100 million EBITDAF. Canberra Data Centres
confirmed a relationship with Microsoft Azure to
host its cloud services and produced a 30% uplift
in its earnings run-rate. Perth Energy completed
a major restructure and by the end of the period
was operating profitably. From a standing start
Longroad Energy is making excellent progress
building a renewable generation and servicing
business. NZ Bus produced credible earnings as
it undertook the difficult task of reducing its scale
to efficiently deliver the smaller number of
routes it is now contracted to provide.
Of course there were disappointments.
NZ Bus was not successful in a number of
the re-contracting rounds that occurred in
Auckland and Wellington. Tilt Renewable’s
generation and hence earnings were reduced
by unusually calm weather in Australia and
New Zealand. RetireAustralia experienced slower
unit resales and flat unit values (both being
industry-wide factors) alongside a modest
commissioning of new accommodation as it
reconfigured its development activity to
incorporate more aged-care.
Infratil maintained a comfortable buffer of funds
on deposit during the year. Infratil is in good
shape with regards to access to capital. Over the
year two Infrastructure Bonds matured and were
refinanced. The average interest rate on the
relevant debt fell from 8.3% per annum to
5.9% per annum, an annual interest saving of
$3.7 million.
CAPITAL INVESTMENT & VALUES
The annual capital outlay of $325.9 million was
satisfactory, but a little less than hoped for at the
start of the period. A couple of investment plans
are taking longer than expected to execute.
Nevertheless, as the discussion and images in
this annual report attest, Infratil’s businesses
have good momentum and are actively growing
their physical infrastructure.
Tilt Renewable’s A$105 million 54MW Salt
Creek wind farm in Victoria is on track to be
commissioned in July 2018. Tilt Renewables is
“shovel ready” to build a 336MW wind farm at
nearby Dundonnell and has progressed analysis,
consents and other preparatory work on a further
2,000MW of wind, 920MW of solar and 320MW
of storage assets. Tilt Renewables has over
$1 billion of projects it could start construction
on over the next year, subject to success in the
Victorian State renewable electricity auction and
Tilt Renewables’ ability to manage future
electricity price risks.
Longroad Energy has acquired 386MW of wind
and 298MW of solar generation and established
a services business which is managing these
facilities and a further 552MW of generation for
third parties. In addition to building a core
business, Longroad Energy is progressing
development projects, at least two of which are
close to starting construction.
Wellington Airport is in the midst of building a
134 room hotel, a 1,000 berth car park and
land-transport hub, expanding and refurbishing
its terminals, and renewing its taxiway. These
projects are part of a $300 million suite of
initiatives which will have finished by the end of
FY2019. Forecasts indicate that the Airport will
then start on a $250 million programme of
additional facility investments.
Canberra Data Centres’ new 21MW data centre
at its Fyshwick campus is on track to be
commissioned later this year. Once fully
operational this new facility will have cost
approximately A$150 million and Canberra Data
Centres is already planning a new 50MW centre
at its other campus at Hume.
At ANU Student Accommodation the Infratil
joint venture delivered 500 student
accommodation units for the 2017 university
year and expects to have a further 450 units
available for 2019.
REPORT OF THE
CHAIRMAN &
THE CHIEF EXECUTIVE
15
CHAIRMAN & CHIEF EXECUTIVE REPORT
RetireAustralia drew A$100 million of capital
from its shareholders to enable it to increase its
rate of development. While only a small number
of new units were delivered in FY2018 and the
target for FY2019 is also modest, from that point
on a substantial increase in available
accommodation is anticipated.
NZ Bus having concluded the arduous process of
re-contracting its routes, NZ Bus is now investing
in the necessary fleet.
Trustpower’s $27.9 million of investment was
allocated across various generation upgrades and
other core systems.
The values of our businesses have also mainly
experienced a positive period. It’s worth making
specific note of Canberra Data Centres. Infratil
purchased 48% of Canberra Data Centres in mid
2016 for A$386 million. At that time Canberra
Data Centres’ EBITDAF run-rate was A$50 million
per annum and its enterprise value was
A$1,075 million. Canberra Data Centres now has
an EBITDAF run-rate of A$69 million which is
forecast to be A$82 million within a year. Market
comparables suggest that multiples have further
strengthened, however just using the acquisition
valuation multiple gives a current value for
Infratil’s holding of A$540 million.
SHAREHOLDER RETURNS
Our objective is to provide Infratil’s shareholders
with good risk-adjusted returns. Primarily we
seek to achieve this by making good investments
which fit within our scope, and by ensuring that
our businesses and risks are well managed.
We also have to ensure that the market
recognises the value that has been created. This
is more than just providing lots of information.
We acknowledge that our portfolio is relatively
complex given the number of sectors and
jurisdictions within which we operate.
Strategically we are proposing the following
actions to improve the visibility of returns and
valuation of our portfolio:
• We are to simplify our portfolio of businesses.
By reducing the number, we hope that
shareholders will be able to focus on the more
material platforms.
• We will continue to provide useful asset-level
information on our businesses and our
objectives.
• To the extent possible we will provide
guidance as to future returns and goals at
both the asset and portfolio levels.
These may sound obvious, but each reflects
trade-offs, for instance owning fewer businesses
means owning fewer growth options. But we
believe the sharemarket is not fully, or even
reasonably, valuing Infratil and we intend to be
more proactive to improve this situation.
DIVIDENDS & GUIDANCE
Dividends for FY2018 amounted to 16.75 cents
per share. Since FY2011 full-year dividends have
risen from 6.25 cps. It is anticipated that the
dividend will continue to increase.
The final dividend of 10.75 cps fully imputed will
be paid on 18 June.
With a growing share of Infratil’s earnings
coming from outside of New Zealand the
availability of imputation credits is constrained
which means that it is unlikely that the dividend
will continue to be fully imputed. Our three year
ahead forecast indicates that over that period
imputation credits may not cover annual
dividends above 10 cps.
Guidance for underlying EBITDAF in the year to
31 March 2019 is for between $500 million and
$540 million ($525.8 million this year). The
guidance range is based on no material
acquisitions or divestments, and on normal wind
and hydro generation. In mitigation of a flat
guidance relative to FY2018, it should be noted
that FY2019’s range includes an assumption that
the value of hydro electricity generation is
forecast to be $25 million lower in FY2019.
In part this is because of the recent sale of
Australian generation assets and in part because
New Zealand’s generation levels were unusually
elevated in the year just concluded. Across the
remainder of the business earnings growth is
anticipated.
Our goals for our shareholders are to preserve
their capital, to provide a good income,
and to deliver capital growth. We are
confident that we can deliver. This is not an
era of certainties, but Infratil has good access
to capital and a portfolio of strong and
resilient businesses.
MARK TUME
Chairman
MARKO BOGOIEVSKI
Chief Executive
16
ANNUAL REPORT 2018
Infratil seeks to invest in sectors where something big is
underway. The key themes which now underpin where it is
allocating capital are population aging, decarbonisation,
air travel, and data.
In 2017 the New Zealand and Australian population of people
aged 85 or over rose 2.5% to 85,100 and 494,500 respectively.
Boeing and Airbus are both projecting Asia-Pacific air travel
to double within 12 to 13 years.
197 countries have signed the Paris Accord to cap global
manmade greenhouse gas emissions. In 2017 global emissions
of CO
2
are estimated to have amounted to 14 billion tonnes with
New Zealand contributing an estimated 76 million tonnes
(59 million tonnes after deducting offsets).
Its estimated that 2,500,000,000,000,000,000 bytes of
data are now generated a day (about 25 billion times as much
data as is used by an average connected New Zealand household).
IDEAS THAT
MATTER
17
CHAIRMAN & CHIEF EXECUTIVE REPORT
18
ANNUAL REPORT 2018
FINANCIAL
TRENDS
On these two pages we provide five graphs that set out Infratil’s assets,
capital investment, funding, earnings and cashflow/dividends over the
last decade. We have also sought to explain what has happened and why.
Infratil's Assets
0
10
20
30
40
50
60
70
80
90
100
%
Infratil's Capital Structure
0
5
10
15
0
100
200
300
400
500
600
2018
2018
Dividend, cents per share
$Millions
$Millions
EBITDAF, Free Cash Flows, Dividends
Sources of Consolidated EBITDAF
0
Wellington Airport
Other
NZ Bus
Tilt Renewables
Trustpower
2018
$Millions
Data
Other
Social
Transport
Energy
2009 2010 2011 2012 2013 2014 201720162015
0
200
400
600
800
1000
100
200
300
400
500
600
2018
Perpetual bonds
Equity (market value)
Net bank debt and dated bonds
Operating cash flow
Interest, tax, working capital
Dividend (rhs)
2009 2010 2011 2012 2013 2014 20172016 2015
2009 2010 2011 2012 2013 2014 2017
2016
2015
200
400
600
0
800
2009 2010 2011 2012 2013 2014 2017
2016
2015
0
500
1,000
1,500
2,000
2,500
3,000
2018
$Millions
ANU
Sold
Retire Australia
CDC
NZ Bus
Wellington Airport
Trustpower
Tilt Renewables
Other
2009 2010 2011 2012 2013 2014 20172016 2015
0
500
1,000
1,500
2,000
2,500
3,000
2018
$Millions
Infratil's Assets
0
10
20
30
40
50
60
70
80
90
100
%
Infratil's Capital Structure
0
5
10
15
0
100
200
300
400
500
600
2018
2018
Dividend, cents per share
$Millions
$Millions
EBITDAF, Free Cash Flows, Dividends
Sources of Consolidated EBITDAF
0
ANU
Other
Retire Australia
CDC
NZ Bus
Wellington Airport
Wellington Airport
Other
NZ Bus
Tilt Renewables
Trustpower
2018
$Millions
Data
Other
Social
Transport
Energy
Trustpower
Tilt Renewables
Sold
2009 2010 2011 2012 2013 2014 201720162015
2009 2010 2011 2012 2013 2014 20172016 2015
100
200
300
400
500
600
2018
Perpetual bonds
Equity (market value)
Net bank debt and dated bonds
Operating cash flow
Interest, tax, working capital
Dividend (rhs)
2009 2010 2011 2012 2013 2014 20172016 2015
2009 2010 2011 2012 2013 2014 2017
2016
2015
200
400
600
0
800
2009 2010 2011 2012 2013 2014 2017
2016
2015
Over the period, $3,993 million
was invested.
$1,960 million of this was undertaken
by Trustpower, Tilt Renewables,
Wellington Airport and NZ Bus.
A further $1,034 million was
internally invested across the rest
of Infratil’s businesses.
$999 million was allocated to
acquisitions.
The reason the total level of assets
remained relatively consistent over
the decade was that $2,180 million
was realised from divestment.
As noted above, Infratil’s total capital
investment over the decade has
amounted to $3,993 million
(divestments were $2,180 million).
This includes $1,023 million invested
into data centres and social
infrastructure assets.
Infrastructure is intrinsically capital
intensive. Its only by deploying capital
that it’s possible to generate compound
growth.
INFRATIL ASSETS
CAPITAL INVESTMENT
19
OPERATING CASH FLOWS & DIVIDENDS
Operating cash flows comprise EBITDAF
less payments of interest and tax and
any adjustment required for changes in
working capital (which can be up or
down). This has been relatively stable
over the last six years due to the same
factors which have determined EBITDAF.
The robust levels of cash earning have
supported the increase in the dividend
to Infratil’s shareholders.
UNDERLYING EBITDAF
INFRATIL FUNDING
INFRATIL: A DECADE OF FINANCIAL TRENDS
0
500
1,000
1,500
2,000
2,500
3,000
2018
$Millions
Infratil's Assets
0
10
20
30
40
50
60
70
80
90
100
%
Infratil's Capital Structure
0
5
10
15
0
100
200
300
400
500
600
2018
2018
Dividend, cents per share
$Millions
$Millions
EBITDAF, Free Cash Flows, Dividends
Sources of Consolidated EBITDAF
0
ANU
Other
Retire Australia
CDC
NZ Bus
Wellington Airport
Wellington Airport
Other
NZ Bus
Tilt Renewables
Trustpower
2018
$Millions
Data
Other
Social
Transport
Energy
Trustpower
Tilt Renewables
Sold
2009 2010 2011 2012 2013 2014 201720162015
2009 2010 2011 2012 2013 2014 20172016 2015
100
200
300
400
500
600
2018
Perpetual bonds
Equity (market value)
Net bank debt and dated bonds
Operating cash flow
Interest, tax, working capital
Dividend (rhs)
2009 2010 2011 2012 2013 2014 20172016 2015
2009 2010 2011 2012 2013 2014 2017
2016
2015
200
400
600
0
800
2009 2010 2011 2012 2013 2014 2017
2016
2015
0
500
1,000
1,500
2,000
2,500
3,000
2018
$Millions
Infratil's Assets
0
10
20
30
40
50
60
70
80
90
100
%
Infratil's Capital Structure
0
5
10
15
0
100
200
300
400
500
600
2018
2018
Dividend, cents per share
$Millions
$Millions
EBITDAF, Free Cash Flows, Dividends
Sources of Consolidated EBITDAF
0
ANU
Other
Retire Australia
CDC
NZ Bus
Wellington Airport
Wellington Airport
Other
NZ Bus
Tilt Renewables
Trustpower
2018
$Millions
Data
Other
Social
Transport
Energy
Trustpower
Tilt Renewables
Sold
2009 2010 2011 2012 2013 2014 201720162015
2009 2010 2011 2012 2013 2014 20172016 2015
100
200
300
400
500
600
2018
Perpetual bonds
Equity (market value)
Net bank debt and dated bonds
Operating cash flow
Interest, tax, working capital
Dividend (rhs)
2009 2010 2011 2012 2013 2014 20172016 2015
2009 2010 2011 2012 2013 2014 2017
2016
2015
200
400
600
0
800
2009 2010 2011 2012 2013 2014 2017
2016
2015
0
500
1,000
1,500
2,000
2,500
3,000
2018
$Millions
Infratil's Assets
0
10
20
30
40
50
60
70
80
90
100
%
Infratil's Capital Structure
0
5
10
15
0
100
200
300
400
500
600
2018
2018
Dividend, cents per share
$Millions
$Millions
EBITDAF, Free Cash Flows, Dividends
Sources of Consolidated EBITDAF
0
ANU
Other
Retire Australia
CDC
NZ Bus
Wellington Airport
Wellington Airport
Other
NZ Bus
Tilt Renewables
Trustpower
2018
$Millions
Data
Other
Social
Transport
Energy
Trustpower
Tilt Renewables
Sold
2009 2010 2011 2012 2013 2014 201720162015
2009 2010 2011 2012 2013 2014 20172016 2015
100
200
300
400
500
600
2018
Perpetual bonds
Equity (market value)
Net bank debt and dated bonds
Operating cash flow
Interest, tax, working capital
Dividend (rhs)
2009 2010 2011 2012 2013 2014 20172016 2015
2009 2010 2011 2012 2013 2014 2017
2016
2015
200
400
600
0
800
2009 2010 2011 2012 2013 2014 2017
2016
2015
As with the ten year asset profile, more
has happened than may appear at first
glance. The combined earnings of the
core businesses Trustpower/Tilt/
Wellington Airport have risen 38%, but
the net contribution of the balance has
risen 138%.
Looking forward, it is anticipated that
earnings will rise materially over the
next few years as recent investments lift
their earnings contributions.
Over the decade Infratil’s use of debt
has declined. Ten years ago, dated debt
made up 49% of Infratil’s capital. It is
now 22%. Perpetual debt contributed
about 9% of the funding throughout.
In part this has been due to a more
conservative approach to the use of
debt, which it reflects that over the last
couple of years Infratil’s need for debt
has declined. This has been because
capital has been available from the sale
of assets and because the planned rate
of capital investment has been slightly
slower than originally anticipated.
20
ANNUAL REPORT 2018
FINANCIAL
PERFORMANCE
& POSITION
CONSOLIDATED RESULTS
YEAR ENDED 31 MARCH
$MILLIONS
20182017
Operating revenue$1,783.5$1,876.5
Operating expenses($1,280.5)($1,374.7)
Depreciation & amortisation($193.8)($183.7)
Net interest($153.5)($162.9)
Tax expense($52.2)($15.7)
Revaluations$20.3($27.1)
Discontinued operations$15.4$18.0
Net profit after tax$139.2$130.4
Minority earnings($78.7)($64.3)
Net parent surplus$60.5$66.1
For FY2018 the average NZ$/A$ exchange rate was 0.9238 and the NZ$/US$ was 0.7149 (0.9418 and 0.7092 in FY2017).
Lower revenue and operating costs were largely due to a reduced level of activity at Perth Energy.
Net interest fell because of lower interest rates and lower average borrowing.
Revaluations include changes of value of hedges used to cover energy prices, interest rates and foreign exchange rates and asset revaluations.
Discontinued operations shows the net surplus of Green State Power. During the last year this company was sold by Trustpower for A$168 million, the
assets and were purchased in FY2014 for approximately A$65 million.
UNDERLYING EBITDAF
YEAR ENDED 31 MARCH
$MILLIONS
20182017
Trustpower$243.1$203.0
Tilt Renewables$112.3$131.7
Perth Energy($5.8)($14.1)
Wellington Airport$95.4$90.5
NZ Bus$33.4$43.7
RetireAustralia$18.3$31.4
Longroad Energy($13.8)($2.9)
ANU Student Accommodation $14.4$7.0
Canberra Data Centres$56.1$10.6
Metlifecare-$14.9
Parent/Other($27.6)($27.8)
Continuing operations$525.8$488.0
Discontinued operations$26.6$31.5
Total$552.4$519.5
21
BREAKDOWN OF CONSOLIDATED RESULTS
The following tables give the breakdown of Infratil’s consolidated results by business, for the last two financial years.
YEAR ENDED 31 MARCH 2018
$MILLIONSINFRATIL’S
SHARE
UNDERLYING
EBITDAF
D&AINTERESTTAXREVALUATIONS
ADJUSTMENTS
NET
SURPLUS
MINORITIESINFRATIL
SHARE OF
EARNINGS
Trustpower51%$243.1($44.3)($32.1)($44.9)($7.8)$114.0($56.5)$57.5
Tilt Renewables51%$112.3($86.9)($31.8)$2.0$1.3($3.1)$1.5($1.6)
Perth Energy80%($5.8)($5.7)($7.2)($3.1)-($21.8)$4.4($17.4)
Wellington Airport66%$95.4($23.6)($18.4)($4.2)$13.4$62.6($17.7)$44.9
NZ Bus100%$33.4($32.9)($5.6)$3.1($1.2)($3.2)-($3.2)
RetireAustralia
1
50%$18.3---($22.8)($4.5)-($4.5)
Longroad Energy
1
45%($13.8)----($13.8)-($13.8)
ANU Student Accommodation
1
50%$14.4----$14.4-$14.4
Canberra Data Centres
1
48%$56.1----$56.1-$56.1
Parent/Other($27.6)($0.4)($58.3)($5.1)$14.5($76.9)($2.8)($79.7)
Continuing operations$525.8($193.8)($153.4)($52.2)($2.6)$123.8($71.1)$52.7
Discontinued operations$26.6($2.4)($2.1)($6.5)($0.2)$15.4($7.6)$7.8
Total$552.4($196.2)($155.5)($58.7)($2.8)$139.2($78.7)$60.5
1. With RetireAustralia, Canberra Data Centres, ANU Student Accommodation and Longroad Energy, Infratil accounts for its share of their earnings.
YEAR ENDED 31 MARCH 2017
$MILLIONSINFRATIL’S
SHARE
UNDERLYING
EBITDAF
D&AINTERESTTAXREVALUATIONS
ADJUSTMENTS
NET
SURPLUS
MINORITIESINFRATIL
SHARE OF
EARNINGS
Trustpower51%$203.0($44.7)($37.8)($28.0)($16.4)$76.1($38.0)$38.1
Tilt Renewables51%$131.7($78.6)($33.8)($10.1)$8.2$17.4($6.0)$11.4
Perth Energy80%($14.1)($5.6)($5.1)$7.4$0.1($17.3)$3.5($13.8)
Wellington Airport66%$90.5($21.7)($21.5)($11.9)$8.4$43.8($15.0)$28.8
NZ Bus100%$43.7($32.3)($7.3)($1.2)($0.2)$2.7-$2.7
RetireAustralia
1
50%$31.4---($2.1)$29.3-$29.3
Longroad Energy
1
45%($2.9)----($2.9)-($2.9)
ANU Student Accommodation
1
50%$7.0----$7.0-$7.0
Canberra Data Centres
1
48%$10.6---($5.6)$5.0-$5.0
Metlifecare
1
20%$14.9---($16.2)($1.3)-($1.3)
Parent/Other($27.8)($0.8)($57.4)$28.1$10.5($47.4)(0.4)($47.5)
Continuing operations$488.0($183.7)($162.9)(15.7)($13.3)$112.4($55.6)$56.8
Discontinued operations$31.5($2.8)($2.8)($8.9)$1.0$18.0($8.7)$9.3
Total$519.5($186.5)($165.7)($24.6)($12.3)$130.4($64.3)$66.1
1. With Metlifecare, RetireAustralia, Canberra Data Centres, ANU Student Accommodation and Longroad Energy, Infratil accounts for its share of their earnings.
INFRATIL’S FINANCIAL PERFORMANCE & POSITION
22
ANNUAL REPORT 2018
CONSOLIDATED OPERATING CASH FLOW
YEAR ENDED 31 MARCH
$MILLIONS
20182017
Underlying EBITDAF $525.8$488.0
Net interest($147.1)($156.4)
Tax($77.9)($47.7)
Working capital and other($16.7)($66.7)
Discontinued operations$11.7$27.8
Operating cash flow$295.8$245.0
The lower interest cost resulted from lower interest rates and less borrowing. The tax rise was due to capital gains tax on Trustpower’s sale of its Australian assets and reversal of a deferred tax liability in
respect to the Group’s investment in Metlifecare in the prior year.
CAPITAL INVESTMENT
YEAR ENDED 31 MARCH
$MILLIONS
20182017
Trustpower$27.9$26.7
Tilt Renewables$90.5$6.3
Perth Energy$5.0$24.8
Longroad Energy
1
$30.6$33.2
Wellington Airport$85.1$79.3
NZ Bus$19.1$16.2
RetireAustralia
2
$35.9$37.8
ANU Student Accommodation -$84.8
Canberra Data Centres
2
$22.0$411.5
Other$9.8$7.6
$325.9$728.2
1. This is the amount Infratil invested into Longroad Energy.
2. These companies are not consolidated. The values shown for FY2018 are 50% of RetireAustralia’s capex and 48% of Canberra Data Centres.
INFRATIL’S FUNDING
YEAR ENDED 31 MARCH
$MILLIONS
20182017
Net cash of 100% subsidiaries ($221.8)($92.2)
Dated Infrastructure Bonds$769.6$773.6
Perpetual Infrastructure Bonds$231.9$231.9
Market value Infratil equity$1,733.8$1,629.8
Total capital$2,513.5$2,543.2
Net dated debt/total capital21.8%26.8%
Net debt/total capital31.0%35.9%
As at 31 March 2018 Infratil and 100% owned subsidiaries had $311.1 million of committed bank funding facilities of which $269.0 million was undrawn.
Infratil has guaranteed borrowing facilities of Perth Energy which as at 31 March 2018 amounted to $76.5 million ($74.1 million as at 31 March 2017) and
were drawn to $42.4 million ($47.7 million as at 31 March 2017).
Infratil guaranteed letters of credit issued by Longroad Energy which as at 31 March 2018 amounted to $67.3 million.
23
INFRATIL’S FINANCIAL PERFORMANCE & POSITION
INFRATIL’S ASSETS
YEAR ENDED 31 MARCH
$MILLIONS
20182017
Trustpower$893.0$734.8
Tilt Renewables$285.9$341.8
Perth Energy$61.7$73.4
Longroad Energy$16.0$33.2
Wellington Airport$471.9$414.5
NZ Bus$167.1$191.2
RetireAustralia$319.0$278.2
ANU Student Accommodation $96.1$91.2
Metlifecare-$237.9
Canberra Data Centres$453.2$426.3
Other$90.085.3
$2,854.0$2,908.0
For 31 March 2018, exchange rates of NZ$/A$ 0.9409 and NZ$/US$ 0.7203 were used (0.9142 and 0.6991 for 2017).
Values exclude 100% subsidiaries’ cash balances and deferred tax where CGT does not apply.
The Trustpower and Tilt Renewables values reflect the price of their shares on the NZX on the relevant dates.
Infratil has sold its interest in Metlifecare.
Most other changes in value reflect the individual companies movements in shareholders’ funds resulting from retaining earnings, losses or revaluations,
and with those domiciled offshore the effect of changes in the value of the NZ dollar. Infratil also advanced a further $54 million to RetireAustralia and
$31 million to Longroad Energy.
Infratil’s investment of $67 million into Longroad Energy is shown as having a value of $16.0 million. In part this is because Longroad Energy has repaid
capital. A fuller explanation is provided later in this Report.
“Other” includes Snapper, Infratil Infrastructure Property, ASIP and Envision.
SHAREHOLDER RETURNS & OWNERSHIP
Infratil’s share price rose from $2.91 on 31 March 2017 to $3.10 on 31 March 2018. Fully imputed dividends of 10.0 cents and 6.0 cents per share were
paid in June and December 2017 respectively.
Had the dividends been reinvested in Infratil shares at the time they were paid they would have provided a fully imputed return of 5.7% per annum on the
31 March 2017 share price. Added together, the dividend and share price movement resulted in shareholders receiving a return of 12.2% per annum
Over the last seven years Infratil’s compound return after tax to shareholders has been 13.1% per annum. Seven years is a useful period as it removed the
market slump and recovery associated with the Global Financial Crisis. Analysis of the seven years shows:
FULL SEVEN YEARSMOST RECENT THREE YEARSPRIOR FOUR YEARS
Infratil return13.1% per annum4.6% per annum19.9% per annum
NZX50G returns13.4% per annum12.5% per annum14.1% per annum
While the returns to Infratil over the seven years (since 31 March 2011) have been close to those of the NZX50 (both calculations include dividends), it is
apparent that Infratil’s returns were excellent for four years and then modest for three.
Management believes that the under-performance is largely because the sharemarket’s value of Infratil does not fully reflect the future growth potential
held within a number of its platforms. In particular, the future development pipelines within Tilt Renewables, Longroad Energy, Canberra Data Centres and
RetireAustralia are largely discounted by the market notwithstanding the accretive returns being delivered by current projects.
Over the last five years, Infratil has invested approximately $2,363 million and returns are expected to rise gradually. It’s a rare investment where the day
one returns are the best returns, and it has proven to be difficult to get share market recognition of the earnings growth potential. A number of initiatives to
improve this are set out in the report of the Chair and the CEO.
24
ANNUAL REPORT 2018
OWNERSHIP
It is estimated that less than 20% of Infratil’s shares changed hands over the year.
Infratil repurchased 775,000 shares for $2.4 million (average price $3.11). No shares were issued.
New Zealand domiciled ownership was stable at slightly over 75%. The ten largest New Zealand institutional holdings amounted to 115 million shares as at
31 March 2018, the same as a year ago. The ten largest offshore institutional holdings rose to 93 million shares from 91 million a year prior. Interests
associated with ex management employees and directors sold 4.6 million shares.
31 MARCH 201831 MARCH 2017
MILLION
SHARES
%MILLION
SHARES
%
New Zealand retail investors28651%27649%
New Zealand institutions11721%12122%
Management / other
1
336%387%
Offshore
1
12422%12522%
560560
1. As at 31 March 2018 12.2 million shares shown as held by interests associated with a retired director were deemed to be held by an offshore party, giving total offshore ownership of 24.3%.
Infratil has approximately 23,000 individual shareholders and 16,000 bondholders.
24 YEAR TRACK RECORD
0
1000
2000
4000
3000
60%
40%
20%
0
-20%
-40%
201820162014201220102008200620042002200019981996
Accumulation Index
Accumulation
Index
Annual
Return
Dividend Return Capital Return
Over the 24 years since Infratil listed, compound after tax returns have been 16.6% per annum.
Someone who invested $1,000 in Infratil shares on 31 March 1994 and subsequently reinvested all dividends and the value of rights issues, etc.
(i.e. who neither took money out nor put money in) would, as at 31 March 2018, own 12,741 shares worth $39,497.
25
BONDHOLDERS
MATURITYYIELD 31 MARCH 2018RELATIVE TO GOVT BONDSYIELD 31 MARCH 2017RELATIVE TO GOVT BONDS
November 20203.90% per annum+2.00% per annum4.80% per annum+2.40% per annum
February 20224.10% per annum+1.80% per annum5.00% per annum+2.45% per annum
June 20244.75% per annum+2.25% per annum5.70% per annum+2.95% per annum
BONDHOLDERS
BONDHOLDERS
Information that is likely to be of interest to
holders of Infratil’s Infrastructure Bonds, which is
not included elsewhere in the annual report, is
set out below.
THE INFRASTRUCTURE BOND YEAR
IN REVIEW
Over the year, Infratil repaid two maturing bonds
and issued two new bonds:
• Repayment of $66.3 million of bonds paying
an 8.5% per annum coupon that were issued
in January 2011.
• Repayment of $81.1 million of bonds paying
an 8.0% per annum coupon that were issued
in November 2011.
• Issuing $100.0 million of 5.65% per annum
coupon bonds maturing in December 2022.
• Issuing $43.4 million of 6.15% per annum
coupon bonds maturing June 2025.
Infratil has previously established an explicit
$30 million bond buy back capability, but over
the year the market operated effectively and no
bond buy backs occurred. The main purpose of
buying back bonds would be to remedy market
illiquidity and unfair prices.
The start and end of year yields of three of
Infratil’s bonds is set out in the table, along with
their yield-spread relative to government bonds.
The decline in New Zealand Government Bond
rates over the year (the benchmark 5 and 10 year
bonds fell in yield from 2.56% per annum to
2.38% per annum and from 3.28% per annum to
2.89% per annum respectively) saw all
creditworthy bonds follow suit.
The most intriguing (and positive) development
for holders of Infratil’s bonds fell to those with
the Perpetual Infratil Infrastructure Bonds (PiiBs).
In November 2017 the annual coupon rate for
these bonds was reset at 3.50% per annum
which is an all-time low. However, from 31 March
2017 to 31 March 2018 the price of the PiiBs in
the market rose from $65 per $100 to $79 per
$100. Someone who bought them at the start of
the year and sold at the end earned a return of
27% per annum.
If the rise in price is logical, it can be explained
by two factors. One is that as the yields on other
bonds fell, even a coupon of 3.5% per annum
becomes more attractive. The second is that
investors anticipating higher interest rates in the
future prefer a security which resets its rate
annually.
Further explanation of the PiiB can be found on
Infratil’s website.
CONTINUOUS DISCLOSURE OF
INFORMATION
As Infratil has shares and bonds listed on the NZX
it is required to continuously disclose
information which could be relevant to investors.
This includes:
• Annual and interim reports which are released
each May and November. They provide
financial statements, a summary of key
developments and activities, and guidance as
to expectations of short term earnings and
investments.
• Update newsletters which give in-depth
coverage of topics relevant to Infratil’s
businesses. Market reports which give
periodic coverage to the operating activities of
Infratil’s businesses and interesting market
influences.
• Occasional announcements on matters which
could be material to the value of Infratil’s
shares and bonds, such as changes in
personnel, transactions, financial results,
payments to share and bond holders, and so
on.
• Infratil hosts an annual investor day where
management present on investment market
conditions, strategies and specific business
plans. The presentations are available on
Infratil’s website.
INFRATIL’S CAPITAL STRUCTURE
Infratil’s capital structure means lender rights are
tiered. A lender to, say, Trustpower will have
direct recourse to the assets of Trustpower and no
recourse to the assets of Infratil. A lender to
Infratil will have recourse to Infratil’s assets
including its shareholding in Trustpower, but no
direct recourse to the assets of Trustpower.
There is also a distinction between the rights of
the banks that lend to the Infratil 100% group
and the rights of Infratil’s bondholders. The
banks have preferred recourse to Infratil’s
shareholdings (in companies such as Trustpower)
and other assets of members of the Infratil 100%
group that provide a guarantee to the banks.
The upshot is that Infratil’s bondholders have
rights to all of Infratil’s assets and are not limited
to the assets of just one subsidiary, but their
recourse to assets of Infratil’s subsidiaries is only
after the direct recourse of other lenders and
creditors.
As at 31 March 2018, the Infratil group debt
comprised:
• $1,526.9 million of net debt of subsidiaries in
which Infratil had less than a 100% interest.
(This included $42.4 million of Perth Energy’s
borrowing which was guaranteed by Infratil.
None of the other debt was guaranteed by
Infratil.)
• $1,002 million of Infratil Infrastructure Bonds.
• The wholly-owned group also had
$222 million of net bank deposits.
These amounts do not include the borrowings
of the companies in which Infratil owns less
than 50%. Infratil does not guarantee any of
the debt or other liabilities of these companies
which include Canberra Data Centres,
RetireAustralia, ANU Student Accommodation
and Longroad Energy.
26
ANNUAL REPORT 2018
TRUSTPOWER
Trustpower experienced a year in which a lot
went right. There was some good fortune with
the weather and Trustpower’s management of
that opportunity, and others, was excellent.
•
Trustpower’s New Zealand generation was
319 GWh above the average of the previous
five years (taking into account the purchase
of King Country Energy).
•
The average New Zealand wholesale price for
electricity was 1.8cents/kwh above the five
year average.
Having hydro catchments which received more
than their usual rainfall in a year when the
systemically important South Island lakes
received less is fortunate, but it reflects a feature
of Trustpower that is often overlooked. Trustpower
has hydro facilities in the Bay of Plenty, Taranaki,
Horowhenua, Nelson, Marlborough, Canterbury,
the West Coast, and Otago. No other power
company has a portfolio with such diversity and
hence such opportunity to take advantage of
weather patterns.
It’s also worth noting that it is necessary that
Trustpower does make hay when the weather
allows. The occasional good years are factored
into its value.
During the year Trustpower sold its Australian
hydro generation subsidiary Green State Power
for A$168 million, the equivalent of A$700,000
per GWh of average year generation. These
assets were acquired by Trustpower in 2014 for
A$65 million or A$270,000 per GWh . The rise in
value reflects an increase in Australian electricity
prices, the increasing value of back-up
generation in that market, and the excellent
acquisition price.
Trustpower also concluded the acquisition of
King Country Energy (KCE). The generation assets
of KCE are now owned 80% Trustpower and 20%
the King Country Electric Power Trust. The
enterprise value of KCE was $142 million. Its
generation produces 216GWh in a year of
average hydrology.
Trustpower’s utility retailing also experienced
another positive year. Total customers rose in a
market which is pitting larger gentailers, telcos,
and start-ups in a highly competitive
environment. Over the year, two thirds of the
new customers Trustpower attracted took at least
two utility services and now over 100,000 of
Trustpower’s customers take at least two services.
Over the next year the electricity industry is to
have its third Ministerial inquiry since 2006.
Both previous Labour and National Governments
undertook such reviews and consequently
introduced changes. The last Labour
administration guaranteed the supply of gas to
Genesis Energy’s gas-fired power station in
Huntly to reduce the risk of power shortages,
while National made changes to the wholesale
hedge and generation markets to increase
competition in the South Island. It is expected
that recommended changes this time are likely
to focus on “equity” issues such as pricing
provided to low users.
Of probably greater importance than the
electricity sector review is Government’s
aspiration to see New Zealand’s generation
produce no greenhouse gas emissions in a year
of average rainfall. This will require a large
investment in new hydro, wind, geothermal and
possibly solar capacity. A rough estimate is that
about $5 billion will have to be invested. As the
time frame is two decades it’s certainly
achievable, but there are plenty of lessons from
Australia and the UK about how not to go about
this. As experts looking at those markets agree, a
high price for greenhouse gas emissions is a
much cheaper and more effective policy tool than
any version of direct intervention. Recent policy
announcements which could curtail the
availability of natural gas could have serious
consequences given the role of gas power
generation as the source of the electricity
system’s security of supply.
During the year, Trustpower’s second largest
shareholder, the Tauranga Energy Consumer
Trust (TECT) initiated a consultation with its
beneficiaries (who are Trustpower’s customers in
the Tauranga and Western Bay of Plenty) over
changes to its income distribution and how it
holds its capital funds. The essence was that TECT
would become a charitable trust quite
independent of Trustpower and its local
customers.
Trustpower opposed the proposal and during
consultation with beneficiaries TECT found that a
majority opposed the proposal so it was
withdrawn. Going forward, if TECT wishes to again
review its structure it is hoped that it will work
with Trustpower to provide beneficiaries with
choices that reflect the underlying purpose of the
Trust, which is to hold its assets for the benefit of
the consumers.
YEAR ENDED 31 MARCH201820172016
New Zealand retail electricity sales1,784GWh1,895GWh1,820GWh
New Zealand generation 2,235GWh2,017GWh1,588GWh
Australian generation284GWh359GWh254GWh
Electricity accounts273,000276,000277,000
Gas accounts37,00033,00031,000
Telecommunication accounts87,00076,00062,000
Av. NZ market spot price
1
8.8c/kwh5.2c/kwh6.4c/kwh
NZ EBITDAF
2
$243.1m$203.0m$195.7m
Green State EBITDAF$26.7m$31.5m$12.3m
Investment spend$27.9m$26.7m$115.0m
Net debt$469.8m$660.8m-
Infratil’s holding value
3
$893.0m$734.8m-
1. 8.8c/kwh is the same as $88,000/GWh (ie. 1 GWh = 1,000,000 kwh)
2. Excludes $16.7 million of demerger costs in FY2017
3. NZX market value at period end
27
TRUSTPOWER
51% INFRATIL
27% TAURANGA ENERGY CONSUMER TRUST
22% PUBLIC
INFRATIL’S INVESTMENT OBJECTIVES
Over the last decade the New Zealand electricity
market has experienced an excess of generation
capacity/supply and correspondingly depressed
electricity prices. Looking forward the supply/
demand balance will change as older coal/gas
power stations are retired and as transport shifts
from being powered by oil to using electricity.
Trustpower has been the most dynamic of the
New Zealand gentailers showing leadership in
developing generation in Australia, using its
hydro storage for irrigation, and through the
development of multi-utility retailing. It has now
demerged its wind farms into Tilt Renewables.
Opportunities are expected in New Zealand as
wholesale electricity prices firm and additional
generation capacity is required.
28
ANNUAL REPORT 2018
Waipori
Highbank
Coleridge
Waihopai
Branch River
Hinemaiaia
Mangahao
Esk
Wheao and Flaxy
Matahina
Kaimai
Kuratau
Bream Bay (diesel)
Motukawa
Wairere & Mokauiti
Mangorei
Piriaka
Patea
Cobb
Arnold
Dillmans
Kaniere Forks
Paerau/Patearoa
Wahapo
As the map and the graph show, Trustpower’s generation is
geographically diversified which provides a hedge against dry years
as usually a drought in one region is matched by wet weather
somewhere else.
It also means that if one region has high prices (there can be
substantial regional price variability) Trustpower can generate in that
region. Protection against adverse regional electricity prices can be
important for a company with customers spread around the country.
It is almost certain that over the next two decades some of the
country’s existing coal and gas fired stations will be retired and
replaced by wind, geothermal and possibly solar and hydro. Wind
and solar generate when its windy and sunny. Geothermal tends to
generate continuously. None fits the bill of being able to fill supply
gaps which occur in a normal day as well as seasonally.
Replacing a gas-fired power station with a wind powered one is to
lose one which people control and to gain one which nature controls.
It must increase the value and importance of the people controlled
ones that remain, including Trustpower’s.
TRUSTPOWER REGIONAL GENERATION (Av. YEAR)
OtagoBay of Plenty
Canterbury
King Country
West Coast
Hawkes Bay
MarlboroughTaranaki
NelsonHorowhenua
29
EBITDAF & GENERATION
Year ended 31 March
Over the last ten years Trustpower’s
hydro generation has risen via
acquisition of operating plant and small
scale development projects. Fluctuations
come from rainfall changing from one
year to the next.
EBITDAF has shown some volatility
reflecting hydrology conditions, but the
trend has been flat. Increased
generation has been largely offset by
lower wholesale prices and increasing
retail market competition.
NZ EBITDAF PER UNIT OF
NZ GENERATION AND THE
AVERAGE NZ MARKET PRICE
OF ELECTRICITY
Year ended 31 March
Trustpower’s success as a utilities
retailer, and with its irrigation
activities, have ensured that earnings
per unit of generation have remained
comfortably above the wholesale
market value of the generation.
But this hasn’t offset the effect of
New Zealand’s surplus generation
capacity on wholesale electricity
prices.
CUSTOMERS AND RETAIL
ELECTRICITY SALES
Year ended 31 March
The success of Trustpower’s utility
retailing offer is apparent from the
graph.
However, electricity sales per
customer have fallen by over a
quarter over the period, while costs
per customer have been reasonably
stable.
0
500
1,500
1,000
2,000
2,500
3,000
2018
GWh
$50
0
2009 2010 2011 2012 2013 2016 2017 2015 2014
$100
$150
$200
$250
EBITDAF
$Millions
$300
NZ Hydro Generation (GWh)
Australian Hydro Generation (GWh)New Zealand EBITDAF
Total EBITDAF
0
12
10
8
6
4
2
2018 2009 2010 2011 2012 2013 2016 2017 2015 2014 2009 2010 2011 2012 2013 2016 2017 2015 2014
Cents/kwh
$80,000
$60,000
$40,000
$20,000
0
$100,000
$120,000
$140,000
EBITDAF
per GWh of
generation
EBITDAF per GWh
NZ Market price
(Cents/kwh)
Customer
Accounts
0
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
GWh
200,000
150,000
100,000
50,000
0
250,000
300,000
350,000
400,000
2018 2009 2010 2011 2012 2013 2016 2017 2015 2014
Electricity Accounts:TelcoGas
Retail Electricity Sales (GWh)
TRUSTPOWER
30
ANNUAL REPORT 2018
Operationally, Tilt Renewables experienced the
downside of relying entirely on wind to power its
582MW of generation. Output was 1,796GWh
down 263GWh on the prior year and the fall in
revenue was reflected in EBITDAF which was
$103.8 million, down from $124.0 million.
Fluctuations in generation are to be expected
and illustrate an important point about the
intermittency of wind generation and hence
the need for electricity systems to have back-up.
All markets that are quickly transitioning from
thermal (ie. controllable) to renewable (often not
controllable) are grappling with the cost of back
up and how to provide it.
Tilt Renewable’s primary goal is to build a large
portfolio of generation under management.
This entails optimising over three requirements:
•
Generation costs. In essence this means
having good sites and choosing the best-fit
technology. Places that are sunny and/or
windy and are well placed relative to
transmission networks.
•
Hedges or contracts to reduce risk from future
electricity prices. Electricity prices are hard to
forecast. Tilt Renewables can accept some of
this risk, but has limited capability although
the highly contracted nature of the portfolio
allows flexibility.
• Fit for purpose funding. This is the flip side
of a project’s exposure to electricity price
fluctuations. If all the electricity price risk is
transferred to a buyer of the electricity then
the project’s lower risk will suit high levels of
debt funding. The more that electricity price
risk is retained, the more the funding needs
to be equity.
Tilt Renewables is developing a huge portfolio of
projects to be “shovel ready”. So that as electricity
price hedges and funding are secured projects
can be progressed.
The list of projects is on the folowing pages.
Each represents a major work stream and
investment, but each is difficult to value until
construction is actually underway. To summarise
just four on the list:
Salt Creek is a 54MW wind project in south
Victoria which is under construction at present
and expected to generate 172GWh in an
average year. The project’s cost is budgeted at
A$105 million. It is connected to the grid by a
49 kilometre 66Kv transmission line. All the
electricity has been sold to Meridian Energy
to 2030.
Dundonnell is a 336MW wind project located
near Salt Creek. It has an estimated total cost of
A$600 million and could produce sufficient
electricity for about 140,000 homes and, relative
to coal-fired generation, reduce annual emissions
by 670,000 tonnes. A part of the output has been
offered into a tender being run by the State
Government to buy renewable generation. A
Government decision is expected by the end of
September.
Storage could involve batteries or pumped-
hydro which would involve pumping water from
one lake to another when electricity is plentiful
and then using the stored energy when the
system has energy shortages.
One project under review could generate
300MW for four to five hours, sufficient for about
200,000 homes. The capital cost is estimated to
be about A$400 million. The South Australian
State Government has provided Tilt Renewables
with a grant to partially fund the cost of assessing
the merits of the energy storage projects.
Waverley is a 130MW wind project located in
south Taranaki. It is fully consented and believed
to be one of the lowest cost new generation
projects available in New Zealand.
The cost of building Tilt Renewables’ entire
portfolio of projects would be in excess of
$3 billion, that isn’t expected at least in the short
term, but there is every prospect that at least a
third will be committed over the next two years.
This will require Tilt Renewables to raise equity
and debt, either on its balance sheet or by selling
down projects. There is good investor demand to
buy renewable generation which has long-term
power sales agreements.
YEAR ENDED 31 MARCH201820172016
Australian generation1,225GWh1,305GWh1,201GWh
New Zealand generation 571GWh744GWh724GWh
Australian revenueA$121.7mA$127.7mA$114.3m
Average price9.9c/kwh9.8c/kwh9.5c/kwh
Australian contracted sales95%96%95%
New Zealand revenueA$36.2mA$46.8mA$48.0m
Average price 6.3c/kwh6.3c/kwh6.6c/kwh
New Zealand contracted sales100%100%-
EBITDAFA$103.8mA$124.0mA$124.7m
Investment spendA$83.6mA$6.0mA$4.3m
Net debtA$593mA$544m-
Infratil’s holding value
2
$285.9m$341.8m
1. 9.9c/kwh is the same as A$99,000/GWh (ie. 1GWh = 1,000,000kwh). All prices are in A$
2. NZX market value at period end.
TILT
RENEWABLES
31
TILT RENEWABLES
51% INFRATIL
27% TAURANGA ENERGY CONSUMER TRUST*
22% PUBLIC
* Subsequently TECT sold 20%
INFRATIL’S INVESTMENT OBJECTIVES
Australia is undergoing a rapid shift from
coal-fired electricity generation to renewables.
To deliver this outcome requires very
substantial investment in new generation.
Tilt Renewables has the intellectual and
financial capital to undertake a material part
of this investment. Its immediate goal is to
double assets under management by 2020.
32
ANNUAL REPORT 2018
QLD Wind
70MW (wind)
NSW Wind Project
400MW (wind)
Blayney
10MW (wind)
Crookwell
5MW (wind)
Rye Park
300MW (wind)
Dundonnell
336MW (wind)
Salt Creek*
54MW (wind)
Waverley
130MW (wind)
Kaiwera
240MW (wind)
VIC Wind Project
300MW (wind)
Palmer
300MW (wind)
Waddi
105MW (wind)
40MW (solar)
Snowtown (Stage I)
101MW (wind)
Snowtown (Stage II)
270MW (wind)
Snowtown Solar/Storage
45MW (solar)
20MW (battery)
QLD Solar Projects
770MW (solar)
Mahinerangi (Stage I)
36MW (wind)
Mahinerangi (Stage II)
160MW (wind)
Tararua (Stage I & II)
68MW (wind)
Tararua (Stage III)
93MW (wind)
Solar projects
Wind projects
Existing generation
* Under construction
33
EBITDAF & GENERATION
Year ended 31 March
The graph shows the trajectory
of the generation and earnings
of the assets that now make up
Tilt Renewables.
It has been some years since
Tilt Renewables’ New Zealand
generation capacity rose. Australian
generation has risen via the
development of new wind farms,
augmented by a couple of small
recent acquisitions.
EBITDAF PER UNIT OF
GENERATION
Year ended 31 March
The stability of Tilt Renewables’
earnings per unit of generation
reflect that most of Tilt Renewables’
output is sold on fixed price
variable quantity contracts. Last year
less than 5% of Tilt Renewables’
generation was sold on the
uncontracted market.
0
500
1,500
1,000
2,000
2,500
2018 2009 2010 2011 2012 2013 2015 2016 2017 2014
GWh
$30
0
$60
$90
$120
$150
EBITDAF
A$Millions
NZ Generation (GWh)
Australian Generation (GWh)
EBITDAF
2018 2009 2010 2011 2012 2013 2016 2017 2015 2014
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
0
(A$)
EBITDAF per GWh (A$)
TILT RENEWABLES
Generation and projects
MW
Existing Australia385Two large wind farms SA. Two small ones NSW
Existing New Zealand197Two wind farms NI. One wind farm SI
Salt Creek54Under construction. All output sold to Meridian
Dundonnell VIC336Power purchase terms on offer to Victoria Government
Waddi WA105Wind
Waddi WA40Solar
Snowtown SA115Solar + 20MW of battery storage
Palmer SA300Wind
Vic Wind VIC300Wind
Rye Park NSW300Wind
NSW Wind NSW400Wind
QLD Wind QLD70Wind
QLD Solar QLD770Solar
Waverley NI130Wind
Mahinerangi 2 SI160Wind
Kaiwera Downs SI240Wind
34
ANNUAL REPORT 2018
LONGROAD
ENERGY
In the less than two years since being
established, Longroad Energy has delivered an
impressive set of milestones. Their variety
illustrates the heterogenous and dynamic
character of the US electricity generation market.
Owning & Managing Generation: Longroad
Energy has employed a team to manage
generation assets and it has purchased three
going-concern vehicles which were established
in the past to own and fund generation. With
each there are opportunities to release capital,
to enhance their value by upgrading or
expanding the generation capacity, and to
provide recurring income from plant
management and energy sales.
• Federal Street Solar owns 297MW of solar
generation spread over more than a dozen
states with all output sold on fixed price
contracts.
• Minnesota Wind owns 80MW of wind
generation with all output sold on contract.
Work is under way to determine whether the
turbines and blades warrant renewal to
increase their output.
• Milford Wind in Utah owns 306MW of wind
generation with the potential to increase
output. Electricity is sold to the Southern
California Public Power Authority.
Development Projects: The Longroad Energy
team are working on over 6,000MW of wind
and solar generation projects in over 20 states.
The three most advanced of these are
coincidentally in Texas and involve 626MW of
solar generation and 238MW of wind and in
aggregate will cost approximately US$1,500
million if progressed to commissioning.
With these projects Longroad Energy has
arranged consents and agreements for use of the
land, construction, and grid connection. It has
firm pricing for the generation plant and the cost
of its installation, the required debt funding and
tax credits, and for the sale of the output for
15-20 years.
Whether the projects are retained (which would
involve Infratil providing equity capital) or sold
prior to commissioning will depend on the
value placed on them by institutional investors.
Longroad Energy and Infratil are reviewing the
options at present.
Financial Flexibility: The three shareholders
have provided an initial commitment of
US$100 million. In addition there has been
conditional support provided to letters of credit
issued by Longroad Energy as a part of the
projects that have been acquired.
Over the last year, Longroad Energy has drawn
on the US$100 million commitment as the
acquisitions and projects outlined above have
progressed, and repaid capital as other sources
of funding have become available.
As at 31 March 2018, Infratil had invested, over
the two years, $66.8 million into Longroad
Energy by way off equity ($63.8 million) and
shareholder loans ($3.0 million) and received
back distributions of $28.9 million. Because of
Longroad Energy’s book losses, Infratil’s
holding had a book value of $16.0 million
as at 31 March 2018.
For the twelve months to 31 December 2017
(Longroad Energy’s financial year) Longroad
Energy reported a net loss of US$22.6 million.
This included depreciation, amortisations, and
interest expenses related to the generation
ownership vehicles which have been acquired as
well as development costs actually incurred by
Longroad Energy. Non-development activities
actually delivered a profit of $1.1 million.
Over time as Longroad Energy grows its
portfolio of generation it will provide more
recurring income and transparency. However,
in the short term, for Infratil’s shareholders
Longroad Energy is likely to represent an
interesting, but hard to value, portfolio of
activities. In recognition of this, Infratil is to
consider linking Longroad Energy’s delivery
of cash development earnings with dividend
payments to Infratil shareholders.
YEAR ENDED 31 MARCH 2018
Infratil investment amount$66.8 million
Infratil capital received back$28.9 million
Infratil book value$16.0 million
Infratil’s share of Longroad Energy’s net income($13.8 million)
EBITDAF
1
(US$5.6 million)
Depreciation/Amortisation
1
(US$8.4 million)
Interest
1
(US$8.6 million)
Net surplus before tax
1
(US$22.6 million)
Operating cash flow inc. development costs
1
(US$5.3 million)
Owned generation684MW
Managed generation1,236MW
Employees74 people
1. Longroad Energy has a 31 December financial year. These figures are for the year ended 31 December 2017.
35
LONGROAD ENERGY
45% INFRATIL
45% NZ SUPERANNUATION FUND
10% MANAGEMENT
INFRATIL’S INVESTMENT OBJECTIVES
Longroad Energy was established as a
development vehicle focused on building the
next generation of utility-scale renewable
assets in the United States. The thesis is that
an experienced development team with deep
operating capability and a flexible remit will
create opportunities to invest in a broad array
of renewable assets as the U.S. migrates away
from subsidised investment in renewables.
Longroad is expected to produce a series of
development and work-out profits, as well as
a core portfolio of operating assets and
recurring services revenues. The investment is
also expected to provide insights into the
economics and trends at the cutting edge of
renewable generation which will be applied
across Infratil’s overall portfolio. Longroad’s
immediate priority is to deliver the first set of
realised development gains from the
extensive pipeline of opportunities that has
been established across a range of wind and
solar opportunities.
36
ANNUAL REPORT 2018
WELLINGTON
AIRPORT
Wellington Airport hosted 173,000 more
domestic and 7,000 more international
passengers than the prior year. The growth was
above budget.
Fluctuations in growth annually and over longer
periods reflect the dynamics of the airline market.
Last year’s domestic increase was mainly due to
Air New Zealand’s incremental additions of
capacity and strong competition by Jetstar on
Dunedin and Nelson routes. Air New Zealand’s
move to larger aircraft has created opportunities
on services with lower passenger demand, and in
central New Zealand Sounds Air has done a good
job expanding its network.
Internationally, the flat net outcome included
reduced airline capacity on the Tasman
balanced by growth on Fiji Airways and
Singapore Airlines services. The year ahead is
more positive; following the decision by
Air New Zealand to cease collaborating with
Virgin Australia both airlines have announced
new services, and Singapore Airlines is
upgrading its service by routing it via Melbourne
rather than Canberra. The new route offers
more convenience, more interconnection
options and a quicker travel time. It is hoped
that the airline’s next step will be to introduce
new aircraft and to increase the service to daily,
from its current four times a week.
In the domestic market, the most positive
development may be Jetstar’s reintroduction of
jet services with Queenstown. This is popular with
locals and Queenstown is “must see” for many
international visitors. In FY2019 the route will
have 260,000 seats available, up 600% from the
37,000 seats of a decade ago.
In FY2019, Wellington Airport will conclude the
$300 million development programme started
four years ago. The final deliveries are the hotel,
the domestic terminal refurbishment, the
renewal of the airfield taxiway, and the multi-
level car park and transport hub. Airport
management are now scoping out the capital
investment programme for the following five
years. Initial estimates are for $250 million of
capital outlays over this period.
At the end of FY2018 Infratil had owned
66% of Wellington Airport for almost two
decades and had overseen $570 million of
development investment. The result is that
Wellington Airport is extremely efficient, it has
the lowest per-passenger operating cost of any
jet airport in Australasia, and is very popular
with users with the second highest user rating
in Australasia.
Next year Wellington Airport will again
consult with its major airline customers to set
aeronautical charges. Indicative of the good
working relationship with airlines, they have
agreed to a postponement of this while
Wellington clarifies its likely investment
programme.
The Airport is involved with two controversial
initiatives reflecting its extremely small site and
its growth. Consultation is underway with the
adjacent golf club to purchase land to enable the
accommodation of larger and more aircraft. The
Airport’s construction of the car parking building
at $72,000 per park was part of its initiatives to
stay within its land footprint, but vertical parking
of aircraft is not possible.
The other initiative is the extension of the
runway 355 metres to the south. This was
delayed by 18 months due to a succession of
court cases which sought to clarify how the Civil
Aviation Authority should interpret its
regulations. The final court decision was close to
an affirmation of CAA’s historic approach and the
Airport has resubmitted its application to have
CAA indicate what runway safety features will be
required once the runway is extended. Knowing
this means that the safety features can be
incorporated in the construction.
The delay means that its likely to be mid 2019
before construction consents could be available
and perhaps a minimum of three years after that
before the first long-haul service could take
advantage of a longer runway to link central
New Zealand directly with Asia or North America.
While progressing construction is taking longer
than hoped, the merits of the initiative are
unchanged. It was recently calculated that 83%
of the world can reach 100 of the world’s top
tourist locations with a single flight. A two stop
itinerary is a material impediment when
competing for tourists.
YEAR ENDED 31 MARCH20182017
Passengers Domestic5,249,358 5,076,479
Passengers International 895,605 888,427
Aeronautical income $76.2m $70.3m
Passenger services income$40.3m $37.0m
Property/other $12.2m $12.2m
Operating costs ($33.3m)($29.0m)
EBITDAF $95.4m $90.5m
Investment spending $85.1m $79.3m
Net debt $400.1m $349.6m
Infratil cash income $37.9m $38.9m
Infratil’s holding value
1
$471.9m $414.5m
1. Infratil’s share of net assets excluding deferred tax at period end
37
WELLINGTON AIRPORT
INFRATIL’S INVESTMENT OBJECTIVES
It is now almost two decades since Infratil
acquired its 66% shareholding in Wellington
Airport. Over that period, annual passenger
numbers have risen from 3.5 million to
6.1 million. This has required the investment
of $570 million into facilities which has
driven annual earnings from $15.5 million
to $95.4 million.
The Airport has benefitted from people’s
increasing propensity to fly and the dynamic
airline market. Both factors are expected to
continue and as long as the regulatory
environment allows, it is anticipated that the
Airport will continue to invest in its own
activities and to grow its returns and value.
Incidentally; in 1998 Wellington Airport had
127,000 aircraft movements and employed
104 people, last year that was 95,000
movements and 107 people.
66% INFRATIL
34% WELLINGTON CITY COUNCIL
38
ANNUAL REPORT 2018
FIJI
Since Fiji Airways initiated Wellington-Nadi services
• Wellington-Fiji traffic (direct and via Auckland) +47%
• Competitor capacity +67%
• Wellington-Fiji direct +242%
SINGAPORE
Since Singapore Airlines initiated Wellington-Singapore
services
• 86% increase in the number of Singaporeans flying
to Wellington
• 83% in the number of visitors from India
• 20% increase in the total Asian traffic
• International visitors to New Zealand spent
$11.7 billion last year. 14% of this was spent in
central New Zealand
• Asian visitors spent $3.5 billion in New Zealand but
only 7% in central New Zealand
Improving international connectivity is critical if tourism
is to be spread around New Zealand
Wellington
Auckland
78% now
fly direct
52% used to fly
via Auckland
Fiji
39
EBITDAF & PASSENGERS
Year ended 31 March
Over the ten years EBITDAF rose from
$65 million to $95 million.
Passenger numbers lifted by 889,000.
On average an additional 67,200
domestic passengers each year and an
additional 32,200 international travellers.
THE COST OF TRAVEL
Year ended 31 March
Over the ten years, consumer prices
rose 19%.
The cost of domestic New Zealand air
travel has risen 28%.
The cost of international air travel for
New Zealanders has fallen 21%.
It illustrates how much more competitive
the international air travel market is, and
helps explain why international traffic has
grown faster than domestic.
$20
$60
$40
$80
$100
0
1
2
3
4
5
6
7
2018 2009 2010 2011 2012 2013 2016 2017 2015 2014
Passengers
Millions
EBITDAF
$Millions
Domestic passengers
International passengers
EBITDAF
$0
$5
$10
$15
$20
20182009 2010 2011 2012 2013 201620172015 2014
$ Income Per
Passenger
Aeronautical incomeServices income
International air travel cost indexDomestic air travel cost index
Statistics New Zealand
80
90
100
110
120
130
140
Index
20082009 20102011 2012 2013 2014 2017201820162015
CPI
WELLINGTON AIRPORT
AERONAUTICAL & SERVICES INCOME
Year ended 31 March
Wellington Airport’s 25% increase in
EBITDAF/Passenger over the period (to
$15.54) reflects better passenger services,
an increase in property income, and good
cost control.
Wellington has the lowest per passenger
costs and aeronautical charges of
New Zealand’s international airports.
AERONAUTICALREV/PAXCOST/PAX
Auckland$17.65$5.79
Wellington$12.49$3.22
Christchurch$14.81$5.85
Queenstown$13.33$5.07
From Airport Disclosures
40
ANNUAL REPORT 2018
NZ BUS
The year to 31 March 2018 included several
important milestones for NZ Bus.
Contract and pricing negotiations were
concluded with Auckland Transport and Greater
Wellington Regional Council. This resulted
in agreement on a series of contracts for up to
12 years requiring around 650 buses.
Alongside the re-contracting of Auckland and
Wellington services, NZ Bus also won a 9 year
contract to become the main provider of public
transport in the Western Bay of Plenty. In
awarding the contract to NZ Bus, the Bay of
Plenty Regional Council noted that NZ Bus
presented the best combination of price and
quality and that the council’s procurement team
was particularly impressed by the increased
driver pay that it offered. The new services start
in December and will involve approximately
86 buses.
Across the Auckland, Wellington and Western Bay
of Plenty contracts NZ Bus’s fleet will comprise
over 740 buses operating out of 13 depots. This
provides a strong industry position for NZ Bus
when combined with the location of its depots,
fleet profile, technology and people. The
Company is well placed to grow its provision of
public transport services, revenue and earnings
in the future.
NZ Bus is also working towards the transition
steps required before the new services go live.
Extensive consultation has been completed in
Wellington and is well underway for Auckland
staff on the reorganisation required to meet new
service requirements.
In some areas the impact is moderate, but for
others the changes are significant. For instance in
Wellington’s Hutt Valley NZ Bus will be no longer
be running many services. The Company is highly
appreciative of the good will and input from staff
during this difficult but required period of
change, and for their service over many years.
NZ Bus has built a strong health and safety
culture and is widely recognised for its
commitment to innovation, value creation,
and its proactive approach to environmental
management.
Another area of change is represented by the
desire by central and local government to see
widespread introduction of electric vehicles.
These buses present many challenges, both
operationally and commercially, and NZ Bus is
trialling options and building its understanding
and capability. Two electric buses have received
certificates of fitness and are under-going road
testing and NZ Bus hopes to be in a position to
announce further details of its progress in the
near future.
Infratil is undertaking a strategic review of
NZ Bus with a view to maximising value and
employee and other stakeholder outcomes.
It is expected that this process will be concluded
within the next few months. Infratil will continue
to update the market as material developments
unfold.
The $33.4 million EBITDAF included $6.4 million
of one-off costs associated with re-contracting
and the associated changes.
YEAR ENDED 31 MARCH20182017
Patronage north34,248,220 37,330,208
Patronage south 20,961,696 20,911,727
Bus distance (million kilometres) 40.0 43.9
Bus numbers 1,001 1,072
Passenger income $109.6m $130.6m
Contract income$103.8m $91.8m
EBITDAF $33.4m $43.7m
Capital spending$19.1m $16.2m
Infratil’s holding value $167.1m $191.2m
1. Infratil’s share of net assets excluding deferred tax at period end
41
NZ BUS
100% INFRATIL
INFRATIL’S INVESTMENT OBJECTIVES
IInfratil acquired NZ Bus in 2005 in the
expectation that increasing road congestion in
Auckland and Wellington, a social desire to
reduce transport emissions, and the potential for
bus public transport to be rapidly and cheaply
expanded all created a platform for growth.
The business also offered many areas where it
could be managed more efficiently and with
more focus on users.
Buses were rebranded to reflect the community
they served, WakaPacific for South Auckland,
Valley Flyer for the Hutt Valley, etc. The Snapper
payment system was developed and installed. A
new fleet of electric trolley buses was introduced
in Wellington. Depots were upgraded and staff
were provided with better facilities.
Transport authorities have now introduced a new
bus contracting regime which is a game changer.
It makes Councils responsible for increasing
patronage, significantly de-risks operator revenue
(Councils now take most patronage and fare risk)
and creates an environment for councils to grow
public transport. New government initiatives are
also encouraging public transport growth.
Accordingly, there is an excellent prospect of bus
public transport growing rapidly, for exactly the
reasons Infratil anticipated in 2005.
42
ANNUAL REPORT 2018
CANBERRA
DATA CENTRES
The highlight of the year for Canberra Data
Centres (CDC) was signing an agreement with
Microsoft Azure for the latter to use CDC’s data
centres as a part of its provision of cloud services
in Australia. It’s easiest to understand this by
looking at the historical evolution:
• Initially a company, individual or government
department stored their data on their own
premises in their own computer and/or
storage device.
• Data owners then started to store data off-site.
Often to ensure there was a second copy if the
office/home computer or disk were lost.
• Increasingly the data owner sought to
regularly access and change this remote data.
• Data owners began to share their data (for
instance when a passport is scanned at an
airport, simultaneously Immigration will be
asked “is this person allowed entry?” Police
will be asked “any outstanding fines?” Social
Welfare “any outstanding childcare
obligations? IRD “student loans?”.
• Sharing data storage (co-location) reduces cost
and makes it faster/cheaper for, say, Police to
share data with Immigration and it allows
consistent standards of security and access.
• Next came Microsoft Azure and the cloud.
Azure offers ways for companies to use
Microsoft tools (Word, Excel, PowerPoint,
Outlook, Publisher, etc.) and data storage/
processing capability.
There is now an active “data ecosystem”, where,
for instance, a company stores data (e.g. A record
of its employees) and another company uses that
data to create a service (e.g. Payroll). Both
companies can be clients of Azure.
Azure operates 140 data centres worldwide and
in Canberra it has chosen to use CDC’s rather
than to build its own because they are fully
accredited as secure facilities and offer several
enduring advantages for government agencies.
A government agency which owns highly
confidential social or security information/data,
or which operates critical infrastructure has
many challenges. Data is expanding at an
immense rate. Many parties want access to
the data to deliver their core services, other
parties want access to the data for information
purposes, and others want to provide services
to the data owner.
While unit costs are falling, the total cost is rising
because of the volume increase. Security is
paramount. Constant access is an imperative.
Back-up is yet another must-have.
What CDC has shown with the Azure agreement
is that it offers something even a US$740 billion
colossus like Microsoft would struggle to
replicate. And by partnering with Azure, CDC can
ensure that its primary users have a full suite of
data storage and management tools and access
to a full range of accredited service providers.
In the background other developments are also
strengthening CDC’s position. The Australian
Government passed the Security of Critical
Infrastructure Act and has imposed stringent
rules to protect data sovereignty and security.
Globally the data storage industry is
consolidating into the “hyperscale” massive
providers (in Europe a data centre with 1,000MW
is under construction!) and specialist niche
providers. CDC is firmly ensconced in the second
group but via Azure is also in the former group.
CDC delivered EBITDAF of A$55.8 million for the
twelve months, which included A$33.1 million
for the last six months. It reported an earnings’
“run rate” as at 31 March 2018 of A$69 million
and indicated that this is expected to rise to
A$83 million by the end of the following year.
The Run Rate measure of EBITDAF reflects the
March 2018 monthly earnings adjusted for
signed contracts.
At present CDC operates 39MW of capacity at its
four data centres with a A$150 million addition
of a further 20MW of capacity due for
commissioning later this year. A further 50MW
capacity increase is now planned for the Hume
campus.
YEAR ENDED 31 MARCH20182017
Capacity39MW39MW
Utilisation78%58%
EBITDAFA$55.8 mA$47.5m
Contribution to InfratilNZ$31.6mNZ$10.6m
CapexA$45.8mA$66.5m
Net debtA$330.5mA$290.4m
Infratil holding valueNZ$453.2mNZ$426.3m
43
CANBERRA DATA CENTRES
INFRATIL’S INVESTMENT OBJECTIVES
The digitalisation of data has exploded and
information of every imaginable type is being
stored and accessed. As costs have fallen,
demand has rocketed. Computers, smart
phones, TVs, and an endless procession of
smart equipment are both generating data
and using data from external sources.
That this growth is not about to slow is
illustrated by a piece of technology that is just
starting to arrive; autonomous cars. Every day
such a vehicle is in operation it generates and
transmits 156 times as much data as was
required by the Apollo 11 landing craft to get
to and from the moon in 1969.
The immense increase in data that is being
stored and accessed has spawned specialist
storage requirements and provision. Canberra
Data Centres provides Infratil with exposure to
a sector growing at a phenomenal rate which
must invest in capacity to meet demand.
48% INFRATIL
48% COMMONWEALTH SUPERANNUATION CORPORATION
4% MANAGEMENT
44
ANNUAL REPORT 2018
RETIRE
AUSTRALIA
YEAR ENDED 31 MARCH201820172016
Residents4,968 5,267 5,245
Serviced apartments465 486 484
Independent living units3,509 3,442 3,334
Unit resales238 319 376
Resale cash gains per unitA$131,513A$113,000A$106,000
New unit sales51 105 102
New unit average priceA$621,588A$571,467 A$535,300
Occupancy receivable/unit
1
A$104,306 A$94,550 A$79,600
Embedded resale gain/unit
1
A$43,112 A$39,300 A$28,300
Underlying profit A$33.7m A$59.1m A$38.8m
Capex A$66.4m A$71.1m A$38.1m
Net external debt A$153.3m A$219.8m A$206.8m
Infratil’s holding valueNZ$319.0mNZ$278.2mNZ$252.9m
1. The values are estimates of average per unit value at that point in time. What RetireAustralia would have received in cash for
deferred occupancy fees and capital gains if all residents left and the occupancy rights were resold on that particular date. The
resale values were estimated by independent valuers based on market and actual transactions.
RetireAustralia is undergoing transition from an
accommodation provider to a provider of a
continuum of accommodation and care so that
residents who need assistance can receive it in
or near their own homes.
Achieving this transition requires two obvious
steps. Specialist amenities must be built,
ranging from apartments for people with low
mobility to hospital facilities. And alongside
this, the necessary care capabilities must
be developed.
Home Care: The ultimate objective is for all
residents to be able to access all the care they
need in their own homes, and to also have
choices of other forms of accommodation if that
becomes preferable. To ensure fairness and to
reduce cost it is desirable that residents have
access to both government and private care. The
latter point is coming to prominence as the
Australian Government shifts how it provides
assistance to the elderly; away from “come to us”
to “we will come to you”.
By 31 March 2018, 30% of RetireAustralia
residents (over 1,500 people) had access to care
and the intention now is to extend this to all
residents.
Development: The objective is to deliver
300 units a year, from an historic rate of 100.
Deliveries in FY2018 and FY2019 are well down
on even the historic rate as RetireAustralia
stopped progress on a number of developments
in favour of facilities consistent with the
long-term vision. As shown in the table, after
the hiatus the rate of delivery is then expected
to lift markedly and to that end shareholders
committed a further A$100 million of equity.
The delivery pipeline is set out in the table:
YE 31 MARCH2019202020212022
Existing villages11943475
New villages-142156134
Total units11236190209
These contracted developments are part of a total
pipeline of over 1,100 units, which will underpin
the plan to increase the rate of delivery to
300 units a year, which is expected to require
additional equity.
One of the new developments which contributes
to the expansion is at Burleigh Golf Club in
Brisbane. It is believed that this model will have
many applications. The Club cedes land for the
village (of approximately 180 apartments) and in
exchange receives funding so it can develop its
course and facilities and support its ongoing
services. Residents will enjoy a good location, a
pleasant outlook and access to Club facilities.
The less salubrious side of some retirement
village operators received the media spotlight in
June 2017. This had a chilling effect on the sector
as people were reluctant to purchase
accommodation in a retirement village while the
sector was being demonised on TV. The worst
effected operator saw unit sales fall 42%. While
RetireAustralia is free of the practices criticised
and was completely untouched by the media
campaign, it too saw unit sales fall 9% and its
vacancy rate rise from 5% to 6%.
RetireAustralia is acutely aware of the need to
provide appropriate pastoral care of its residents
and to be completely open and fair in its
commercial dealings. To that end, RetireAustralia
has standardised its resident contracts, to ensure
they are simple, transparent, have no “hidden
charges”, and generally meet resident preferences
for stable costs. It’s very closely modelled on the
retirement village occupancy contract which is
almost universal in New Zealand.
RetireAustralia also continually monitors and
invests in its services and staff, both to ensure
standards are maintained, and to comply with the
government requirements that come with the
provision of funding for “in home care”.
Financially, RetireAustralia delivered an
underlying profit of A$33.7 million which was
down from last year’s A$59.1 million.
Development margins were down A$7.4 million
because of the lower number of units delivered
while management costs were up A$4.4 million
reflecting the work being done to boost the
development pipeline and to introduce care.
Revaluations were lower as the residential
property market flattened out after last year’s
increase.
45
RETIRE AUSTRALIA
50% INFRATIL
50% NEW ZEALAND SUPERANNUATION FUND
INFRATIL’S INVESTMENT OBJECTIVES
There are roughly 500,000 people in Australia
over 85 years old. When the youngest of these
individuals was 50 years old, only slightly more
than 100,000 Australians was over 85.
Many elderly people seek accommodation and
care to suit their reduced mobility and personal
and social needs, and they have the capital to
support this. However, society has also accepted
a welfare obligation, especially when medical
treatment or intensive care is required.
RetireAustralia was conceived, by its previous
owners/managers, to provide accommodation
with features which suited retired people. The
objective now is to develop RetireAustralia to
offer a “full continuum” of accommodation and
care. So that an elderly resident knows that a full
range of facilities and services will be available
in their own homes for as long as they wish. For
governments which both recognise an
obligation to the elderly and worry about the
cost, the objective is to ensure that there is as
much private care and funding as possible and
as much public support as is required.
For Infratil, RetireAustralia provides investment
exposure to a high growth sector and a
restructuring opportunity.
46
ANNUAL REPORT 2018
AUSTRALIAN NATIONAL
UNIVERSITY STUDENT
ACCOMMODATION
When Infratil and the
Commonwealth
Superannuation Corporation
acquired the economic
interest in the ANU Student
Accommodation in
August 2016 it comprised
3,250 fully occupied units
(either apartments or rooms
in halls of residence).
Later that year the JV received another 500 units
so that 3,750 were available for students
attending ANU for the 2017 academic year.
They too were fully occupied in 2017 and 2018.
The University is now building a further
450 units and it is anticipated that the JV will
acquire these so they can be available for the
2019 academic year. When this occurs Infratil
and its partner will provide equity and further
bank funding will be drawn.
These additional units are part of the Kambri
Union Court development being undertaken
by ANU. Once open in 2019, Kambri will be the
largest and most profound change to the ANU
campus since its establishment. It combines the
best elements of existing campus life, adding
educational, cultural, physical and social facilities
for the benefit of the university community.
It will certainly make it even more attractive for
students to reside on campus.
Infratil’s original thesis when making this
investment was that it would deliver solid
inflation-protected cash earnings and provide
opportunities to put additional capital to
work, to reduce risk and to increase returns.
This is occurring.
It is also a showcase for a university partnering
with long-term capital providers. ANU has been
able to free up its balance sheet and progress
developments such as Kambri. Students have
benefited from having both the University and
the private partners working to invest in better
facilities. And the JV partners have been able to
manage the facilities so as to reduce risk and
capture the benefits of 100% occupancy.
For the year to 31 March 2018 Infratil received
income of NZ$14.4 million (NZ$7.0 million
the previous year for an eight month holding
period).
The holding was revalued up to A$90.4 million
from A$83.4 million. The independent valuer
recognised the improved cash flows and market
discount rates.
47
ANU STUDENT ACCOMMODATION
INFRATIL’S INVESTMENT OBJECTIVES
Universities attract students on the basis of
their academic faculties and their holistic
impact. This can take the form of sporting or
cultural activities which build bonds amongst
the students, support programmes to help
students transition into university life, and
living conditions which build personal bonds
and life skills.
The Australian National University is taking a
proactive approach to make sure that its
students are offered affordable, safe, and
communal accommodation in halls or
apartments. ANU is not alone.
However, while the University’s rationale is
apparent, it requires a lot of capital. Infratil in
partnership with the Commonwealth
Superannuation Corporation acquired an
economic interest in the student
accommodation owned by ANU. It is a
material investment in a sector where
demand and the need for capital is growing.
50% INFRATIL
50% COMMONWEALTH
SUPERANNUATION CORPORATION
48
ANNUAL REPORT 2018
OTHER
INVESTMENTS
PERTH ENERGY HOLDINGS
(80% INFRATIL)
Infratil’s Investment Objectives
Western Australia, (WA) like New Zealand,
operates an electricity industry that is
entirely isolated (not connected to any
other market). State electricity consumption
is about the same as
New Zealand’s although its generation
mix is very different, being predominantly
gas (58%) and coal (34%), although
renewables (solar and wind) are growing.
The state government owns much of the
state’s distribution, generation and
retailing, and restricts competition in the
household market. In 2007 when Infratil
initially invested in Perth Energy it was
expected that there would be an opening
up of the WA market with opportunities to
invest in generation and retailing following.
Instead, deregulation of the market has
been a slow and bumpy process.
After two very difficult years there are positive
signs that Perth Energy is recovering with the
business delivering a positive EBITDAF of
A$0.5 million over the second half of FY2018.
Instrumental in this turnaround has been a
restructuring of Perth Energy’s wholesale supply
arrangements, a closing out of unprofitable
legacy customer contracts, and a revitalised sales
team focused on dual fuel (electricity and gas)
sales to the small and medium enterprise market
and large commercial and industrials. The
business is well placed to take advantage of a
likely reduction in the retail contestability
threshold that will materially expand the
available market.
Over the past year Perth Energy’s Kwinana power
station has been running regularly in response to
the changing power system operating model and
has made a material contribution to lowering
Perth Energy’s wholesale electricity costs.
As the fastest starting power plant in the WA
market, Kwinana also plays an important role
supporting the deployment of intermittent
renewables in Western Australia.
YEAR ENDED 31 MARCH 20182017
Generation revenueA$29.8m A$16.6m
Retail revenueA$245.8mA$319.8m
Other revenueA$13.8mA$7.0m
Operating costs($294.8m)(A$356.7m)
EBITDAF(A$5.3m)(A$13.3m)
Net loss (A$20.2m) (A$16.3m)
Net external debt A$25.2m A$29.2m
Infratil’s holding
valueNZ$61.7mNZ$73.4m
SNAPPER SERVICES
(100% INFRATIL)
Infratil’s Investment Objectives
Snapper was established to provide a
high-tech and low-cost public transport
ticketing system which could be used by
NZ Bus and other public transport
operators. It delivered on its establishment
objectives, but struggled to gain support
from NZ public transport agencies, even as
it has forged a positive reputation working
with public transport bodies offshore in
places as diverse as Ireland and Latvia.
Snapper’s reputational highpoint for the year
was being Runner Up at London’s Annual
Transport Ticketing Technology Award.
Closer to home, Snapper is transitioning from
serving NZ Bus to providing ticketing services for
Greater Wellington Regional Council’s regional
bus services. Starting in the Wairarapa, Snapper
will provide GWRC with a complete ticketing
system, including a concessions management
system to support new tertiary fares.
INFRATIL INFRASTRUCTURE PROPERTY
(100% INFRATIL)
Infratil’s Investment Objectives
Through its portfolio of businesses Infratil
is a substantial land owner. Rather than
always leaving it to such businesses to
undertake their own land development, or
to sell surplus land so that others can
develop it, IIP was established.
IIP has access to the necessary expertise
and capital to ensure that as much value as
possible is created and extracted by Infratil.
IIP’s priority role has been to provide NZ Bus
with fit-for-purpose depots for its buses and to
develop and on-sell land released from depots.
The last year has been a period of considerable
activity, in part because of NZ Bus requiring less
depot space and, in part, as a part of a series of
long-term development initiatives.
• IIP sold its residual interests in the New Lynn
development that was undertaken with
Auckland Council. While the sale has
terminated that stage of the JV, the parties
are continuing to work on a number of other
potential nearby developments.
• IIP sold two properties which had previously
been used as bus depots and were now no
longer required for that purpose.
• The largest development IIP is engaged on
involves 1.7 hectares in Auckland’s waterfront
Wynyard Quarter which where the new
America’s Cup village is to be built. This will be
a staged development and it is hoped that the
first commitments are made in FY2019.
• The other large project IIP is progressing is in
Kilbirnie Wellington. This involves relocating
the NZ Bus depot to modern purpose built
facilities which suits the bus company’s fleet,
and the development of the old depot site
which is owned by IIP.
As at 31 March 2018 IIP’s book value was
$33.9 million. Over the year it contributed
$4.0 million to Infratil as it undertook the asset
sales noted above.
49
OTHER INVESTMENTS
Perth Energy
Snapper Services
Infratil Infrastructure Property
50
ANNUAL REPORT 2018
ENVISION VENTURES FUND
(INFRATIL HAS COMMITTED US$25 MILLION
WITH US$9.8 MILLION NOW DRAWN)
Infratil’s Investment Objectives
Technology changes the fortunes of
businesses by reducing the cost of
desirable but previously expensive services
or products.
Apple’s iPhone provided ubiquitous
mobile access to the net and its
extraordinary level of take up resulted in
widespread disruption as it fundamentally
changed the way many businesses
communicate and interact with customers.
Infratil is aware of potential technology
changes which could impact its businesses.
More electric vehicles will mean cheaper
batteries, which will impact the economics
of the electricity industry. Autonomous
vehicles will change how people get
around town and the demand for public
transport and even car parks. Cheap
sensors and data processing capability will
change energy demand patterns.
Historically Infratil sought to engage
directly with technology with toe-in-the-
water initiatives. But this gave more
insights about how difficult it is for start-up
businesses than about which technologies
were about to succeed at delivering a
low-cost solution to a previously expensive
problem.
To improve direct awareness of technology
developments in a cost and time efficient
way, Infratil has committed capital to a
fund managed by California based
Envision Ventures.
Infratil committed US$25 million to Envision
Ventures to investment in technology activities
with relevance to Infratil’s businesses. So far
US$9.8 million has been committed to
10 companies. Investment sectors include
transportation (electric vehicle charging), security
(the “internet of things (IoT)”, cyber, real time
data encryption), management of devices which
connect via the IoT, and satellite communication
and imaging.
An example of the investments made by the
Fund is ChargePoint; which provides electric
vehicle charging stations. They have over
49,000 stations in North America and are
seeking to expand in other hemispheres.
ChargePoint has achieved this scale by being
able to work with a wide range of partners. In
New York and San Francisco they are working
with the cities. In other locations they work with
companies such as Apple and Google to provide
charging stations for employee vehicles. They are
also working with Uber on that company’s
initiative to introduce flying electric taxis! There
are a great many lessons available to Infratil from
how ChargePoint has succeeded in this field.
To date the valuation of the Fund’s portfolio is
also positive. While the priority is to gain insights
about technology changes relevant to Infratil
and its businesses, it is naturally hoped that the
investment also provides a good return.
Infratil management actively engages with
both Envision Ventures Fund management and
people in the investee companies and Infratil’s
businesses are also encouraged to develop
relationships with the technology companies
relevant to their own activities; both to raise
awareness and to identify commercial
opportunities.
FINANCIAL
STATEMENTS
5253
ANNUAL REPORT 2018INFRATIL
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2018
NOTES
2018
$MILLIONS
2017
$MILLIONS
Operating revenue1,730.1 1,786.5
Dividends1.2 1.9
Total revenue1,731.3 1,788.4
Share of earnings of associate companies6 52.2 88.1
Total income1,783.5 1,876.5
Depreciation12 176.8 166.8
Amortisation of intangibles13 17.0 16.9
Employee benefits213.8 204.8
Other operating expenses10 1,066.7 1,169.9
Total operating expenditure1,474.3 1,558.4
Operating surplus before financing, derivatives, realisations and impairments309.2 318.1
Net gain/(loss) on foreign exchange and derivatives7.8 28.1
Net realisations, revaluations and (impairments)12.5 (55.2)
Interest income11.6 16.5
Interest expense165.1 179.4
Net financing expense153.5 162.9
Net surplus before taxation176.0 128.1
Taxation expense11 52.2 15.7
Net surplus for the year from continuing operations123.8 112.4
Net surplus from discontinued operations after tax9 15.4 18.0
Net surplus for the year139.2 130.4
Net surplus attributable to owners of the Company60.5 66.1
Net surplus attributable to non-controlling interest78.7 64.3
Other comprehensive income, after tax
Items that will not be reclassified to profit and loss:
Net change in fair value of property, plant & equipment recognised in equity
55.7 150.6
Share of associates other comprehensive income(3.6)(0.2)
Fair value movements in relation to the executive share scheme(0.2) -
Income tax effect of the above items20.6 (39.5)
Items that may subsequently be reclassified to profit and loss:
Differences arising on translation of foreign operations
(40.6)(0.5)
Realisations on disposal of subsidiary, reclassified to profit and loss - -
Net change in fair value of available for sale financial assets3.6 0.2
Ineffective portion of hedges taken to profit and loss - 0.1
Effective portion of changes in fair value of cash flow hedges3.2 (2.4)
Income tax effect of the above items(1.5)0.9
Total other comprehensive income after tax37.2 109.2
Total comprehensive income for the year176.4 239.6
Total comprehensive income for the year attributable to owners of the Company67.7 123.0
Total comprehensive income for the year attributable to non-controlling interests108.7 116.6
Earnings per share
Basic and diluted (cents per share)
4 10.8 11.8
The accompanying notes form part of these financial statements.
5353
ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2018
NOTES
2018
$MILLIONS
2017
$MILLIONS
Cash and cash equivalents19.1 380.5 268.8
Trade and other accounts receivable and prepayments19.1 228.3 220.0
Derivative financial instruments19.4 2.9 4.6
Inventories4.2 2.7
Income tax receivable2.1 0.8
Land, buildings and investment properties held for sale - 8.6
Investments held for sale6.5 - 237.9
Current assets618.0 743.4
Trade and other accounts receivable and prepayments2.5 15.7
Property, plant and equipment12 4,808.9 4,900.5
Investment properties81.9 72.9
Derivative financial instruments19.4 3.0 8.3
Intangible assets13 43.4 55.6
Goodwill 14 117.4 117.4
Investments in associates6 884.6 831.1
Other investments7 61.9 51.8
Non-current assets6,003.6 6,053.3
Total assets6,621.6 6,796.7
Accounts payable, accruals and other liabilities231.3 214.2
Interest bearing loans and borrowings15 73.1 134.5
Derivative financial instruments19.4 12.7 9.5
Income tax payable23.6 25.3
Infrastructure bonds16 111.2 147.2
Trustpower bonds17 - 52.0
Wellington International Airport bonds18 - 90.0
Total current liabilities451.9 672.7
Interest bearing loans and borrowings15 855.6 885.4
Other liabilities5.3 8.1
Deferred tax liability11.3 510.0 536.7
Derivative financial instruments19.4 39.0 53.2
Infrastructure bonds16 652.0 620.3
Perpetual Infratil Infrastructure bonds16 231.2 230.8
Trustpower bonds17 322.3 321.2
Wellington International Airport bonds and senior notes18 421.6 327.4
Non-current liabilities3,037.0 2,983.1
Attributable to owners of the Company1,934.4 1,958.3
Non-controlling interest in subsidiaries1,198.3 1,182.6
Total equity3,132.7 3,140.9
Total equity and liabilities6,621.6 6,796.7
Net tangible assets per share ($ per share)3.17 3.19
Approved on behalf of the Board on 16 May 2018
Alison Gerry Mark Tume
Director Director
The accompanying notes form part of these financial statements.
5455
ANNUAL REPORT 2018INFRATIL
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2018
NOTES
2018
$MILLIONS
2017
$MILLIONS
Cash flows from operating activities
Cash was provided from:
Receipts from customers
1,764.4 1,848.1
Distributions received from associates38.6 6.1
Other dividends1.1 0.7
Interest received11.6 16.5
1,815.7 1,871.4
Cash was disbursed to:
Payments to suppliers and employees
(1,283.3)(1,405.8)
Interest paid(158.7)(172.9)
Taxation paid(77.9)(47.7)
(1,519.9)(1,626.4)
Net cash inflow from operating activities22 295.8 245.0
Cash flows from investing activities
Cash was provided from:
Proceeds from sale of associates
- -
Proceeds from sale of subsidiaries (net of cash sold)176.7 0.4
Proceeds from sale of property, plant and equipment10.4 8.2
Proceeds from investment properties7.5 -
Proceeds from sale of investments237.9 -
Return of security deposits13.2 3.5
445.7 12.1
Cash was disbursed to:
Purchase of investments
(76.7)(546.1)
Lodgement of security deposits(3.5)(13.3)
Purchase of intangible assets(10.0)(7.1)
Interest capitalised on construction of fixed assets - -
Capitalisation of customer acquisition costs - -
Purchase of property, plant and equipment233.6(119.8)
323.8(686.3)
Net cash inflow / (outflow) from investing activities121.9 (674.2)
Cash flows from financing activities
Cash was provided from:
Proceeds from issue of shares
- 0.5
Proceeds from issue of shares to Non-controlling Interests - -
Bank borrowings240.7 304.7
Issue of bonds243.2 455.0
483.9 760.2
Cash was disbursed to:
Repayment of bank debt
318.7(381.2)
Loan establishment costs(2.2)(9.4)
Repayment of bonds / Perpetual Infratil Infrastructure bonds buyback(289.4)(269.0)
Infrastructure bond issue expenses(3.0)(7.3)
Share buyback(0.8)(7.0)
Share buyback of non-wholly owned subsidiary(19.4)(0.7)
Dividends paid to non-controlling shareholders in subsidiary companies(73.6)(78.6)
Dividends paid to owners of the Company3 (89.6)(82.9)
796.7(836.1)
Net cash inflow / (outflow) from financing activities312.8(75.9)
Net increase / (decrease) in cash and cash equivalents104.9 (505.1)
Foreign exchange gains / (losses) on cash and cash equivalents6.8 (1.6)
Cash and cash equivalents at beginning of the year268.8 775.5
Adjustment for cash acquired with new subsidiary - -
Cash and cash equivalents at end of the year380.5 268.8
The accompanying notes form part of these financial statements.
5555
ANNUAL REPORT 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2018
CAPITAL
$MILLIONS
REVALUATION
RESERVE
$MILLIONS
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$MILLIONS
OTHER
RESERVES
$MILLIONS
RETAINED
EARNINGS
$MILLIONS
TOTAL
$MILLIONS
NON-
CONTROLLING
$MILLIONS
TOTAL EQUITY
$MILLIONS
Balance as at 1 April 2017364.2 810.1 (0.2)(4.9)789.1 1,958.3 1,182.6 3,140.9
Total comprehensive income for the year
Net surplus for the year
- - - - 60.5 60.5 78.7 139.2
Other comprehensive income, after tax
Differences arising on translation of foreign operations
- - (42.2) - - (42.2)1.2 (41.0)
Realisations on disposal of subsidiary, reclassified to
profit and loss
- - - - - - - -
Net change in fair value of available for sale financial assets - - - 3.6 - 3.6 - 3.6
Ineffective portion of hedges taken to profit and loss - - - - - - - -
Effective portion of changes in fair value of cash flow hedges - - - 1.0 - 1.0 1.1 2.1
Fair value movements in relation to the executive
share scheme
- - - (0.2) - (0.2) - (0.2)
Net change in fair value of property, plant & equipment
recognised in equity
- 20.8 - - 27.8 48.6 27.7 76.3
Share of associates other comprehensive income - - - - (3.6)(3.6) - (3.6)
Total other comprehensive income - 20.8 (42.2)4.4 24.2 7.2 30.0 37.2
Total comprehensive income for the year - 20.8 (42.2)4.4 84.7 67.7 108.7 176.4
Contributions by and distributions to non-controlling interest
Non-controlling interest arising on acquisition of subsidiary
- - - - - - - -
Issue/(acquisition) of shares held by outside equity interest - - - - 0.4 0.4 (19.4)(19.0)
Total contributions by and distributions to non-controlling
interest
- - - - 0.4 0.4 (19.4)(19.0)
Contributions by and distributions to owners
Share buyback
(2.4) - - - - (2.4) - (2.4)
Treasury Stock reissued under dividend reinvestment plan - - - - - - - -
Conversion of executive redeemable shares - - - - - - - -
Dividends to equity holders - - - - (89.6)(89.6)(73.6)(163.2)
Total contributions by and distributions to owners(2.4) - - - (89.6)(92.0)(73.6)(165.6)
Balance at 31 March 2018361.8 830.9 (42.4)(0.5)784.6 1,934.4 1,198.3 3,132.7
The accompanying notes form part of these financial statements.
5657
ANNUAL REPORT 2018INFRATIL
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2017
CAPITAL
$MILLIONS
REVALUATION
RESERVE
$MILLIONS
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$MILLIONS
OTHER
RESERVES
$MILLIONS
RETAINED
EARNINGS
$MILLIONS
TOTAL
$MILLIONS
NON-
CONTROLLING
$MILLIONS
TOTAL EQUITY
$MILLIONS
Balance as at 1 April 2016370.7 749.8 2.8 (4.7)806.1 1,924.7 1,145.3 3,070.0
Total comprehensive income for the year
Net surplus for the year
- - - - 66.1 66.1 64.3 130.4
Other comprehensive income, after tax
Differences arising on translation of foreign operations
- - (3.0) - - (3.0)3.2 0.2
Realisations on disposal of subsidiary, reclassified to
profit and loss
- - - - - - - -
Net change in fair value of available for sale financial assets - - - 0.2 - 0.2 - 0.2
Ineffective portion of hedges taken to profit and loss - - - 0.1 - 0.1 - 0.1
Effective portion of changes in fair value of cash flow hedges - - - (0.5) - (0.5)(1.7)(2.2)
Fair value movements in relation to the executive
share scheme
- - - - - - - -
Net change in fair value of property, plant & equipment
recognised in equity
- 60.3 - - - 60.3 50.8 111.1
Share of associates other comprehensive income - - - - (0.2)(0.2) - (0.2)
Total other comprehensive income - 60.3 (3.0)(0.2)(0.2)56.9 52.3 109.2
Total comprehensive income for the year - 60.3 (3.0)(0.2)65.9 123.0 116.6 239.6
Contributions by and distributions to non-controlling interest
Non-controlling interest arising on acquisition of subsidiary
- - - - - - - -
Issue/(acquisition) of shares held by outside equity interest - - - - - - (0.7)(0.7)
Total contributions by and distributions to non-controlling
interest
- - - - - - (0.7)(0.7)
Contributions by and distributions to owners
Share buyback
(7.1) - - - - (7.1) - (7.1)
Treasury Stock reissued under dividend reinvestment plan - - - - - - - -
Conversion of executive redeemable shares0.6 - - - - 0.6 - 0.6
Dividends to equity holders - - - - (82.9)(82.9)(78.6)(161.5)
Total contributions by and distributions to owners(6.5) - - - (82.9)(89.4)(78.6)(168.0)
Balance at 31 March 2017364.2 810.1 (0.2)(4.9)789.1 1,958.3 1,182.6 3,140.9
The accompanying notes form part of these financial statements.
5757
ANNUAL REPORT 2018
1. ACCOUNTING POLICIES
(A) Reporting Entity
Infratil Limited (‘the Company’) is a company domiciled in New Zealand
and registered under the Companies Act 1993. The Company is listed on
the NZX Main Board (‘NZX’) and Australian Securities Exchange (‘ASX’), and
is an FMC Reporting Entity in terms of Part 7 of the Financial Markets
Conduct Act 2013.
(B) Basis of preparation
The financial statements have been prepared in accordance with
New Zealand Generally Accepted Accounting Practice (‘NZ GAAP’) and
comply with New Zealand equivalents to International Financial Reporting
Standards (‘NZ IFRS’) and other applicable financial reporting standards as
appropriate for profit-oriented entities. The consolidated financial
statements comprise the Company, its subsidiaries and associates (‘the
Group’). The presentation currency used in the preparation of these
financial statements is New Zealand dollars, which is also the Group’s
functional currency, and is presented in $Millions unless otherwise stated.
The principal accounting policies adopted in the preparation of these
financial statements are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated.
Comparative figures have been restated where appropriate to ensure
consistency with the current period.
The financial statements comprise statements of the following:
comprehensive income; financial position; changes in equity; cash flows;
significant accounting policies; and the notes to those statements. The
financial statements are prepared on the basis of historical cost, except
certain property, plant and equipment which is valued in accordance with
accounting policy (D), investment property valued in accordance with
accounting policy (E), investments valued in accordance with accounting
policy (G), and financial derivatives valued in accordance with accounting
policy (K).
Accounting estimates and judgements
The preparation of financial statements in conformity with NZ IFRS requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Future outcomes could differ from those estimates. The principal
areas of judgement in preparing these financial statements are set out
below.
Valuation of property, plant and equipment and investment
properties
The basis of valuation for the Group’s property, plant and equipment and
investment properties is fair value by independent valuers, or cost. The
basis of the valuations include assessment of the net present value of the
future earnings of the assets, the depreciated replacement cost, and other
market based information, in accordance with asset valuation standards.
The major inputs and assumptions that are used in the valuations that
require judgement include projections of future revenues, sales volumes,
operational and capital expenditure profiles, capacity, life assumptions,
terminal values for each asset, the application of discount rates and
replacement values. The key inputs and assumptions are reassessed at each
balance date between valuations to ensure there has been no significant
change that may impact the valuation.
With respect to assets held at cost, judgements must be made about
whether costs incurred relate to bringing an asset to its working condition
for its intended use, and therefore are appropriate for capitalisation as part
of the cost of the asset. The determination of the appropriate life for a
particular asset requires judgements about, among other factors, the
expected future economic benefits of the asset and the likelihood of
obsolescence. Assessing whether an asset is impaired involves estimating
the future cash flows that the asset is expected to generate. This will, in
turn, involve a number of assumptions, including rates of expected
revenue growth or decline, expected future margins, terminal values and
the selection of an appropriate discount rate for valuing future cash flows.
Valuation of investments including Associates
Infratil completes an assessment of the carrying value of investments at
least annually and considers objective evidence for impairment on each
investment, taking into account observable data on the investment, the
status or context of markets, its own view of fair value, and its long term
investment intentions. Infratil notes the following matters which are
specifically considered in terms of objective evidence of impairment of its
investments, and whether there is a significant or prolonged decline from
cost, which should be recorded as an impairment, and taken to profit and
loss: any known loss events that have occurred since the initial recognition
date of the investments, including its investment performance, its long
term investment horizon, specific initiatives which reflect the strategic or
influential nature of its existing investment position and internal
valuations; and the state of markets. The assessment also requires
judgements about the expected future performance and cash flows of the
investment.
Accounting for income taxes
Preparation of the financial statements requires estimates of the amount of
tax that will ultimately be payable, the availability and recognition of losses
to be carried forward and the amount of foreign tax credits that will be
received.
Goodwill
The carrying value of goodwill is subject to an annual impairment test to
ensure the carrying value does not exceed the recoverable amount at
balance date. For the purpose of impairment testing, goodwill is allocated
to the individual cash-generating units to which it relates. Any impairment
losses are recognised in the statement of comprehensive income. In
determining the recoverable amount of goodwill, fair value is assessed,
including the use of valuation models to calculate the present value of
expected future cash flows of the cash-generating units, and where
available with reference to Listed prices. The major inputs and assumptions
requiring judgement that are used in the models, include forecasts of sales
volumes and revenues, future prices and costs, terminal values and
discount rates.
Derivatives
Certain derivatives are classified as financial assets or financial liabilities at
fair value through profit or loss. The key assumptions and risk factors for
these derivatives relate to energy price hedges and their valuation. Energy
price hedges are valued with reference to financial models of future energy
prices or market values for the relevant derivative. Accounting judgements
have been made in determining hedge designation for the different types
of derivatives employed by the Group to hedge risk exposures. Other
derivatives including interest rate instruments and foreign exchange
contracts are valued based on market information and prices.
Revenue
Judgement is required to be exercised when determining estimated sales
for unbilled revenues at balance date. Specifically, this involves estimates
of consumption or sales to customers, turnover for turnover based rents
and customer/passenger volumes.
Provision for doubtful debts
Provisions are maintained for estimated losses incurred from customers
being unable to make required payments. These provisions take into
account known commercial factors impacting specific customer accounts,
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2018
5859
ANNUAL REPORT 2018INFRATIL
as well as the overall profile of the debtor portfolio. In assessing the
provision, factors such as past collection history, the age of receivable
balances, the level of activity in customer accounts, as well as general
macro-economic trends, are also taken into account.
(C) Basis of preparing consolidated financial statements
Principles of consolidation
The consolidated financial statements are prepared by combining the
financial statements of all the entities that comprise the consolidated
entity. A list of significant subsidiaries and associates is shown in Note 8.
Consistent accounting policies are employed in the preparation and
presentation of the Group financial statements.
(D) Property, plant and equipment
Property, plant and equipment (‘PPE’) is recorded at cost less accumulated
depreciation and accumulated impairment losses (or fair value on
acquisition), or at valuation, with valuations undertaken on a systematic
basis. No individual asset is included at a valuation undertaken more than
five years previously. PPE that is revalued, is revalued to its fair value
determined by an independent valuer or by the Directors with reference to
independent experts, in accordance with NZ IAS 16 Property, Plant and
Equipment. Where the assets are of a specialised nature and do not have
observable market values in their existing use, depreciated replacement
cost is used as the basis of the valuation. Depreciated replacement cost
measures net current value as the most efficient, lowest cost which would
replace existing assets and offer the same amount of utility in their present
use. For non-specialised assets where there is no observable market an
income based approach is used.
Land, buildings, leasehold improvements and civil works are measured at
fair value or cost.
Renewable and Non-renewable Generation assets are shown at fair value,
based on periodic valuations by independent external valuers or by
Directors with reference to independent experts, less subsequent
depreciation.
Depreciation is provided on a straight line basis and the major depreciation
periods (in years) are:
Buildings and civil works5-80
Vehicles, plant and equipment3-20
Renewable generation12-200
Non-renewable generation assets 30-40
Metering equipment6-20
Land not depreciated
Capital work in progress not depreciated until asset in use
(E) Investment property
Investment property is property held to earn rental income. Investment
property is measured at fair value with any change therein recognised in
profit or loss. Property that is being constructed for future use as investment
property is measured at fair value and classified as investment property.
(F) Receivables
Receivables, classified as loans and receivables, are initially recognised
at fair value and subsequently measured at amortised cost, less any
provision for impairment. A provision for impairment is established when
there is objective evidence that the Group will not be able to collect the
amount due.
(G) Investments
Share investments held by the Group and classified as available-for-sale are
stated at fair value, with any resulting gain or loss recognised directly in
equity, except for impairment losses. When these investments are
derecognised, the cumulative gain or loss previously recognised directly in
equity is recognised in profit or loss. The fair value of shares are quoted bid
price where there is a quoted market bid price, or cost if fair value cannot
be reliably measured. Investments classified as available-for-sale are
recognised/derecognised by the Group on the trade date. Equity
instruments are deemed to be impaired when there is a significant or
prolonged decline in fair value below the original purchase price or there is
other objective evidence that the investment is impaired. Investments
classified as Financial Assets at Fair Value Through Profit or Loss, are stated
at fair value, with any resulting gain or loss recognised in profit or loss.
(H) Other intangible assets
Intangible customer base assets
Costs incurred in acquiring customers are recorded based on the directly
attributable costs of obtaining the customer contract and are amortised on
a straight line basis over the period of the expected benefit. This period has
been assessed as between 12 years and 20 years depending on the nature
of the customer and term of the contract. The carrying value is reviewed for
any indication of impairment on an annual basis and adjusted where it is
considered necessary.
Computer software
Acquired computer software licenses are capitalised on the basis of the
costs incurred to acquire and bring to use the specific software. These costs
are amortised over three years on a straight line basis except for major
pieces of billing system software which are amortised over no more than
seven years on a straight line basis.
(I) Non-current assets and disposal groups held for sale
Non-current assets and disposal groups classified as held for sale are
measured at the lower of carrying amount or fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than
through continuing use. This condition is regarded as met only when the
sale is highly probable and the asset (or disposal group) is available for
immediate sale in its present condition and the sale of the asset (or
disposal group) is expected to be completed within one year from the date
of classification.
(J) Taxation
Income tax comprises both current and deferred tax. Current tax is the
expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at the balance date, and any adjustment
to tax payable in respect of previous years. Deferred tax is recognised in
respect of the differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the carrying amounts used
for taxation purposes.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised, or there are deferred tax liabilities to offset it.
(K) Derivative financial instruments
When appropriate, the Group enters into agreements to manage its
interest rate, foreign exchange, operating and investment risks.
In accordance with the Group’s risk management policies, the Group does
not hold or issue derivative financial instruments for speculative purposes.
5959
ANNUAL REPORT 2018
However, certain derivatives do not qualify for hedge accounting and are
required to be accounted for at fair value through profit or loss. Derivative
financial instruments are recognised initially at fair value at the date they
are entered into. Subsequent to initial recognition, derivative financial
instruments are stated at fair value at each balance sheet date. The
resulting gain or loss is recognised in the profit or loss immediately unless
the derivative is designated effective as a hedging instrument, in which
event, recognition of any resultant gain or loss depends on the nature of
the hedging relationship. The Group identifies certain derivatives as hedges
of highly probable forecast transactions to the extent the hedge meets the
hedge designation tests.
Hedge accounting
The Group designates certain hedging instruments as either cash flow
hedges or hedges of net investments in equity. At the inception of the
hedge relationship the Group documents the relationship between the
hedging instrument and hedged item, along with its risk management
objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an on-going basis, the
Group documents whether the hedging instrument that is used in the
hedging relationship is highly effective in offsetting changes in fair values
or cash flows of the hedged item.
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges are recognised in other
comprehensive income and presented in equity. The gain or loss relating to
the ineffective portion is recognised in profit or loss. Amounts presented in
equity are recognised in profit or loss in the periods when the hedged item
is recognised in profit or loss.
Hedge accounting is discontinued when the Group revokes the hedging
relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting. Any cumulative gain
or loss recognised in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in profit
or loss. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was recognised in equity is recognised in profit
or loss.
Foreign currency differences arising on the retranslation of a financial
liability designated as a hedge of a net investment in a foreign operation
are recognised directly in equity, in the foreign currency translation reserve,
to the extent that the hedge is effective. To the extent that the hedge is
ineffective, such differences are recognised in profit or loss. When the
hedged net investment is disposed of, the cumulative amount in equity is
transferred to profit or loss as an adjustment to the profit or loss on
disposal.
(L) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to the functional currency at
the exchange rate at that date. The foreign currency gain or loss on
monetary items is the difference between amortised cost in the functional
currency at the beginning of the period, adjusted for interest and payments
during the period, and the amortised cost in foreign currency translated at
the exchange rate at the end of the period. Non-monetary assets and
liabilities denominated in foreign currencies that are measured at fair value
are translated to the functional currency at the exchange rate at the date
that the fair value was determined. Foreign currency differences arising on
translation are recognised in profit or loss, except for differences arising on
the translation of the net investment in a foreign operation.
Foreign operations
The assets and liabilities of foreign operations including goodwill and fair
value adjustments arising on acquisition, are translated to New Zealand
dollars at exchange rates at the reporting date. The income and expenses of
foreign operations are translated to New Zealand dollars at the average rate
for the reporting period.
(M) Impairment of assets
At each reporting date, the Group reviews the carrying amounts of its assets
to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash flows that
are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. Goodwill,
intangible assets with indefinite useful lives and intangible assets not yet
available for use are tested for impairment annually and whenever there is
an indication that the asset may be impaired.
(N) Revenue recognition
Revenue comprises the fair value of consideration received or receivable for
the sale of goods or services in the ordinary course of the Group’s activities.
Interest revenues are recognised as accrued, taking into account the
effective yield of the financial asset. Revenue from services is recognised in
the profit or loss over the period of service. Dividend income is recognised
when the right to receive the payment is established.
(O) Borrowings
Borrowings are recorded initially at fair value, net of transaction costs.
Subsequent to initial recognition, borrowings are measured at amortised
cost with any difference between the initial recognised amount and the
redemption value being recognised in profit or loss over the period of the
borrowing using the effective interest rate. Bond and bank debt issue
expenses, fees and other costs incurred in arranging finance are capitalised
and amortised over the term of the relevant debt instrument or debt
facility.
(P) Discontinued operations
Classification as a discontinued operation occurs on disposal, or when the
operation meets the criteria to be classified as a non-current asset or
disposal group held for sale (see note (I)), if earlier. When an operation is
classified as a discontinued operation, the comparative statement of
comprehensive income is re-presented as if the operation had been
discontinued from the start of the comparative year.
(Q) Segment reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur expenses,
including revenues and expenses that relate to transactions with any of the
Group’s other components. All operating segments’ operating results are
reviewed regularly by the Group’s Board of Directors to make decisions
about resources to be allocated to the segment and assess its performance,
and for which discrete financial information is available.
The Group is organised into seven main business segments, Trustpower,
Tilt Renewables, Wellington International Airport, NZ Bus, Perth Energy,
Associate Companies and Other. Other comprises investment activity not
included in the specific categories.
(R) Adoption status of relevant new financial reporting standards
and interpretations
The following new standards, amendments to standards and
interpretations are issued but not yet effective and have not been applied
in preparation of these consolidated financial statements.
6061
ANNUAL REPORT 2018INFRATIL
NZ IFRS 9 Financial Instruments, published in July 2014, replaces the
existing guidance in NZ IAS 39 Financial Instruments: Recognition and
Measurement. NZ IFRS 9 includes revised guidance on the classification
and measurement of financial instruments, a new expected credit loss
model for calculating impairment on financial assets, and new general
hedge accounting requirements. It also carries forward the guidance on
recognition and derecognition of financial instruments from NZ IAS 39.
NZ IFRS 9 is effective for annual reporting periods beginning on or after
1 January 2018, with early adoption permitted. The Group’s preliminary
assessment of adopting NZ IFRS 9 is that it will not have a material impact
on the financial statements. However, a limited number of additional
disclosures will be required in the notes to the financial statements.
NZ IFRS 15 Revenue from Contracts with Customers, establishes a
comprehensive framework for determining whether, how much and when
revenue is recognised. It replaces existing revenue recognition guidance,
including NZ IAS 18 Revenue, NZ IAS 11 Construction Contracts and IFRIC
13 Customer Loyalty Programmes. NZ IFRS 15 is effective for annual
reporting periods beginning on or after 1 January 2018, with early
adoption permitted. The primary effect on the Group financial statements
relates to the treatment of incremental costs directly incurred acquiring
new customers and retaining existing customers including sales
commissions and customer incentives such as discounted services for an
initial period. The impact of the standard, had it been adopted in the
current year, would have the effect of increasing capitalised customer
acquisition costs by $28.9 million, Retained Earnings by $20.8 million
and Deferred tax liabilities by $8.1 million.
NZ IFRS 16 Leases, removes the classification of leases as either operating
leases or finance leases – for the lessee – effectively treating all leases as
finance leases. Lessor accounting remains similar to current practice – i.e.
lessors continue to classify leases as finance and operating. The standard is
effective for annual reporting periods beginning on or after 1 January
2019. The impact of the standard has the effect of taking the current leases
that the Group is committed to and recognising leased assets and liabilities
in the balance sheet. As disclosed in Note 20, the Group currently has
commitments of $125.9 million classified as operating leases relating to
the lease of premises and the hire of plant and equipment.
2. NATURE OF BUSINESS
The Group owns and operates infrastructure and utility businesses
and investments in New Zealand, Australia and the United States. The
Company is a limited liability company incorporated and domiciled in
New Zealand. The address of its registered office is 5 Market Lane,
Wellington, New Zealand.
3. INFRATIL SHARES AND DIVIDENDS
Ordinary shares (fully paid)20182017
Total issued capital at the beginning
of the year
560,053,166562,325,645
Movements in issued and fully paid
ordinary shares during the year:
Share buyback
(775,000)(2,510,000)
Treasury Stock reissued under
dividend reinvestment plan
- -
Conversion of executive
redeemable shares-237,521
Total issued capital at the end of
the year559,278,166560,053,166
All fully paid ordinary shares have equal voting rights and share equally in
dividends and equity. At 31 March 2018 the Group held 775,000 shares as
Treasury Stock. 7,010,000 shares held as Treasury stock in the prior year
were cancelled as at 31 March 2017.
Dividends paid on
ordinary shares
2018
CENTS PER
SHARE
2017
CENTS PER
SHARE
2018
$MILLIONS
2017
$MILLIONS
Final dividend prior year 10.00 9.00 56.0 50.6
Interim dividend paid
current year6.00 5.75 33.6 32.3
Dividends paid on
ordinary shares16.00 14.75 89.6 82.9
4. EARNINGS PER SHARE
2018
$MILLIONS
2017
$MILLIONS
Net surplus attributable to
ordinary shareholders
60.5 66.1
Basic earnings per share (cps)10.8 11.8
Weighted average number of
ordinary shares
Issued ordinary shares at 1 April
560.1 562.3
Effect of new shares issued under
Executive Share Scheme
- -
Effect of shares issued through
dividend reinvestment plan
- -
Effect of shares bought back - (0.5)
Weighted average number of
ordinary shares at end of year
560.1 561.8
6161
ANNUAL REPORT 2018
5. OPERATING SEGMENTS
Reportable segments of the Group are analysed by significant businesses. The Group has seven reportable segments, as described below:
Trustpower and Tilt Renewables are renewable generation investments, Wellington International Airport is an airport investment, NZ Bus is a transportation
investment and Perth Energy is a non-renewable generation investment. Associates comprises Infratil’s investments that aren’t consolidated for financial
reporting purposes including Canberra Data Centres, RetireAustralia, ANU Student Accommodation and Longroad Energy. Further information on these
investments is outlined in Note 6. All other segments and corporate includes predominately the activities of the Parent Company. The group has no
significant reliance on any one customer.
TRUSTPOWER
AUSTRALASIA
$MILLIONS
TILT
RENEWABLES
AUSTRALASIA
$MILLIONS
WELLINGTON
INTERNATIONAL
AIRPORT
NEW ZEALAND
$MILLIONS
NZ BUS
NEW ZEALAND
$MILLIONS
PERTH ENERGY
AUSTRALIA
$MILLIONS
ASSOCIATES
$MILLIONS
ALL OTHER
SEGMENTS &
CORPORATE
NEW ZEALAND
$MILLIONS
ELIMINATIONS &
DISCONTINUED
OPERATIONS
$MILLIONS
TOTAL FROM
CONTINUING
OPERATIONS
$MILLIONS
For the year ended
31 March 2018
Segment revenue
979.4 171.0 128.6 218.7 306.7 - 112.9 (36.0)1,881.3
Share of earnings of associate
companies
- - - - - 52.2 - - 52.2
Inter-segment revenue - - - - - - (104.7)(45.3)(150.0)
Segment revenue – external
979.4 171.0 128.6 218.7 306.7 52.2 8.2 (81.3)1,783.5
Operating expenses
(excluding Depreciation and
amortisation)
(709.6)(58.7)(33.2)(185.3)(312.5) - (32.5)51.1 (1,280.6)
Interest income
1.6 1.2 0.9 0.1 0.3 - 14.1 (6.6)11.6
Interest expense
(35.8)(33.0)(19.3)(5.7)(7.5) - (75.7)11.9 (165.1)
Depreciation and
amortisation
(46.7)(86.9)(23.6)(32.9)(5.7) - (0.4)2.4 (193.8)
Net gain / (loss) on foreign
exchange and derivatives
(3.1)1.3 1.9 - - - 7.3 0.4 7.8
Net realisations, revaluations
and (impairments)
(5.1) - 11.5 (1.2) - - 7.3 - 12.5
Taxation expense(51.4)2.0 (4.2)3.1 (3.1) - (5.1)6.5 (52.2)
Segment profit / (loss)129.3 (3.1)62.6 (3.2)(21.8)52.2 (76.8)(15.5)123.7
Investments in associates
- - - - - 884.6 - - 884.6
Total non-current assets
(excluding derivatives and
deferred tax)
2,255.2 1,330.8 1,146.1 182.2 107.7 884.6 94.0 - 6,000.6
Total assets
2,401.2 1,418.2 1,187.0 196.2 157.9 884.6 376.5 - 6,621.6
Total liabilities
887.1 878.9 601.7 41.6 80.8 - 998.8 - 3,488.9
Capital expenditure and
investments
27.9 90.5 85.1 19.1 1.1 85.4 9.7 - 318.8
6263
ANNUAL REPORT 2018INFRATIL
TILT
RENEWABLES
AUSTRALASIA
$MILLIONS
WELLINGTON
INTERNATIONAL
AIRPORT
NEW ZEALAND
$MILLIONS
NZ BUS
NEW ZEALAND
$MILLIONS
PERTH ENERGY
AUSTRALIA
$MILLIONS
ASSOCIATES
$MILLIONS
ALL OTHER
SEGMENTS &
CORPORATE
NEW ZEALAND
$MILLIONS
ELIMINATIONS &
DISCONTINUED
OPERATIONS
$MILLIONS
TOTAL FROM
CONTINUING
OPERATIONS
$MILLIONS
For the year ended
31 March 2017
Segment revenue
939.9 185.2 119.6 227.8 364.6 -120.4 (37.3)1,920.2
Share of earnings of associate
companies
-----88.1 --88.1
Inter-segment revenue------(86.4)(45.4)(131.8)
Segment revenue – external939.9 185.2119.6 227.8 364.6 88.1 34.0(82.7)1,870.5
Operating expenses
(excluding Depreciation and
amortisation)
(722.1)(53.5)(29.0)(184.1)(378.7)-(31.6)51.1(1,374.7)
Interest income3.9 0.3 0.8 0.1 0.3 -15.9 (4.8)16.5
Interest expense(44.5)(34.1)(22.3)(7.4)(5.4)-(73.3)7.6(179.4)
Depreciation and
amortisation
(47.5)(78.6)(21.7)(32.3)(5.6)-(0.8)2.8(183.7)
Net gain/(loss) on foreign
exchange and derivatives
4.7 8.2 8.3 -0.1 -7.7 (0.9)28.1
Net realisations, revaluations
and (impairments)
(3.5)-0.1 (0.2)-(54.5)2.9 -(55.2)
Taxation expense(36.9)(10.1)(1.0)(1.2)7.4 -17.2 8.9(15.7)
Segment profit / (loss)94.0 17.4 54.8 2.7 (17.3)33.6 (54.8) (18.0)112.4
Investments in associates
(including those held for sale)
-----1,069.0 --1,069.0
Total non-current assets
(excluding derivatives and
deferred tax)
2,441.5 1,358.1 1,000.2 205.9 125.2 831.1 83.0 -6,045.0
Total assets 2,576.9 1,414.4 1,085.6 225.1 180.9 1,069.0 244.8 -6,796.7
Total liabilities 1,078.5 846.2 572.9 53.1 89.1 - 1,016.0 -3,655.8
Capital expenditure and
investments
23.1 6.0 79.3 16.2 0.9 561.0 7.5 -694.0
TRUSTPOWER
AUSTRALASIA
$MILLIONS
6363
ANNUAL REPORT 2018
Entity wide disclosure – geographical
The Group operates in two principal areas, New Zealand and Australia, as well as having certain investments in the United States. The Group’s geographical
segments are based on the location of both customers and assets.
NEW ZEALAND
$MILLIONS
AUSTRALIA
$MILLIONS
UNITED STATES
$MILLIONS
ELIMINATIONS &
DISCONTINUED
OPERATIONS
$MILLIONS
TOTAL FROM
CONTINUING
OPERATIONS
$MILLIONS
For the year ended 31 March 2018
Segment revenue
1,446.3 471.0 - (36.0)1,881.3
Share of earnings of associate companies - 66.0 (13.8) - 52.2
Inter-segment revenue(104.7) - - (45.3)(150.0)
Segment revenue – external1,341.6 537.0 (13.8)(81.3)1,783.5
Operating expenses (excluding Depreciation and amortisation)(1,015.7)(316.0) - 51.1 (1,280.6)
Interest income16.5 1.7 - (6.6)11.6
Interest expense(139.2)(37.8) - 11.9 (165.1)
Depreciation and amortisation(125.6)(70.6) - 2.4 (193.8)
Net gain/(loss) on foreign exchange and derivatives5.1 2.3 - 0.4 7.8
Net realisations, revaluations and (impairments)12.2 0.3 - - 12.5
Taxation expense(47.9)(10.8) - 6.5 (52.2)
Segment profit/(loss)47.0 106.1 (13.8)(15.5)123.8
Investments in associates0.3 868.3 16.0 - 884.6
Total non-current assets (excluding derivatives and deferred tax) 3,721.2 2,251.0 28.4 - 6,000.6
Total assets4,267.8 2,325.4 28.4 - 6,621.6
Total liabilities2,654.5 834.4 - - 3,488.9
Capital expenditure and investments143.8 144.4 30.6 - 318.8
For the year ended 31 March 2017
Segment revenue
1,417.4 540.1 - (37.3)1,920.2
Share of earnings of associate companies53.2 37.8 (2.9) - 88.1
Inter-segment revenue(86.4) - - (45.4)(131.8)
Segment revenue – external1,384.2 577.9 (2.9)(82.7)1,876.5
Operating expenses (excluding Depreciation and amortisation)(1,025.1)(400.7) - 51.1 (1,374.7)
Interest income20.6 0.7 - (4.8)16.5
Interest expense(148.1)(38.9) - 7.6 (179.4)
Depreciation and amortisation(123.4)(63.1) - 2.8 (183.7)
Net gain/(loss) on foreign exchange and derivatives21.8 7.2 - (0.9)28.1
Net realisations, revaluations and (impairments)(55.2) - - - (55.2)
Taxation expense(13.9)(10.7) - 8.9 (15.7)
Segment profit/(loss)79.5 53.8 (2.9)(18.0)112.4
Investments in associates (including those held for sale)240.1 795.7 33.2 - 1,069.0
Total non-current assets (excluding derivatives and deferred tax) 3,848.3 2,153.8 42.9 - 6,045.0
Total assets4,496.9 2,256.9 42.9 - 6,796.7
Total liabilities2,780.0 875.8 - - 3,655.8
Capital expenditure and investments128.0 529.8 36.2 - 694.0
6465
ANNUAL REPORT 2018INFRATIL
6. INVESTMENTS IN ASSOCIATES
NOTE
2018
$MILLIONS
2017
$MILLIONS
Investments in associates are as follows:
Canberra Data Centres
6.1453.2426.3
RetireAustralia6.2319.0278.2
ANU Student Accommodation6.396.191.2
Longroad Energy 6.416.033.2
Mana Coach Holdings0.32.2
Investments in associates 884.6831.1
NOTE
2018
$MILLIONS
2017
$MILLIONS
Equity accounted earnings of associates are as follows:
Canberra Data Centres
6.156.15.0
RetireAustralia6.2(4.5)29.3
ANU Student Accommodation6.314.4 3.5
Longroad Energy 6.4(13.8)(2.9)
Metlifecare6.5-53.2
Mana Coach Holdings--
Share of earnings of associate companies 52.288.1
6.1) Canberra Data Centres
On 14 September 2016 the Group completed the acquisition of 48.13% of Canberra Data Centres (‘CDC’), with consortium partner the Commonwealth
Superannuation Corporation acquiring 48.13% and CDC Executives 3.74%. CDC operates 39MW of installed capacity across 2 accredited and connected
Data Centre campuses in Canberra, providing highly secure outsourced co-location Data Centre services to Australian Government entities and third party
service providers. Infratil’s initial A$385.7 million (NZ$396.4 million) equity investment was made by way of an A$144.4 million (NZ$148.4 million)
shareholder loan and A$241.3 million (NZ$248.0 million) of equity.
Movement in the carrying amount of the Group’s investment in Canberra Data Centres:
2018
$MILLIONS
2017
$MILLIONS
Carrying value at 1 April426.3-
Acquisition of shares0.9248.0
Capitalised transaction costs-15.1
Shareholder loan-148.4
Total capital contributions during the year0.9411.5
Interest on shareholder loan (including accruals)
14.07.5
Share of associate’s surplus / (loss) before income tax52.7(3.7)
Share of associate’s income tax (expense)(10.6)1.2
Total share of associate’s earnings in the year56.15.0
Share of associate’s other comprehensive income
--
less: shareholder loan repayments including interest(17.8)-
Foreign exchange movements recognised in other comprehensive income(12.3)9.8
Carrying value of investment in associate453.2426.3
6565
ANNUAL REPORT 2018
Summary financial information:
2018
A$MILLIONS
2017
A$MILLIONS
Summary information for CDC is not adjusted for the percentage ownership held by the Group:
Current assets
39.046.4
Non-current assets1,248.01,124.2
Total assets1,287.01,147.3
Current liabilities
21.229.6
Non-current liabilities688.4624.4
Total liabilities709.6650.8
Revenues
88.938.4
Net profit / (loss) after tax60.615.3
CDC’s functional currency is Australian Dollars (A$) and the summary financial information shown is presented in this currency.
6.2) RetireAustralia
On 31 December 2014, the Group acquired a 50% shareholding of RetireAustralia, with consortium partner the New Zealand Superannuation Fund
acquiring the other 50%. RetireAustralia operates 27 retirement villages across three states in Australia – New South Wales, Queensland and South
Australia. The total equity consideration was A$407.8 million with Infratil and the NZ Super Fund each providing total cash equity of A$203.9 million
(NZ$213.0 million).
Movement in the carrying amount of the Group’s investment in RetireAustralia:
2018
$MILLIONS
2017
$MILLIONS
Carrying value at 1 April278.2252.9
Acquisition of shares53.929.5
Total capital contributions during the year53.929.5
Share of associate’s surplus/(loss) before income tax5.238.8
Share of associate’s income tax (expense)(9.7)(9.5)
Total share of associate’s earnings in the year(4.5)29.3
Share of associate’s other comprehensive income- -
less: distributions received-(31.1)
Foreign exchange movements recognised in other comprehensive income(8.6)(2.4)
Carrying value of investment in associate319.0278.2
Summary financial information:
2018
A$MILLIONS
2017
A$MILLIONS
Summary information for RetireAustralia is not adjusted for the percentage ownership held by the Group:
Current assets
180.8 177.9
Non-current assets2,310.6 2,226.0
Total assets2,491.4 2,403.9
Current liabilities
1,727.9 1,639.0
Non-current liabilities164.9 258.3
Total liabilities1,892.9 1,897.3
Revenues
82.0 91.8
Net profit / (loss) after tax(8.3) 55.2
RetireAustralia’s functional currency is Australian Dollars (A$) and the summary financial information shown is presented in this currency.
6667
ANNUAL REPORT 2018INFRATIL
6.3) ANU Student Accommodation
On 4 August 2016 the Group completed the acquisition of 50% of the concession for the net rental revenue from nine on-campus Purpose Built Student
Accommodation residences at the Australian National University (‘ANU Student Accommodation’), with consortium partner the Commonwealth
Superannuation Corporation acquiring the other 50%. Infratil’s A$80.4 million (NZ$84.8 million) equity investment was made by way of an A$45.0 million
(NZ$47.5 million) shareholder loan and A$35.4 million (NZ$37.3 million) of equity.
Movement in the carrying amount of the Group’s investment in ANU Student Accommodation:
2018
$MILLIONS
2017
$MILLIONS
Carrying value at 1 April91.2-
Acquisition of shares-37.3
Shareholder loan-47.5
Total capital contributions during the year-84.8
Interest on shareholder loan (including accruals)3.52.3
Share of associate’s surplus / (loss) before income tax10.91.2
Total share of associate’s earnings during the year14.4 3.5
less: distributions received(4.3)-
less: shareholder loan repayments including interest(2.5)-
Foreign exchange movements recognised in other comprehensive income(2.7) 2.9
Carrying value of investment in associate96.1 91.2
Summary financial information:
2018
A$MILLIONS
2017
A$MILLIONS
Summary information for ANU Student Accommodation is not adjusted for the percentage ownership held by the Group
Current assets37.619.0
Non-current assets517.8524.3
Total assets555.4543.3
Current liabilities11.57.3
Non-current liabilities458.7463.0
Total liabilities470.2470.3
Revenues51.131.8
Net surplus / (loss) after tax20.22.3
The investment entity’s functional currency is Australian Dollars (A$) and the summary financial information shown is presented in this currency.
6767
ANNUAL REPORT 2018
6.4) Longroad Energy
On 5 October 2016 Infratil announced an initial (45%) investment in Longroad Energy Holdings, LLC (‘Longroad Energy’), a recently formed renewable
energy development and operating vehicle headquartered in Boston, Massachusetts. Longroad’s focus is primarily in the development of utility-scale wind
and solar generation throughout North America. The other establishment partners were the New Zealand Superannuation Fund (45%) and the Longroad
management team (10%).
Movement in the carrying amount of investment in Longroad Energy:
2018
$MILLIONS
2017
$MILLIONS
Carrying value at 1 April33.2 -
Capital contributions27.534.8
Shareholder loan3.11.4
Total capital contributions during the year30.636.2
Interest on shareholder loan (including accruals)0.3-
Share of associate’s surplus / (loss) before income tax(20.0)(2.9)
Share of associate’s income tax (expense)5.9-
Total share of associate’s earnings during the year(13.8)(2.9)
Share of associate’s other comprehensive income(3.6)-
less: distributions received(13.7)-
less: capital returned(11.7)-
less: shareholder loan repayments including interest(3.5)-
Foreign exchange movements recognised in other comprehensive income(1.5)(0.1)
Carrying value of investment in associate16.033.2
Summary financial information:
31 DECEMBER
2017
US$MILLIONS
31 DECEMBER
2016
US$MILLIONS
Summary information for Longroad Energy is not adjusted for the percentage ownership held by the Group
Current assets
91.47.7
Non-current assets549.045.2
Total assets640.452.9
Current liabilities35.00.6
Non-current liabilities531.7-
Total liabilities566.70.6
Revenues18.1-
Net surplus / (loss) after tax(22.6)(1.7)
The summary information provided is taken from the most recent audited annual financial statements of Longroad Energy Holdings, LLC which have a
balance date of 31 December and are reported as at that date. Longroad’s functional currency is United States Dollars (US$) and the summary financial
information shown is presented in this currency.
Letter of credit facility
Longroad has obtained an uncommitted secured letter of credit facility of up to US$150 million from HSBC Bank. Letters of credit under the Facility have
been issued to beneficiaries to support the development and continued operations of Longroad. Infratil has provided shareholder backing of the Longroad
Letter of Credit facility, specifically, Infratil (and the New Zealand Superannuation Fund) have collectively agreed to meet up to US$150 million of capital
calls (i.e. subscribe for additional units) equal to Longroad’s reimbursement obligation in the event that a Letter of Credit is called and Longroad cannot
fund the call, taking into account immediately available working capital. As at 31 March 2018, USD $97.0 million in Letters of Credit have been issued
under the Longroad Letter of Credit facility.
6.5) Metlifecare
On 7 April 2017 Infratil advised the NZX that it had entered into a block trade agreement for the off-market sale of its 19.9% stake (42.4 million shares) in
Metlifecare at a price of $5.61 per share. Settlement occurred on 11 April 2017. As at 31 March 2017 the Group’s investment in Metlifecare was reclassified
from investments in associates to investments held for sale and had been revalued to fair value less costs to sell.
6869
ANNUAL REPORT 2018INFRATIL
7. OTHER INVESTMENTS
2018
$MILLIONS
2017
$MILLIONS
Australian Social Infrastructure Partners40.734.0
Envision Ventures12.49.7
Other8.88.1
Other investments61.951.8
Australian Social Infrastructure Partners
Infratil has made a commitment of A$100 million to pursue greenfield availability based public-private partnership (‘PPP’) opportunities in Australia via
Australian Social Infrastructure Partners (‘ASIP’). ASIP has currently invested in 9.95% and 49.0% respectively of the equity in the New Royal Adelaide
Hospital PPP and the South East Queensland Schools PPP. As at 31 March 2018 Infratil has made total contributions of A$30.2 million (31 March 2017:
A$29.3 million), with the remaining A$69.8 million commitment uncalled at that date.
Envision Ventures
In February 2016 Infratil made a commitment of US$25 million to the California based Envision Ventures Fund 2. The strategic objective is to help Infratil’s
businesses identify and engage with technology changes that will impact their activities. As at 31 March 2018 Infratil has made total contributions of
US$9.8 million (31 March 2017: US$5.25 million), with the remaining US$15.2 million commitment uncalled at that date.
8. INVESTMENT IN SUBSIDIARIES AND ASSOCIATES
The significant companies of the Infratil Group and their activities are shown below. The financial year end of all the significant subsidiaries and associates
is 31 March with exceptions noted.
Subsidiaries
2018
HOLDING
2017
HOLDINGPRINCIPAL ACTIVITY
New Zealand
Infratil Finance Limited
100%100%Finance
Infratil Infrastructure Property Limited
100%100%Property
New Lynn Central Limited Partnership (30 June financial year end)
58.0%58.0%Property
New Zealand Bus Limited
100%100%Public Transport
Snapper Services Limited
100%100%Technology
Swift Transport Limited
100%100%Investment
Tilt Renewables Limited
51.0%51.0%Electricity Generation
Trustpower Limited
51.0%51.0%Electricity Generation and Utility Retailer
Wellington International Airport Limited
66.0%66.0%Airport
Australia
Perth Energy Pty Limited
80.0%80.0%Electricity Retailer
Western Energy Pty Limited
80.0%80.0%Electricity Generation
Associates
New Zealand
Mana Coach Holdings Limited
26.0%26.0%Public Transport
Metlifecare Limited (30 June financial year end)
-19.9%Retirement Living
Australia
CDC Group Holdings Pty Ltd
48.2%48.1%Data Centres
Cullinan Holding Trust
50.0%50.0%Purpose Built Student Accommodation
RA (Holdings) 2014 Pty Limited
50.0%50.0%Retirement Living
United States
Longroad Energy Holdings, LLC (31 December financial year end)
45.0%45.0%Renewable Energy Development
6969
ANNUAL REPORT 2018
9. DISCONTINUED OPERATIONS
On 21 December 2017, Trustpower announced its intention to sell the shares in its only Australian subsidiary, GSP Energy Pty Ltd. The associated assets and
liabilities were consequently reclassified as held for sale. Upon classification as held for sale, the assets were revalued to the sale price. The revaluation gain
of $19.4 million, less deferred tax of $5.8 million was taken to the revaluation reserve. Once disposed, the revaluation reserve was transferred directly to
retained earnings. The sale was completed on 29 March 2018 and is reported in the financial statements as a discontinued operation.
Financial information relating to the discontinued operation for the period to the date of disposal is set out below.
Results of GSP Energy Pty Ltd (classified as discontinued)
2018
$MILLIONS
2017
$MILLIONS
Revenue32.537.3
Operating expenses5.85.7
Results from operating activities26.731.6
Depreciation and amortisation of intangibles(2.4)(2.8)
Net (gain) / loss on foreign exchange and derivatives(0.4)0.9
Net interest expense(2.1)(2.8)
Profit before tax21.826.9
Taxation expense(6.6)(8.9)
Net surplus after tax15.218.0
The net gain on the sale is calculated as follows:
Gross sale proceeds
176.7
Carrying amounts of assets and liabilities as at the date of sale134.8
Gain on sale before income tax and reclassification of foreign currency translation reserve41.9
Reclassification of foreign currency translation reserve(3.0)
Cost of disposal(2.3)
Capital gains tax(36.4)
Gain on sale after income tax0.2
Net surplus from discontinued operation after tax15.418.0
Basic and diluted earnings per share (cents per share) $0.03
Diluted earnings per share (cents per share) $0.03
Cash flows from (used in) discontinued operation:
Net cash used in operating activities
13.830.7
Net cash used in investing activities151.2(13.6)
Net cash used in financing activities(69.3)(16.6)
Net cash flows for the year95.70.5
There is no cumulative income recognised in other comprehensive income relating to discontinued operations (31 March 2017: $0.0 million)
7071
ANNUAL REPORT 2018INFRATIL
10. OTHER OPERATING EXPENSES
NOTES
2018
$MILLIONS
2017
$MILLIONS
Fees paid to the Group auditor1.30.9
Audit fees paid to other auditors0.70.7
Bad debts written off2.91.6
Increase in provision for doubtful debts190.90.1
Onerous lease expense1.4-
Directors’ fees233.42.8
Administration and other corporate costs5.77.6
Donations0.7-
Management fee (to related party Morrison & Co Infrastructure Management)2522.121.4
Trading operations
Energy and wholesale costs
387.3433.3
Line, distribution and network costs372.6413.0
Generation production & development costs46.164.5
Other energy business costs75.991.7
Telecommunications cost of sales54.947.9
Transportation business costs68.966.1
Airport business costs21.918.3
Total other operating expenses1,066.71,169.9
Included within other Energy business costs during the prior year are expenses relating to the demerger of Trustpower and Tilt Renewables of
$16.7 million.
Fees paid to the Group auditor (including fees paid by Associates)
2018
$MILLIONS
2017
$MILLIONS
Audit and review of financial statements438.0440.3
Regulatory audit work33.033.0
Other assurance services40.514.2
Taxation services260.8417.7
Other services489.3-
1,261.6905.2
Fees paid to the Group auditor by Associates (recognised through share of Associate Earnings)445.21,094.8
Total fees paid to the Group auditor1,706.82,000.0
The audit fee includes the fees for both the annual audit of the financial statements and the review of the interim financial statements. Regulatory audit
work consists of the audit of regulatory disclosures. Other assurance services comprise of agreed upon procedures, audit of compliance reports and
verification in relation to gas trading licence. Tax services relate to tax compliance work, tax advisory services provided to a subsidiary of the group, and
services relating to the Trustpower demerger. Other services primarily relate to due diligence work undertaken.
7171
ANNUAL REPORT 2018
11. TAXATION
11.1) Tax Reconciliation
2018
$MILLIONS
2017
$MILLIONS
Net surplus before taxation from continuing operations176.0128.1
Taxation on the surplus for the year at 28%49.335.9
Plus / (less) taxation adjustments:
Effect of tax rates in foreign jurisdictions
(0.5)0.1
Net benefit of imputation credits - (0.3)
Timing differences not recognised1.2(20.4)
Tax losses not recognised / (utilised)0.3(2.9)
Effect of equity accounted earnings of associates(6.7)1.5
(Over) / Under provision in prior periods(2.4)0.6
Net investment realisations2.10.4
Other permanent differences8.90.8
Taxation expense52.215.7
Current taxation57.169.8
Deferred taxation(4.9)(54.1)
Tax on discontinued operations6.68.9
11.2) Income tax recognised in other comprehensive income
2018
BEFORE TAX
$MILLIONS
TAX (EXPENSE)
$MILLIONS
NET OF TAX
$MILLIONS
Differences arising on translation of foreign operations(40.6)(0.4)(41.0)
Realisations on disposal of subsidiary, reclassified to profit and loss---
Net change in fair value of available for sale financial assets3.6-3.6
Ineffective portion of hedges taken to profit and loss---
Effective portion of changes in fair value of cash flow hedges3.2(1.1)2.1
Fair value movements in relation to executive share scheme(0.2)-(0.2)
Net change in fair value of property, plant & equipment recognised in equity55.720.676.3
Share of associates other comprehensive income(3.6) -(3.6)
Balance at the end of the year18.119.137.2
2017
BEFORE TAX
$MILLIONS
TAX (EXPENSE)
$MILLIONS
NET OF TAX
$MILLIONS
Differences arising on translation of foreign operations(0.5)0.70.2
Realisations on disposal of subsidiary, reclassified to profit and loss---
Net change in fair value of available for sale financial assets0.2-0.2
Ineffective portion of hedges taken to profit and loss0.1-0.1
Effective portion of changes in fair value of cash flow hedges(2.4)0.2(2.2)
Fair value movements in relation to executive share scheme---
Net change in fair value of property, plant & equipment recognised in equity150.6(39.5)111.1
Share of associates other comprehensive income(0.2)-(0.2)
Balance at the end of the year147.8(38.6)109.2
7273
ANNUAL REPORT 2018INFRATIL
11.3) Deferred Tax
Deferred tax assets and liabilities are offset on the Statement of Financial Position where they relate to entities with a legally enforceable right to offset tax.
2018
$MILLIONS
2017
$MILLIONS
Balance at the beginning of the year(536.7)(544.4)
Charge for the year4.954.1
Charge relating to discontinued operations33.1(1.0)
Deferred tax recognised in equity(19.8)(38.6)
Arising on Business Combination--
Effect of movements in foreign exchange rates5.11.5
Tax losses recognised3.4(8.3)
Disposed as part of investment sale--
Balance at the end of the year(510.0)(536.7)
The Infratil New Zealand Group is forecasting to derive taxable profits in future periods, sufficient to utilise the tax losses carried forward and deductible
temporary differences. As a result deferred tax assets and liabilities have been recognised where they arise, including deferred tax on tax losses carried
forward.
11.4) Recognised deferred tax assets and liabilities
ASSETS
$MILLIONS
LIABILITIES
$MILLIONS
NET
$MILLIONS
31 March 2018
Property, plant and equipment
-(557.3)(557.3)
Investment property-(13.4)(13.4)
Derivative financial instruments9.9-9.9
Employee benefits6.5-6.5
Customer base assets-(3.8)(3.8)
Provisions4.3-4.3
Tax losses carried forward57.5-57.5
Other items1.5(15.2)(13.7)
Total79.7(589.7)(510.0)
ASSETS
$MILLIONS
LIABILITIES
$MILLIONS
NET
$MILLIONS
31 March 2017
Property, plant and equipment
-(600.1)(600.1)
Investment property-(9.9)(9.9)
Derivative financial instruments13.5(0.1)13.4
Employee benefits5.3-5.3
Customer base assets-(5.1)(5.1)
Provisions3.2-3.2
Tax losses carried forward56.9-56.9
Other items6.6(7.0)(0.4)
Total85.5(622.2)(536.7)
7373
ANNUAL REPORT 2018
11.5) Changes in temporary differences affecting tax expense
TAX EXPENSEOTHER COMPREHENSIVE INCOME
2018
$MILLIONS
2017
$MILLIONS
2018
$MILLIONS
2017
$MILLIONS
Property, plant and equipment17.220.520.2(39.5)
Investment property(3.4)(0.8)--
Derivative financial instruments(2.8)(7.6)(0.8)0.2
Employee benefits1.2 0.3(0.1)-
Customer base assets1.31.2--
Provisions1.1---
Tax losses carried forward3.23.4--
Other items(12.9)37.1(0.2)0.7
4.954.119.1(38.6)
11.6) Imputation credits available to be used by Infratil Limited
2018
$MILLIONS
2017
$MILLIONS
Balance at the end of the year9.619.4
Imputation credits that will arise on the payment/(refund) of tax provided for--
Imputation credits that will arise on the (payment)/receipt of dividends accrued at year end--
Imputation credits available for use9.619.4
12. PROPERTY, PLANT AND EQUIPMENT
2018
LAND AND
CIVIL WORKS
$MILLIONS
BUILDINGS
$MILLIONS
VEHICLES,
PLANT AND
EQUIPMENT
$MILLIONS
CAPITAL
WORK IN
PROGRESS
$MILLIONS
METERING
$MILLIONS
GENERATION
PLANT
(RENEWABLE)
$MILLIONS
GENERATION
PLANT (NON
RENEWABLE)
$MILLIONS
TOTAL
$MILLIONS
Cost or valuation
Balance at beginning of year
510.8 425.4 536.2 90.2 68.1 3,570.8 104.5 5,306.0
Additions - 0.1 21.3 188.1 1.3 19.2 0.3 230.3
Capitalised Interest and financing costs - - - - - - - -
Disposals(0.2)(0.1)(27.3) - - (182.5) - (210.1)
Impairment - - (0.2) - - - - (0.2)
Revaluation 30.0 20.2 - - - 19.4 (2.0)67.6
Transfers between categories2.5 4.3 3.4 (21.5) - 11.3 - -
Transfer to assets held for sale - - - - - - - -
Transfers to intangible assets - - - - - - - -
Transfers from / (to) investment properties - (0.5) - - - - - (0.5)
Effect of movements in foreign exchange rates - - (0.2)(1.7) - (47.4)(2.9)(52.2)
Balance at end of year543.1 449.4 533.2 255.1 69.4 3,390.8 99.9 5,340.9
7475
ANNUAL REPORT 2018INFRATIL
2018 (continued)
LAND AND
CIVIL WORKS
$MILLIONS
BUILDINGS
$MILLIONS
VEHICLES,
PLANT AND
EQUIPMENT
$MILLIONS
CAPITAL
WORK IN
PROGRESS
$MILLIONS
METERING
$MILLIONS
GENERATION
PLANT
(RENEWABLE)
$MILLIONS
GENERATION
PLANT (NON
RENEWABLE)
$MILLIONS
TOTAL
$MILLIONS
Accumulated depreciation
Balance at beginning of year
7.8 12.7 303.9 - 59.2 21.9 - 405.5
Depreciation for the year7.5 12.4 43.0 - 4.2 106.8 5.3 179.2
Transfer to investment properties - - - - - - - -
Revaluation - (22.2) - - - - (5.3)(27.5)
Disposals - - (17.5) - - (5.8) - (23.3)
Transfer to assets held for sale - - - - - - - -
Effect of movements in foreign exchange rates - - 0.1 - - (2.0) - (1.9)
Balance at end of year15.3 2.9 329.5 - 63.4 120.9 - 532.0
Carrying value at 31 March 2018527.8 446.5 203.7 255.1 6.0 3,269.9 99.9 4,808.9
2017
LAND AND
CIVIL WORKS
$MILLIONS
BUILDINGS
$MILLIONS
VEHICLES,
PLANT AND
EQUIPMENT
$MILLIONS
CAPITAL
WORK IN
PROGRESS
$MILLIONS
METERING
$MILLIONS
GENERATION
PLANT
(RENEWABLE)
$MILLIONS
GENERATION
PLANT (NON
RENEWABLE)
$MILLIONS
TOTAL
$MILLIONS
Cost or valuation
Balance at beginning of year
486.7 384.2 510.1 86.9 68.2 3,502.0 112.9 5,151.0
Additions0.2 0.7 19.9 96.4 - 23.3 0.4 140.9
Capitalised Interest and financing costs - - - - - - - -
Disposals(2.5)(5.8)(3.7) - - - - (12.0)
Impairment - - - - - - - -
Revaluation 0.3 2.6 - - - 62.7 (7.2)58.4
Transfers between categories26.0 44.8 10.5 (92.9) - 6.6 - (5.0)
Transfer to assets held for sale - - - (0.4) - - - (0.4)
Transfers to intangible assets - - - - - - - -
Transfers from / (to) investment properties - (0.1) - - - - - (0.1)
Effect of movements in foreign exchange rates0.1 (1.0)(0.6)0.2 (0.1)(23.8)(1.6)(26.8)
Balance at end of year510.8 425.4 536.2 90.2 68.1 3,570.8 104.5 5,306.0
Accumulated depreciation
Balance at beginning of year
- 6.7 264.7 - 55.0 - - 326.4
Depreciation for the year7.8 10.9 41.7 - 4.5 99.4 5.3 169.6
Transfer to investment properties - - - - - - - -
Revaluation - - - - - (78.1)(5.3)(83.4)
Disposals - (0.2)(2.7) - - - - (2.9)
Transfer to assets held for sale - (4.6) - - (0.1) - - (4.7)
Effect of movements in foreign exchange rates - (0.1)0.2 - (0.2)0.6 - 0.5
Balance at end of year7.8 12.7 303.9 - 59.2 21.9 - 405.5
Carrying value at 31 March 2017503.0 412.7 232.3 90.2 8.9 3,548.9 104.5 4,900.5
7575
ANNUAL REPORT 2018
Trustpower generation property, plant and equipment
Trustpower’s generation assets include land and buildings which are not separately identifiable from other generation assets. Generation assets were
independently revalued, using a discounted cash flow methodology, as at 31 March 2016, to their estimated market value as assessed by Deloitte
Corporate Finance. A review of the fair value of generation assets has been undertaken, in conjunction with Deloitte Corporate Finance, as at 31 March
2018. While not a full revaluation exercise, this review has provided a range for the fair value of the generation assets. The carrying value of generation
assets is within this fair value range and, as such, the Directors have determined that the carrying value is appropriate.
The valuation of Trustpower’s generation assets is sensitive to the inputs used in the discounted cash flow valuation model. A sensitivity analysis around
some key inputs is given in the table below. The valuation is based on a combination of values that are generally at the midpoint of the range. The valuation
impact is calculated as the movement in the fair value as a result of the change in the assumption and keeping all other valuation inputs constant.
GENERATION RENEWABLELOWHIGHVALUATION IMPACT
New Zealand Assets
Forward electricity price pathIncreasing in real terms from
$72/MWh to $85/MWh by 2021.
Thereafter held constant.
Increasing in real terms from
$72/MWh to $100/MWh by 2023.
Thereafter held constant.
-/+ $113.0m
Generation volume1,926 GWh2,354 GWh-/+ $192.0m
Avoided Cost of Transmission100% reduction in revenue
from 2021
Current regulatory structure
is unchanged
-/+ $80.0m
Operating costs$29.1 million p.a.$39.1 million p.a.+/- $52.6m
Weighted average cost of capital7.36%8.36%+ $134.0m / - $113.0m
Tilt Renewables’ generation property, plant and equipment
The valuation of Tilt Renewables generation assets is sensitive to the inputs used in the discounted cash flow valuation model. A sensitivity analysis around
some key inputs is given in the table below. The valuation is based on a combination of values that are generally at the midpoint of the range. The valuation
impact is calculated as the movement in the fair value as a result of the change in the assumption and keeping all other valuation inputs constant. In
addition to the tests below, a separate sensitivity analysis has been conducted to assess the impact of varying future cash flows for increases or decreases of
up to 10% in market prices (including New Zealand market prices beyond the fixed price period to March 2022). None of these tests resulted in an
impairment of the fair value of generation, property, plant and equipment.
GENERATION RENEWABLELOWHIGHVALUATION IMPACT
New Zealand Assets
Generation volume10% reduction in future production 10% increase in future production -/+ $33.9m
Operating costs10% increase in future operating
expenditure
10% decrease in future operating
expenditure
+/- $9.0m
Weighted average cost of capital7.40%8.40%+ $9.1m / - $8.6m
Australian Assets
Forward electricity price path
(including renewable energy credits)
The valuation impact of changes in price
path is reduced by the fixed price
agreements in place
Lower South Australia spot prices
over a 10-year period (15% below
the base case on average), reverting
to real $93/MWh beyond 2030
Higher South Australia spot prices over
a 10-year period (23% above the base
case on average) reflecting current
market fundamentals without
short-term energy policy intervention
- A$57.5/+ A$77.3m
Generation volume10% reduction in future production 10% increase in future production -/+ A$115.4m
Weighted average cost of capital7.10%8.10%+ A$40.6m / - A$38.1m
Perth Energy’s generation property, plant and equipment
Non-renewable generation plant held by Perth Energy was revalued to A$93.9 million as at 31 March 2018 (31 March 2017: A$95.7 million), using a
discounted cash flow methodology. To arrive at the plant’s estimated market values, the directors relied, amongst other factors, on valuation works
performed by an external and independent valuer. The key assumptions in this valuation include; future reserve capacity pricing, future output of the
assets, remaining life of the assets, rehabilitation cost and terminal value at the end of assets, ongoing operating and maintenance costs for each asset
and the weighted average cost of capital.
The valuation has considered the key proposed changes to the reserve capacity pricing mechanism and the effects these changes have on the reserve
capacity price (RCP). The key assumptions made within the valuation model include; the earliest the proposed auction process will start is in 2024-25
capacity year, longer term pricing of RCP will eventually return to the average cost of a marginal entrant, generation revenue until year ended 31 March
2023 and RCP increasing by 2.5% CPI from 2024-25 onwards.
7677
ANNUAL REPORT 2018INFRATIL
GENERATION NON-RENEWABLELOWHIGHVALUATION IMPACT
Australian Assets
Weighted average cost of capital8.0% 9.0%
2020/2021 reserve capacity price per MWA$131,210A$131,210+/- A$3.5m
CPI escalation post 2024/20252.5% 2.5%
Plant reliability98.0% 98.0%
Wellington International Airport’s property, plant and equipment
The following tables summarise the significant valuation techniques and inputs used by valuers to arrive at the fair value for WIAL’s property, plant
and equipment.
ASSET CLASSIFICATION AND DESCRIPTION
VALUATION
APPROACHKEY VALUATION ASSUMPTIONS
+/- 5% VALUATION
IMPACT
Land
Aeronautical land – used for airport activities and
specialised aeronautical assets.
MVEURate per hectare$1.86 million per hectare+/- $10.0m
Non-aeronautical land – used for non-aeronautical purposes
e.g. industrial, service, retail, residential and land
associated with the vehicle business.
Developer’s WACC rate10.40%+/- $7.4m
Holding period6 years+/- $11.1m
Valued at 31 March 2018 by Savills (NZ) Limited, registered
valuers, at $333.1 million.
Civil
Civil works includes sea protection and site services,
excluding such site services to the extent that they would
otherwise create duplication of value.
ODRCAverage cost rates
including concrete,
asphalt, base course
and foundations
Concrete $800
Asphalt $892
Basecourse $96
Foundations $19
+/- $7.2m
Estimated remaining
useful life
Average remaining
useful life 30 years
+/- $7.2m
Valued at 31 March 2016 by Opus International
Consultants Limited at $144.7 million.
Buildings
Specialised buildings used for identified airport activitiesODRCModern equivalent asset
rate (per square metre)
$7,658+/- $11.8m
Non specialised buildings used for purposes other than for
identified airport activities, including space allocated
within the main terminal building for retail activities,
offices and storage.
Modern equivalent asset
rate (per square metre)
$1,742+/- $0.4m
Vehicle business assets associated with car parking and
taxi, shuttle and bus services (excluding land and civil).
DCFRevenue growth3.00%+/- $0.8m
Cost growth3.00%+/- $0.1m
Discount rate12.00%+/- $6.6m
Capitalisation rate9.00%+/- $9.0m
Valued at 31 March 2018 by Savills (NZ) Limited, registered
valuers, at $423.4 million.
7777
ANNUAL REPORT 2018
Effect of level 3 fair value measurements on profit or loss and other comprehensive income
The following table summarises for property, plant and equipment measured at fair value, classified as level 3 in the fair value hierarchy, the effect of the
fair value movements on profit or loss and other comprehensive income for the year.
2018
RECOGNISED IN
PROFIT OR LOSS
$MILLIONS
RECOGNISED
IN OCI
$MILLIONS
TOTAL
$MILLIONS
Level 3 Fair Value movements
Generation Plant (renewable)
-(41.0)(41.0)
Generation Plant (non renewable) -2.32.3
Land and civil works -30.030.0
Buildings -20.220.2
Vehicle business assets---
-11.511.5
2017
RECOGNISED IN
PROFIT OR LOSS
$MILLIONS
RECOGNISED
IN OCI
$MILLIONS
TOTAL
$MILLIONS
Level 3 Fair Value movements
Generation Plant (renewable)
-110.0110.0
Generation Plant (non renewable)-(1.3)(1.3)
Land and civil works-0.30.3
Buildings ---
Vehicle business assets-1.91.9
-110.9110.9
There were no transfers between property, plant and equipment assets classified as level 1 or level 2, and level 3 of the fair value hierarchy during the year
ended 31 March 2018 (2017: none).
Revalued assets at deemed cost
For each revalued class the carrying amount that would have been recognised had the assets been carried on a historical cost basis are as follows:
2018
COST
$MILLIONS
ASSETS UNDER
CONSTRUCTION
$MILLIONS
ACCUMULATED
DEPRECIATION
$MILLIONS
NET BOOK VALUE
$MILLIONS
Generation Plant (renewable)2,109.814.8(651.1)1,473.5
Generation Plant (non-renewable)127.3-(42.8)84.5
Land and civil works249.92.5(46.7)205.7
Buildings292.44.3(84.7)212.0
Vehicle business assets46.82.4(36.1)13.1
Capital work in progress-- --
2,826.224.0(861.4)1,988.8
2017
COST
$MILLIONS
ASSETS UNDER
CONSTRUCTION
$MILLIONS
ACCUMULATED
DEPRECIATION
$MILLIONS
NET BOOK VALUE
$MILLIONS
Generation Plant (renewable)2,185.114.5(601.2)1,598.4
Generation Plant (non-renewable)128.6-(36.4)92.2
Land and civil works223.726.0(43.4)206.3
Buildings185.90.2(73.3)112.8
Vehicle business assets55.10.2(4.5)50.8
Capital work in progress-- --
2,778.440.9(758.8)2,060.5
7879
ANNUAL REPORT 2018INFRATIL
13. INTANGIBLES
2018
LEASE
AGREEMENTS/
SOFTWARE
$MILLIONS
CUSTOMER
ACQUISITION
COSTS
$MILLIONS
TOTAL
$MILLIONS
Cost or valuation
Balance at beginning of the year
115.3 83.0 198.3
Foreign exchange adjustment on opening balance(0.1) - (0.1)
Additions at cost10.1 - 10.1
Disposals(1.2) - (1.2)
Impairment(5.1) - (5.1)
Transfers from property, plant and equipment - - -
Balance at end of year119.0 83.0 202.0
Amortisation and impairment losses
Balance at beginning of the year
(78.2)(64.5)(142.7)
Foreign exchange adjustment on opening balance - - -
Amortisation for the year(12.2)(4.8)(17.0)
Disposals1.1 - 1.1
Impairment - - -
Balance at end of year(89.3)(69.3)(158.6)
Carrying value 31 March 201829.7 13.7 43.4
2017
LEASE
AGREEMENTS/
SOFTWARE
$MILLIONS
CUSTOMER
ACQUISITION
COSTS
$MILLIONS
TOTAL
$MILLIONS
Cost or valuation
Balance at beginning of the year
107.5 83.0 190.5
Foreign exchange adjustment on opening balance - - -
Additions at cost11.3 - 11.3
Disposals(0.5) - (0.5)
Impairment(3.4) - (3.4)
Transfers from property, plant and equipment0.4 - 0.4
Balance at end of year115.3 83.0 198.3
Amortisation and impairment losses
Balance at beginning of the year
(66.0)(60.2)(126.2)
Foreign exchange adjustment on opening balance - - -
Amortisation for the year(12.6)(4.3)(16.9)
Disposals0.4 - 0.4
Impairment - - -
Balance at end of year(78.2)(64.5)(142.7)
Carrying value 31 March 201737.1 18.5 55.6
7979
ANNUAL REPORT 2018
14. GOODWILL
2018
$MILLIONS
2017
$MILLIONS
Balance at beginning of the year117.4 117.4
Goodwill arising on acquisitions - -
Goodwill disposed of during the year - -
Goodwill impaired during the year - -
Balance at the end of the year117.4 117.4
The aggregate carrying amounts of goodwill allocated to each cash generating unit are as follows:
Trustpower
79.2 79.2
Tilt Renewables33.8 33.8
Other4.4 4.4
117.4 117.4
Following the demerger of Trustpower and Tilt Renewables on 31 October 2016, Goodwill of $108.9 million at the Group level was allocated between the
two entities on a Relative Value basis. This Goodwill arose on the acquisition of a 15.3% interest in Trustpower in the 2007 financial year. This calculation
was performed based on the value of the opening share price following demerger. The recoverable amount of Goodwill at balance date has been assessed
by reference to the fair value of Trustpower and Tilt Renewables based on the market share price quoted on the NZX, and the extent of the Group’s
shareholding. There were no impairments required following this review.
15. LOANS AND BORROWINGS
This note provides information about the contractual terms of the Group’s interest bearing loans and borrowings.
2018
$MILLIONS
2017
$MILLIONS
Current liabilities
Unsecured bank loans
29.9 92.7
Secured bank facilities44.0 44.5
less: Loan establishment costs capitalised and amortised over term(0.8)(2.7)
73.1 134.5
Non-current liabilities
Unsecured bank loans
179.4 257.9
Secured bank facilities682.2 634.4
less: Loan establishment costs capitalised and amortised over term(6.0)(6.9)
855.6 885.4
Facilities utilised at reporting date
Unsecured bank loans
209.3 350.6
Unsecured guarantees - -
Secured bank loans726.2 678.9
Secured guarantees32.3 26.8
Facilities not utilised at reporting date
Unsecured bank loans
566.8 463.5
Unsecured guarantees - -
Secured bank loans48.3 152.2
Secured guarantees0.3 0.3
Interest bearing loans and borrowings – current73.1 134.5
Interest bearing loans and borrowings – non-current855.6 885.4
Total interest bearing loans and borrowings928.7 1,019.9
8081
ANNUAL REPORT 2018INFRATIL
Financing arrangements
The Group’s debt includes bank facilities with negative pledge arrangements, which, with limited exceptions, do not permit the borrower to grant any
security over its assets. The bank facilities require the borrower to maintain certain levels of shareholder funds and operate within defined performance and
gearing ratios. The banking arrangements also include restrictions over the sale or disposal of certain assets without bank agreement. Throughout the year
the Group has complied with all debt covenant requirements as imposed by lenders.
Interest rates are determined by reference to prevailing money market rates at the time of draw-down plus a margin. Interest rates paid during the period
ranged from 2.4% to 5.7% (31 March 2017: 1.9% to 5.0%).
During the period the A$41.6 million secured bank facility of Perth Energy has been refinanced with an expiry date of 21 May 2020. This facility and certain
other indebtedness between the Perth Energy Holdings Group and financiers has been guaranteed by Infratil Finance Limited.
On 7 September 2016, Tilt Renewables signed financing documents in order to enable the funding of the demerger from Trustpower. These financing
documents included a new syndicated bank debt facility along with the continuation of the EKF Facilities which were historically used to fund a number of
the Tilt Renewables operating wind farms. These facilities were drawn down at implementation of the demerger on 31 October 2016 for the purpose of
refinancing Trustpower debt and are now classified as secured bank facilities.
16. INFRASTRUCTURE BONDS
2018
$MILLIONS
2017
$MILLIONS
Balance at the beginning of the year998.3 949.8
Issued during the year143.4 150.0
Exchanged during the year(32.7)(49.5)
Matured during the year(114.7)(50.5)
Purchased by Infratil during the year - (1.5)
Bond issue costs capitalised during the year(2.1)(2.2)
Bond issue costs amortised during the year2.2 2.2
Balance at the end of the year994.4 998.3
Current111.2 147.2
Non-current fixed coupon 652.0 620.3
Non-current perpetual variable coupon231.2 230.8
Balance at the end of the year994.4 998.3
Repayment terms and interest rates:
IFT160 maturing in June 2017, 8.50% p.a. fixed coupon rate
- 66.3
IFT170 maturing in November 2017, 8.00% p.a. fixed coupon rate - 81.1
IFT180 maturing in November 2018, 6.85% p.a. fixed coupon rate111.4 111.4
IFT200 maturing in November 2019, 6.75% p.a. fixed coupon rate68.5 68.5
IFT090 maturing in February 2020, 8.50% p.a. fixed coupon rate80.5 80.5
IFT220 maturing in June 2021, 4.90% p.a. fixed coupon rate93.9 93.9
IFT190 maturing in June 2022, 6.85% p.a. fixed coupon rate93.7 93.7
IFT240 maturing in December 2022, 5.65% p.a. fixed coupon rate100.0 -
IFT210 maturing in September 2023, 5.25% p.a. fixed coupon rate122.1 122.1
IFT230 maturing in June 2024, 5.50% p.a. fixed coupon rate56.1 56.1
IFT250 maturing in June 2025, 6.15% p.a. fixed coupon rate43.4 -
IFTHA Perpetual Infratil infrastructure bonds231.9 231.9
less: Bond issue costs capitalised and amortised over term(7.1)(7.2)
Balance at the end of the year994.4 998.3
8181
ANNUAL REPORT 2018
Fixed coupon
The fixed coupon bonds the Company has on issue are at a face value of $1.00 per bond. Interest is payable quarterly on the bonds. 25 days prior to the
maturity date of the IFT090 series, Infratil can elect to convert all of the bonds in that series to equity by issuing the number of shares calculated by dividing
the $1.00 face value by 98% of the market price of an Infratil share. The market price is the average price weighted by volume of all trades of ordinary
shares over the 10 business days up to the fifth business day before the maturity date.
Perpetual Infratil infrastructure bonds (‘PIIBs’)
The Company has 231,916,000 (31 March 2017: 231,916,000) PIIBs on issue at a face value of $1.00 per bond. Interest is payable quarterly on the bonds.
For the period to 15 November 2018 the coupon was fixed at 3.50% per annum (2017: 3.63%). Thereafter the rate will be reset annually at 1.5% per
annum over the then one year bank rate for quarterly payments, unless Infratil’s gearing ratio exceeds certain thresholds, in which case the margin
increases. These infrastructure bonds have no fixed maturity date. No PIIBs (2017: 1,489,000) were repurchased by Infratil Limited during the period.
Throughout the period the Company complied with all debt covenant requirements as imposed by the bond trustee.
At 31 March 2018 Infratil Infrastructure bonds (including PIIBs) had a fair value of $989.6 million (31 March 2017: $943.8 million).
17. TRUSTPOWER BONDS
Unsecured subordinated bonds
2018
$MILLIONS
2017
$MILLIONS
Repayment terms and interest rates:
TPW160 maturing in September 2019, 6.75% p.a. fixed coupon rate
114.2 114.2
less: Bond issue costs capitalised and amortised over term(0.6)(1.1)
Balance at the end of the year113.6 113.1
Current - -
Non-current113.6 113.1
Balance at the end of the year113.6 113.1
The bonds are fully subordinated behind all of Trustpower’s other creditors. At 31 March 2018 Trustpower’s unsecured subordinated bonds had a fair value
of $119.1 million (31 March 2017: $121.0 million).
Unsecured senior bonds
2018
$MILLIONS
2017
$MILLIONS
Repayment terms and interest rates:
TPW130 maturing in December 2017, 7.10% p.a. fixed coupon rate
- 52.0
TPW140 maturing in December 2021, 5.63% p.a. fixed coupon rate83.0 83.0
TPW150 maturing in December 2022, 4.01% p.a. fixed coupon rate127.7 127.7
less: Bond issue costs capitalised and amortised over term(2.0)(2.6)
Balance at the end of the year208.8 260.1
Current - 52.0
Non-current208.8 208.1
Balance at the end of the year208.8 260.1
Trustpower’s Senior bonds rank equally with their bank loans. Trustpower borrows under a negative pledge arrangement, which with limited exceptions
does not permit Trustpower to grant any security interest over its assets. The Trust Deed requires Trustpower to operate within defined performance and debt
gearing ratios. The arrangements under the Trust Deed may also create restrictions over the sale or disposal of certain assets unless the senior bonds are
repaid or renegotiated. Throughout the year Trustpower complied with all debt covenant requirements as imposed by the bond trustee.
At 31 March 2018 Trustpower’s unsecured senior bonds had a fair value of $216.4 million (31 March 2017: $264.5 million).
8283
ANNUAL REPORT 2018INFRATIL
18. WELLINGTON INTERNATIONAL AIRPORT BONDS AND USPP NOTES
2018
$MILLIONS
2017
$MILLIONS
Repayment terms and interest rates:
WIA0817 Wholesale bonds maturing August 2017, repriced quarterly at BKBM plus 25bps
- 90.0
WIA0619 Wholesale bonds maturing June 2019, repriced quarterly at BKBM plus 130bp25.0 25.0
WIA0620 Wholesale bonds maturing June 2020, 5.27% p.a. fixed coupon rate25.0 25.0
WIA020 Retail bonds maturing May 2021, 6.25% p.a. fixed coupon rate75.0 75.0
WIA030 Retail bonds maturing May 2023, 4.25% p.a. fixed coupon rate75.0 75.0
WIA040 Retail bonds maturing August 2024, 4.00% p.a. fixed coupon rate60.0 60.0
WIA050 Retail bonds maturing June 2025, 5.00% p.a. fixed coupon rate70.0 70.0
USPP Notes – Series A47.2 -
USPP Notes – Series B47.2 -
less: Issue costs capitalised and amortised over term(2.9)(2.6)
Balance at the end of the year421.6 417.4
Current - 90.0
Non-current421.6 327.4
Balance at the end of the year421.6 417.4
The Trust Deeds for these bonds require Wellington International Airport (‘WIAL’) to operate within defined performance and debt gearing ratios. The
arrangements under the Trust Deeds create restrictions over the sale or disposal of certain assets. Throughout the year Wellington International Airport
complied with all debt covenant requirements as imposed by the bond trustee.
On 27 July 2017 WIAL completed a United States Private Placement (‘USPP’) Note issuance, securing US$72 million of long term debt. The USPP
comprised two equal tranches, a US$36 million 10 year Note with a coupon of 3.47% and a US$36 million 12 year Note with a coupon of 3.59%. The
proceeds of the USPP were used to repay the $90 million in wholesale bonds that matured on 1 August 2017 (WIA0817) and for investments in major
capital projects. In conjunction with the USPP issuance, WIAL entered into cross currency interest rate swaps to formally hedge the exposure to foreign
currency risk over the term of the notes.
At 31 March 2018 WIAL’s bonds had a fair value of $346.5 million (2017: $427.3 million), and WIAL’s USPP Notes had a fair value of $93.3 million
(2017: nil).
19. FINANCIAL INSTRUMENTS
The Group has exposure to the following risks due to its business activities and financial policies:
•
Credit risk
•
Liquidity risk
•
Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and
managing risk, and the Group’s management of capital.
Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group has established
an Audit and Risk Committee for Infratil and each of its significant subsidiaries and associates with responsibilities which include reviewing management
practices in relation to identification and management of significant business risk areas and regulatory compliance. The Group has developed a
comprehensive, enterprise wide risk management framework. Management and Boards throughout the Group participate in the identification, assessment
and monitoring of new and existing risks. Particular attention is given to strategic risks that could affect the Group. Management report to the Audit and
Risk Committee and the Board on the relevant risks and the controls and treatments for those risks.
8383
ANNUAL REPORT 2018
19.1) Credit Risk
Credit risk is the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Group. The Group is exposed to credit risk
in the normal course of business including those arising from trade receivables with its customers, financial derivatives and transactions (including cash
balances) with financial institutions. The Group minimises its exposure to credit risk of trade receivables through the adoption of counterparty credit limits
and standard payment terms. Derivative counterparties and cash transactions are limited to high-credit-quality financial institutions and organisations in
the relevant industry. The Group’s exposure and the credit ratings of significant counterparties are monitored, and the aggregate value of transactions
concluded are spread amongst approved counterparties. The carrying amounts of financial assets recognised in the Statement of Financial Position best
represent the Group’s maximum exposure to credit risk at the reporting date. Generally no security is held on these amounts.
Exposure to credit risk
2018
$MILLIONS
2017
$MILLIONS
The Group had exposure to credit risk with finance institutions at balance date from cash deposits held as follows:
Financial institutions with ‘AA’ credit ratings from Standard & Poor’s or equivalent rating agencies
- -
Financial institutions with ‘AA-’ credit ratings from Standard & Poor’s or equivalent rating agencies380.4 260.7
Financial institutions with ‘A+’ credit ratings from Standard & Poor’s or equivalent rating agencies - 8.0
Total380.4 268.7
Cash on hand0.1 0.1
Total Cash and cash equivalents380.5 268.8
At 31 March 2018 $2.4 million (31 March 2017: $2.0 million) of cash deposits are “restricted” and not immediately available for use by the Group.
Trade and other receivables
The Group has exposure to various counterparties. Concentration of credit risk with respect to trade receivables is limited due to the Group’s large customer
base in a diverse range of industries throughout New Zealand and Australia.
Ageing of trade receivables
2018
$MILLIONS
2017
$MILLIONS
The ageing analysis of trade receivables is as follows:
Not past due
77.7 117.5
Past due 0-30 days6.3 5.7
Past due 31-90 days1.9 0.9
Greater than 90 days2.1 0.2
Total88.0 124.3
The ageing analysis of impaired trade receivables is as follows:
Not past due
0.1 -
Past due 0-30 days - -
Past due 31-90 days(0.1) -
Greater than 90 days(2.8)(2.0)
Total(2.8)(2.0)
Movement in the provision for impairment of trade receivables for the year was as follows:
Balance as at 1st April
2.2 2.1
Impairment loss recognised0.9 0.1
Balance as at 31 March3.1 2.2
Other current prepayments and receivables143.1 97.7
Total Trade, accounts receivable and current prepayments228.3 220.0
8485
ANNUAL REPORT 2018INFRATIL
19.2) Liquidity Risk
Liquidity risk is the risk that assets held by the Group cannot readily be converted to cash to meet the Group’s contracted cash flow obligations. Liquidity risk
is monitored by continuously forecasting cash flows and matching the maturity profiles of financial assets and liabilities. The Group’s approach to managing
liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due and make value investments, under both normal and stress
conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by maintaining sufficient
cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities, the spreading of debt maturities, and
its credit standing in capital markets.
The tables below analyse the Group’s financial liabilities, excluding gross settled derivative financial liabilities, into relevant maturity groupings based on
the earliest possible contractual maturity date at year end. The amounts in the tables below are contractual undiscounted cash flows, which include interest
through to maturity. Perpetual Infratil Infrastructure Bonds cash flows have been determined by reference to the longest dated Infratil bond maturity in the
year 2025.
BALANCE SHEET
$MILLIONS
CONTRACTUAL
CASH FLOWS
$MILLIONS
6 MONTHS
OR LESS
$MILLIONS
6-12 MONTHS
$MILLIONS
1 TO 2 YEARS
$MILLIONS
2 TO 5 YEARS
$MILLIONS
5 + YEARS
$MILLIONS
31 March 2018
Accounts payable, accruals and other liabilities
236.6 190.8 172.3 12.4 4.4 1.7 -
Unsecured/Secured bank facilities 928.7 964.9 32.2 49.7 311.9 447.3 123.8
Unsecured/Secured bank guarantees - 0.2 0.1 0.1 - - -
Infratil Infrastructure bonds 763.2 936.5 24.0 132.5 186.7 359.1 234.2
Perpetual Infratil Infrastructure bonds 231.2 290.5 4.1 4.1 8.1 24.4 249.8
Wellington International Airport bonds 421.6 546.5 9.7 9.7 43.8 145.5 337.8
Trustpower bonds 322.3 378.4 8.8 8.8 127.8 233.0 -
Derivative financial instruments 51.7 58.8 15.1 8.2 19.5 7.2 8.8
2,955.3 3,366.6 266.3 225.5 702.2 1,218.2 954.4
31 March 2017
Accounts payable, accruals and other liabilities
222.4 212.7 176.5 3.5 1.2 2.5 0.2
Unsecured/Secured bank facilities 1,019.9 1,157.8 152.5 47.6 194.4 579.9 183.4
Unsecured/Secured bank guarantees - 0.4 0.2 0.2 - - -
Infratil Infrastructure bonds 767.5 939.5 90.5 101.7 148.2 309.7 289.4
Perpetual Infratil Infrastructure bonds 230.8 292.6 4.2 4.2 8.4 25.3 250.5
Wellington International Airport bonds 417.4 517.1 99.0 8.0 15.9 166.2 228.0
Trustpower bonds 373.2 426.2 10.4 74.2 16.1 217.3 108.2
Derivative financial instruments 62.7 67.2 17.4 11.5 15.7 21.0 1.6
3,093.9 3,613.5 550.7 250.9 399.9 1,321.9 1,061.3
8585
ANNUAL REPORT 2018
19.3) Market Risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and energy prices will affect the Group’s income or the
value of its holdings of financial assets and liabilities. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return.
19.3.1) Interest rate risk (cash flow and fair value)
Interest rate risk is the risk of interest rate volatility negatively affecting the Group’s interest expense cash flow and earnings. Infratil mitigates this risk by
issuing term borrowings at fixed interest rates and entering into Interest Rate Swaps to convert floating rate exposures to fixed rate exposures. Borrowings
issued at fixed rates expose the Group to fair value interest rate risk which is managed by the interest rate profile and hedging.
2018
$MILLIONS
2017
$MILLIONS
At balance date the face value of interest rate contracts outstanding were:
Interest rate swaps
1,086.41,285.6
Fair value of interest rate swaps (30.5)(39.2)
Cross currency interest rate swaps99.5 -
Fair value of cross currency interest rate swaps (6.2) -
The termination dates for the interest rate swaps are as follows:
Between 0 to 1 year
201.2 463.5
Between 1 to 2 years237.4 204.2
Between 2 to 5 years550.1 435.6
Over 5 years97.7 182.3
The termination dates for the cross currency interest rate swaps are as follows:
Between 0 to 1 year
- -
Between 1 to 2 years - -
Between 2 to 5 years - -
Over 5 years99.5-
Interest rate sensitivity analysis
The following table shows the impact on post-tax profit and equity of a movement in bank interest rates of 100 basis points higher/lower with all other
variables held constant.
2018
$MILLIONS
2017
$MILLIONS
Profit or loss
100 bp increase
23.1 31.7
100 bp decrease(24.5)(30.9)
Other comprehensive income
100 bp increase
19.3 25.1
100 bp decrease(20.6)(23.9)
8687
ANNUAL REPORT 2018INFRATIL
19.3.2) Foreign Currency Risk
The Group has exposure to foreign currency risk on the value of its net investment in foreign investments, assets and liabilities, future investment
obligations and future income. Foreign currency obligations and income are recognised as soon as the flow of funds is likely to occur. Decisions on buying
forward cover for likely foreign currency investments is subject to the Group’s expectation of the fair value of the relevant exchange rate.
The Group enters into forward exchange contracts to reduce the risk from price fluctuations of foreign currency commitments associated with the construction
of generation assets and to hedge the risk of its net investment in foreign operations. Any resulting differential to be paid or received as a result of the
currency hedging of the asset is reflected in the final cost of the asset. The Group has elected to apply cash flow hedge accounting to these instruments.
2018
$MILLIONS
2017
$MILLIONS
At balance date the face value of the forward foreign exchange contracts outstanding were:
Foreign exchange contracts
- 23.5
Fair value of foreign exchange contracts - 0.2
The termination dates for foreign exchange contracts are as follows:
Between 0 to 1 year
- 23.5
Between 1 to 2 years - -
Between 2 to 5 years - -
Over 5 years - -
Foreign exchange sensitivity analysis
The following table shows the impact on post-tax profit and equity if the New Zealand dollar had weakened/strengthened by 10% against the currencies
with which the Group has foreign currency risk with, all other variables held constant.
2018
$MILLIONS
2017
$MILLIONS
Profit or loss
Strengthened by 10 per cent
(1.5)(0.7)
Weakened by 10 per cent1.5 0.7
Other comprehensive income
Strengthened by 10 per cent
(92.1)(89.1)
Weakened by 10 per cent92.1 90.2
Significant assumptions used in the foreign currency exposure sensitivity analysis include:
Reasonably possible movements in foreign exchange rates were determined based on a review of the last two years’ historical movements. A movement of
plus or minus 10% has therefore been applied to the AUD/NZD and USD/NZD exchange rates to demonstrate the sensitivity of foreign currency risk of the
company’s investment in foreign operations and associated derivative financial instruments. The sensitivity was calculated by taking the AUD and USD spot
rate as at balance date, moving this spot rate by plus and minus 10% and then reconverting the AUD and USD balances with the ‘new spot-rate’.
Unhedged foreign currency exposures
At balance date the Group has the following unhedged exposure to foreign currency risk arising on foreign currency monetary assets and liabilities that fall
due within the next twelve months:
2018
$MILLIONS
2017
$MILLIONS
Cash, short term deposits and trade receivables
United States Dollars (USD)
29.4 -
Australian Dollars (AUD)0.4 18.2
Bank overdraft, bank debt and accounts payable
Australian Dollars (AUD)
- -
8787
ANNUAL REPORT 2018
19.3.3) Energy Price Risk
Energy Price Risk is the risk that results will be impacted by fluctuations in spot energy prices. The Group meets its energy sales demand by purchasing
energy on spot markets, physical deliveries and financial derivative contracts. This exposes the Group to fluctuations in the spot and forward price of energy.
The Group has entered into a number of energy hedge contracts to reduce the energy price risk from price fluctuations. These hedge contracts establish the
price at which future specified quantities of energy are purchased and settled. Any resulting differential to be paid or received is recognised as a component
of energy costs through the term of the contract. The Group has elected to apply cash flow hedge accounting to those instruments it deems material and
which qualify as cash flow hedges.
20182017
At balance date the aggregate notional volume of outstanding energy derivatives were:
Electricity (GWh)
1,502.0 1,490.0
Gas (Tj) - -
Oil (barrels ‘000) - -
Fair value of energy derivatives ($millions)(9.1)(10.8)
As at 31 March 2018, the Group had energy contracts outstanding with various maturities expected to occur continuously throughout the next three years.
The hedged anticipated energy purchase transactions are expected to occur continuously throughout the contract period from balance sheet date consistent
with the Group’s forecast energy generation and retail energy sales. Gains and losses recognised in the cash flow hedge reserve on energy derivatives as of
31 March 2018 will be continuously released to the income statement in each period in which the underlying purchase transactions are recognised in the
profit or loss.
2018
$MILLIONS
2017
$MILLIONS
The termination dates for the energy derivatives are as follows:
Between 0 to 1 year
71.4 64.7
Between 1 to 2 years26.6 38.9
Between 2 to 5 years13.3 6.1
Over 5 years - -
111.3 109.7
Energy price sensitivity analysis
The following table shows the impact on post-tax profit and equity of an increase/decrease in the relevant forward electricity prices with all other variables
held constant:
2018
$MILLIONS
2017
$MILLIONS
Profit and loss
10% increase in energy forward prices
(0.8) 1.0
10% decrease in energy forward prices0.8(1.0)
Other comprehensive income
10% increase in energy forward prices
6.45.1
10% decrease in energy forward prices(6.4)(5.1)
8889
ANNUAL REPORT 2018INFRATIL
19.4) Fair Values
The carrying amount of financial assets and financial liabilities recorded in the financial statements is their fair value, with the exception of bond debt
and senior notes held at amortised cost which have a fair value at 31 March 2018 of $1,764.8 million (31 March 2017: $1,756.7 million) compared to
a carrying value of $1,738.3 million (31 March 2017: $1,788.9 million).
The carrying value of derivative financial assets and liabilities recorded in the statement of financial position are as follows:
2018
$MILLIONS
2017
$MILLIONS
Assets
Derivative financial instruments – energy
3.3 5.9
Derivative financial instruments – cross currency interest rate swaps - -
Derivative financial instruments – foreign exchange - 0.2
Derivative financial instruments – interest rate2.6 6.8
5.9 12.9
Split as follows:
Current
2.9 4.6
Non-current 3.0 8.3
5.9 12.9
Liabilities
Derivative financial instruments – energy
12.4 16.7
Derivative financial instruments – cross currency interest rate swaps6.2 -
Derivative financial instruments – foreign exchange - -
Derivative financial instruments – interest rate33.1 46.0
51.7 62.7
Split as follows:
Current
12.7 9.5
Non-current 39.0 53.2
51.7 62.7
Estimation of fair values
The fair values of financial assets and financial liabilities are determined as follows:
•
The fair value of financial assets and liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to
quoted market prices.
•
The fair value of other financial assets and liabilities are calculated using market-quoted rates based on discounted cash flow analysis.
•
The fair value of derivative financial instruments are calculated using quoted prices. Where such prices are not available, use is made of discounted cash
flow analysis using the applicable yield curve or available forward price data for the duration of the instruments.
8989
ANNUAL REPORT 2018
Where the fair value of a derivative is calculated as the present value of the estimated future cash flows of the instrument, the two key types of variables
used by the valuation techniques are:
•
forward price curve (for the relevant underlying interest rates, foreign exchange rates or commodity prices); and
•
discount rates.
VALUATION INPUTSOURCE
Interest rate forward price curvePublished market swap rates
Foreign exchange forward pricesPublished spot foreign exchange rates
Electricity forward price curveMarket quoted prices where available and management’s best estimate
based on its view of the long run marginal cost of new generation where
no market quoted prices are available
Discount rate for valuing interest rate derivativesPublished market interest rates as applicable to the remaining life of
the instrument
Discount rate for valuing forward foreign exchange contractsPublished market rates as applicable to the remaining life of the
instrument
Discount rate for valuing electricity price derivativesAssumed counterparty cost of funds ranging from 3.1% to 3.5%
(31 March 2017: 3.1% to 3.5%)
The selection of variables requires significant judgement and therefore there is a range of reasonably possible assumptions in respect of these variables
that could be used in estimating the fair value of these derivatives. Maximum use is made of observable market data when selecting variables and
developing assumptions for the valuation techniques.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
•
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
•
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is,
derived from prices) (level 2)
•
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)
The following tables present the Group’s financial assets and liabilities that are measured at fair value.
LEVEL 1
$MILLIONS
LEVEL 2
$MILLIONS
LEVEL 3
$MILLIONS
TOTAL
$MILLIONS
31 March 2018
Assets per the statement of financial position
Derivative financial instruments – energy
- - 3.3 3.3
Derivative financial instruments – cross currency interest rate swaps - - - -
Derivative financial instruments – foreign exchange - - - -
Derivative financial instruments – interest rate - 2.6 - 2.6
Total - 2.6 3.3 5.9
Liabilities per the statement of financial position
Derivative financial instruments – energy
- - 12.4 12.4
Derivative financial instruments – cross currency interest rate swaps - 6.2 - 6.2
Derivative financial instruments – foreign exchange - - - -
Derivative financial instruments – interest rate - 33.1 - 33.1
Total - 39.3 12.4 51.7
9091
ANNUAL REPORT 2018INFRATIL
LEVEL 1
$MILLIONS
LEVEL 2
$MILLIONS
LEVEL 3
$MILLIONS
TOTAL
$MILLIONS
31 March 2017
Assets per the statement of financial position
Derivative financial instruments – energy
- - 5.9 5.9
Derivative financial instruments – foreign exchange - 0.2 - 0.2
Derivative financial instruments – interest rate - 6.8 - 6.8
Total - 7.0 5.9 12.9
Liabilities per the statement of financial position
Derivative financial instruments – energy
- - 16.7 16.7
Derivative financial instruments – foreign exchange - - - -
Derivative financial instruments – interest rate - 46.0 - 46.0
Total - 46.0 16.7 62.7
There were no transfers between derivative financial instrument assets or liabilities classified as level 1 or level 2, and level 3 of the fair value hierarchy
during the year ended 31 March 2018 (31 March 2017: none).
The following table reconciles the movements in level 3 Electricity price derivatives that are classified within level 3 of the fair value hierarchy because the
assumed location factors which are used to adjust the forward price path are unobservable.
2018
$MILLIONS
2017
$MILLIONS
Assets per the statement of financial position
Opening balance
5.9 6.4
Foreign exchange movement on opening balance - -
Acquired as part of business combination - -
Gains and (losses) recognised in profit or loss(2.9)(0.2)
Gains and (losses) recognised in other comprehensive income0.3 (0.3)
Closing balance3.3 5.9
Total gains or (losses) for the year included in profit or loss for assets held at the end of the reporting year(1.0)1.4
Liabilities per the statement of financial position
Opening balance
16.7 11.9
Foreign exchange movement on opening balance - -
Acquired as part of business combination - -
(Gains) and losses recognised in profit or loss(1.2)0.2
(Gains) and losses recognised in other comprehensive income(3.1)4.6
Sold as part of the disposal of a subsidiary - -
Closing balance12.4 16.7
Total gains or (losses) for the year included in profit or loss for liabilities held at the end of the reporting year0.7 6.5
Settlements during the year4.4 (13.2)
19.5) Capital Management
The Group’s capital includes share capital, reserves, retained earnings and non-controlling interests of the Group. From time to time the Group purchases its
own shares on the market with the timing of these purchases dependent on market prices, an assessment of value for shareholders and an available
window to trade on the NZX. Primarily the shares are intended to be held as treasury stock and may be reissued under the Dividend Reinvestment Plan or
cancelled. During the year the Group bought back 775,000 shares (2017: 2,510,000). The Company and the Group’s borrowings are subject to certain
compliance ratios in accordance with the facility agreements or the trust deed applicable to the borrowings.
9191
ANNUAL REPORT 2018
The Group seeks to ensure that no more than 25% of its non-bank debt is maturing in any one year period, and to spread the maturities of its bank debt
facilities between one and five years. Discussions on refinancing of facilities will normally commence at least six months before maturity. Facilities are
maintained with AA- (2017: A+) or above rated financial institutions, and with a minimum number of bank counterparties to ensure diversification. The
Group manages its interest rate profile so as to minimise value volatility. This means having interest costs fixed for extended terms. At times when long
rates appear to be sustainably high, the profile may be shortened, and when rates are low the profile may be lengthened.
20. LEASES
The Group has receivables from operating leases relating to the lease of premises. These receivables expire as follows:
2018
$MILLIONS
2017
$MILLIONS
Operating lease receivables as lessor
Between 0 to 1 year
20.5 19.3
Between 1 to 2 years16.4 17.7
Between 2 to 5 years38.9 39.9
More than 5 years8.1 15.7
83.9 92.6
Over 90% of the electricity generated by Tilt Renewables Australian wind farms is sold via power purchase agreements to a large Australian electricity
retailer. Almost all of the electricity generated by Tilt Renewables New Zealand is sold via a power purchase agreement to Trustpower. These agreements
have been deemed as operating leases of the wind farms under NZ IFRS and all revenue under these contracts are accounted for as lease revenue (2018:
A$150.5 million 2017: A$148.5 million).
The volume of energy supplied is dependent on the actual generation of the wind farms, therefore, the future minimum payments under the terms of the
contracts, that expire between 31 December 2018 and 31 December 2030, are not able to be quantified with sufficient reliability for disclosure in the
financial statements.
The Group has commitments under operating leases relating to the lease of premises and the hire of plant and equipment. These commitments expire
as follows:
2018
$MILLIONS
2017
$MILLIONS
Operating lease commitments as lessee
Between 0 to 1 year
13.4 13.3
Between 1 to 2 years13.6 9.4
Between 2 to 5 years33.9 39.6
More than 5 years65.1 46.6
125.9 108.9
21. CAPITAL COMMITMENTS
2018
$MILLIONS
2017
$MILLIONS
Committed but not contracted for 35.1 -
Contracted but not provided for79.3 42.5
Capital commitments114.4 42.5
The capital commitments include the hotel development and multi level car park works at Wellington International Airport and the purchase of buses by
NZ Bus. See note 7 for Infratil’s commitments to ASIP and Envision.
On 14 February 2018, Tilt Renewables (‘Tilt’) announced that it had submitted a bid into the Victorian Renewable Energy Auction Scheme (‘VREAS’) for a
portion of output from the fully permitted Dundonnell Wind Farm (‘Dundonnell’). In June 2016, the Victorian Government committed to the Victorian
Renewable Energy Target (‘VRET’) of 25% of energy generation in the state by 2020 and 40% by 2025. To ensure these targets are met, the Victorian
Government is seeking to contract up to 650MW of new renewable energy capacity under the VREAS. The outcome of this process is expected to be known
around July 2018.
9293
ANNUAL REPORT 2018INFRATIL
Should Dundonnell be awarded a contract under the VREAS construction would begin in late 2018 with an estimated total construction cost of
approximately A$600 million. Tilt Renewable’s current expectation is that it would fund Dundonnell and the associated VREAS bid using a combination of
new corporate debt and an equity raising together covering the full estimated construction cost. In order to provide further support for the bid, Tilt obtained
equity funding support from Infratil. This equity funding support comprises a conditional agreement by Infratil to offer to underwrite 100% of an equity
raising of A$300 million for Dundonnell (subject to agreement on equity pricing). Should Infratil underwrite the equity raising in full, various Tilt
Renewable’s shareholder approvals will be required.
22. RECONCILIATION OF NET SURPLUS WITH CASH FLOW FROM OPERATING ACTIVITIES
2018
$MILLIONS
2017
$MILLIONS
Net surplus for the year139.2 130.4
(Add) / Less items classified as investing activity:
(Gain) / Loss on investment realisations and impairments
5.3 56.0
Add items not involving cash flows:
Movement in financial derivatives taken to the profit or loss
(7.5)(28.7)
Decrease in deferred tax liability excluding transfers to reserves(4.9)(53.1)
Changes in fair value of investment properties(18.0)(0.8)
Equity accounted earnings of associate net of distributions received(13.7)(83.3)
Depreciation176.8 169.6
Movement in provision for bad debts3.7 1.6
Amortisation of intangibles17.0 16.9
Other9.7 11.1
Movements in working capital:
Change in receivables
(25.8)(5.0)
Change in inventories(1.5)0.4
Change in trade payables21.9 7.2
Change in accruals and other liabilities7.7 (6.9)
Change in current and deferred taxation(14.1)29.4
Net cash flow from operating activities295.8 245.0
23. KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel have been defined as the Chief Executives and direct reports for the Group’s operating subsidiaries (excluding
non-executive Directors).
2018
$MILLIONS
2017
$MILLIONS
Key management personnel remuneration comprised:
Short-term employee benefits
18.2 15.7
Post employment benefits - -
Termination benefits - -
Other long-term benefits 0.4 0.2
Share based payments4.5 1.0
23.1 16.9
Directors fees paid to directors of Infratil Limited and its subsidiaries during the year were $3.4 million (2017: $2.8 million).
See also management fees paid to Infratil’s manager in the Related parties and Management fee to Morrison & Co Infrastructure Management Limited
(‘MCIM’) in notes 25 and 26.
9393
ANNUAL REPORT 2018
24. SHARE SCHEME
Infratil Staff Share Purchase Scheme
In 2008 Infratil commenced a staff share purchase scheme (‘the Staff Share Scheme’). Under the Staff Share Scheme participating employees have a
beneficial title to the ordinary shares, which are held by a trustee company. Staff are provided a loan in respect of the shares which is repayable over a
period of three years. Upon repayment of the loan and three years’ service by the participating employee, the ordinary shares will transfer from the trustee
company to the participating employee, and the shares become unrestricted. Other than in exceptional circumstances, the length of the retention period
before the shares vest is three years during which time the ordinary shares cannot be sold or disposed of.
During the year 42,091 shares were transferred to employees under the scheme (2017: 44,557 shares).
Infratil Executive Redeemable Share Scheme
From time to time selected key eligible executives and senior managers of Infratil and certain of its subsidiaries are invited to participate in the Infratil
Executive Redeemable Share Scheme (‘Executive Scheme’) to acquire Executive Redeemable Shares (‘Executive Shares’). The Executive Shares have certain
rights and conditions and cannot be traded and do not convert to ordinary shares until those conditions have been met. The Executive Shares confer no
rights to receive dividends or other distributions or to vote. Executive Shares may be issued which will convert to ordinary shares after three years (other than
in defined circumstances) provided that the issue price has been fully paid and vesting conditions have been met. The vesting conditions include share
performance hurdles with minimum future share price targets which need to be achieved over the specified period. The number of shares that “vest” (or LTI
bonus paid) is based on the share price performance over the relevant period of the Infratil ordinary shares. If the executive is still employed by the Group at
the end of the specified period, provided the share performance hurdles are met the executive receives a long term incentive bonus (‘LTI’) which must be
used to repay the outstanding issue price of the Executive Shares and the Executive Shares are then converted to fully paid ordinary shares of Infratil.
No new Infratil Executive Redeemable Shares were granted during the current year. On 17 June 2016, 528,000 Infratil Executive Redeemable Shares were
granted at a price of $3.3107, the volume weighted average market price over the 20 business days immediately preceding the date on which the shares
were issued to each executive. One cent per Executive Share was paid up in cash by the executive with the balance of the issue price payable when the
executive becomes eligible to receive the long term incentive bonus.
The Determination Date for the 2014 Scheme was 23 December 2017. The performance hurdles for the 2014 Scheme were not met and, accordingly, the
shares did not vest. On 17 December 2016, the 2013 Executive Scheme matured having met certain share performance thresholds. Pursuant to this and
the Trust Deed, the Company converted 237,521 Executive Shares into Infratil Ordinary Shares on 22 December 2016.
Executive redeemable shares
20182017
Balance at the beginning of the year 990,500 827,500
Shares issued - 528,000
Shares converted to ordinary shares - (237,521)
Shares cancelled(557,500)(127,479)
Balance at end of year 433,000 990,500
25. RELATED PARTIES
Certain Infratil Directors have relevant interests in a number of companies with which Infratil has transactions in the normal course of business. A number
of key management personnel are also Directors of Group subsidiary companies and associates.
Morrison & Co Infrastructure Management Limited (‘MCIM’) is the management company for the Company and receives management fees in accordance
with the applicable management agreement. MCIM is owned by H.R.L. Morrison & Co Group Limited Partnership (‘MCO’). Mr M Bogoievski is a director of
Infratil and is a director and Chief Executive Officer of MCO. Entities associated with Mr Bogoievski also have beneficial interests in MCO.
Management and other fees paid by the Group (including associates) to MCIM, MCO or its related parties during the year were:
2018
$MILLIONS
2017
$MILLIONS
Management fees22.1 21.4
Executive secondment and consulting - 0.3
Directors fees2.1 1.7
Financial management, accounting, treasury, compliance and administrative services1.4 3.8
Risk management reporting - -
Investment banking services1.2 1.4
Total management and other fees26.8 28.5
9495
ANNUAL REPORT 2018INFRATIL
At 31 March 2018 amounts owing to MCIM of $2.5 million (excluding GST) are included in trade creditors (2017: $2.3 million).
On 8 May 2017 the Company obtained a standing waiver from NZSX Listing Rule 9.2.1. The effect of the waiver is to waive the requirement for Infratil
to obtain an Ordinary Resolution from shareholders to enter into a Material Transaction with a Related Party to the extent required to allow Infratil to
enter into transactions with co-investors that have also engaged an entity related to H.R.L. Morrison & Co Group LP for investment management or
advisory services. The waiver is provided on the conditions specified in paragraph 2 of the waiver decision, which is available on Infratil’s website:
www.infratil.com/for-investors/announcements. As yet, no transaction has been entered into in reliance on this waiver.
MCO, or Employees of MCO received directors fees from the Company’s subsidiaries or associated companies as follows:
2018
$000’S
2017
$000’S
CDC Group Holdings Pty Ltd234.9 95.5
Cullinan Holding Trust89.6 -
Infratil Infrastructure Property Limited60.0 -
Metlifecare Limited - 180.0
New Zealand Bus Limited175.5 171.6
Longroad Energy Holdings, LLC74.6 -
Perth Energy Pty Limited163.5 167.8
RA (Holdings) 2014 Pty Limited238.1 205.2
Snapper Services Limited37.8 3.7
Tilt Renewables Limited400.5 163.7
Trustpower Limited263.0 305.0
Wellington International Airport Limited287.5 305.7
2,025.0 1,598.1
26. MANAGEMENT FEE TO MORRISON & CO INFRASTRUCTURE MANAGEMENT LIMITED
The management fee to MCIM comprises a number of different components:
A New Zealand base management fee is paid on the ‘New Zealand Company Value’ at the rates of 1.125% per annum on New Zealand Company value up
to $50 million, 1.0% per annum on the New Zealand Company Value between $50 million and $150 million, and 0.80% per annum on the New Zealand
Company Value above $150 million. The New Zealand Company Value is:
•
the Company’s market capitalisation as defined in the management agreement (i.e. the aggregated market value of the Company’s listed securities,
being ordinary shares, partly paid shares and, Infratil Infrastructure bonds);
•
plus the Company and its wholly owned subsidiaries’ net debt (excluding listed debt securities and the book value of the debt in any non-Australasian
investments);
•
minus the cost price of any non-Australasian investments; and,
•
plus/minus an adjustment for foreign exchange gains or losses related to non-New Zealand investments.
An international fund management fee is paid at the rate of 1.50% per annum on:
•
the cost price of any non-Australasian investments; and,
•
the book value of the debt in any wholly owned non-Australasian investments.
•
An international fund incentive fee is payable at the rate of 20% of gains on the international (including Australian) assets in excess of 12% per annum
post tax.
9595
ANNUAL REPORT 2018
27. CONTINGENT LIABILITIES AND LEGAL MATTERS
The Company and certain wholly owned subsidiaries are guarantors of the bank debt facilities of Infratil Finance Limited under a Deed of Negative Pledge,
Guarantee and Subordination and the Company is a guarantor to certain obligations of subsidiary companies.
The Perth Energy group has issued bank guarantees of $32.3 million to satisfy the prudential requirements from suppliers and the Australian Energy
Market Operator.
The Company has a contingent liability under the international fund management agreement with Morrison & Co International Limited in the event that
the Group sells its international assets, or valuation of the assets exceeds the performance thresholds set out in the international fund management
agreement.
During 2007 the European Commission opened formal investigations into alleged state aid in relation to Lübeck airport (owned and operated by Flughafen
Lübeck GmbH, one of the Group’s subsidiaries at that time). One of the matters being investigated with regard to Lübeck airport related to Infratil Airports
Europe Limited (‘IAEL’), specifically the price IAEL paid when it purchased 90% of Flughafen Lübeck GmbH. In February 2012, the investigation was formally
extended to include the put option arrangements (including the 2009 exercise of a put option by Infratil, by which it sold its interest in Lübeck airport back
to the City of Lübeck) and the postponement of the put option period. On 7 February 2017, the European Commission released a decision that there was no
state aid in respect of any of the Lübeck airport transactions involving Infratil. This decision became final and non-appealable on 1 March 2018, following
the expiry of the deadline for challenges to be brought. Consequently, this has ceased to be a contingent liability for Infratil.
28. EVENTS AFTER BALANCE DATE
Dividend
On 16 May 2018, the Directors approved a fully imputed final dividend of 10.75 cents per share to holders of fully paid ordinary shares to be paid on
18 June 2018.
9697
ANNUAL REPORT 2018INFRATIL
© 2017 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Independent Auditor’s Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Infratil Limited (the company)
and its subsidiaries (the Group) on pages 1 to 38:
i.present fairly in all material respects the Group’s
financial position as at 31 March 2017 and its
financial performance and cash flows for the year
ended on that date; and
ii.comply with
New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
—the consolidated statement of financial position
as at 31 March 2017;
—the consolidated statement of comprehensive
income, statement of changes in equity and
statement of cash flows for the year then ended;
and
—notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (“ISAs (NZ)”). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics
for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code),
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the Auditor’s Responsibilities for the Audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the Group in relation to taxation, regulatory disclosures and other
assurance engagements. Subject to certain restrictions, partners and employees of our firm may also deal with
the Group on normal terms within the ordinary course of trading activities of the business of the Group. These
matters have not impaired our independence as auditor of the Group. The firm has no other relationship with, or
interest in, the Group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the Group, the significance and
risk profile of each investment it owns, the Group’s accounting processes and controls, and the industry in which
the investments operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
© 2018 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Independent Auditor’s
Report
To the shareholders of Infratil Limited
Report on the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated financial
statements of Infratil Limited (the company) and its
subsidiaries (the group) on pages 52 to 95:
i. present fairly in all material respects the group’s
financial position as at 31 March 2018 and its financial
performance and cash flows for the year ended on
that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of financial position as
at 31 March 2018;
— the consolidated statements of comprehensive
income, changes in equity and cash flows for the
year then ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for
Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated
financial statements section of our report.
Our firm has also provided other services to the group in relation to taxation, regulatory disclosures and other assurance
engagements. Subject to certain restrictions, partners and employees of our firm may also deal with the group on normal
terms within the ordinary course of trading activities of the business of the group. These matters have not impaired our
independence as auditor of the group. The firm has no other relationship with, or interest in, the group.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the significance and risk profile
of each investment it owns, the group’s accounting processes and controls, and the industry in which the investments
operate.
9797
ANNUAL REPORT 2018
IFT Audit report final 2
In establishing the overall approach to the group audit, we determined the type of work that needed to be performed at the
component level by us, as the group engagement team, or component auditors operating under our instruction. A full scope
audit was performed on the most significant investments for the group using component materialities which were lower
than group materiality. The component materiality took into account the size and the risk profile of each component.
Where the work was performed by component auditors, we determined the level of involvement we needed to have in the
audit work at those investments to be able to conclude whether sufficient appropriate audit evidence had been obtained as
a basis for our opinion on the group financial statements as a whole. We kept in regular communication with component
audit teams throughout the year with phone calls, discussions and written instructions and ensured that the component
audit teams had the appropriate skills and competencies which are needed for the audit. We reviewed the work undertaken
by component auditors in order to ensure the quality and adequacy of their work.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the
consolidated financial statements as a whole. The materiality for the consolidated financial statements as a whole was set
at $17 million, determined with reference to a benchmark of group total assets. We chose total assets given the asset
intensive nature of the group’s underlying investments and that this is a more stable and relevant measure than a profit
measure. Materiality represents 0.25% of the selected benchmark.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements in the current period. We summarise below those matters and our key audit procedures
to address those matters in order that the shareholders as a body may better understand the process by which we arrived
at our audit opinion. Our procedures were undertaken in the context of and solely for the purpose of our statutory audit
opinion on the consolidated financial statements as a whole and we do not express discrete opinions on separate elements
of the consolidated financial statements.
The key audit matter How the matter was addressed in our audit
Valuation of Property, Plant and Equipment
As disclosed in note 12 of the financial statements, the group has property, plant and equipment of $4,809 million (2017:
$4,900 million), with renewable generation assets, land and civil works and buildings making up the majority of this
balance. The group has a policy of recording classes of property, plant and equipment at cost less accumulated
depreciation, or at valuation, with valuations undertaken at least every 5 years.
Renewable generation assets ($3,271 million)
Valuation of renewable generation assets is considered to
be a key audit matter due to both its magnitude and the
judgement involved in the assessment of the fair value of
these assets by the group’s
Directors. The judgement
relates to the valuation methodology used and the
assumptions included within that methodology. Renewable
generation assets include both hydro and wind generation
assets.
The Group’s
hydro generation assets carrying value is
$2,034 million as at 31 March 2018 and the last independent
valuation was as at 31 March 2016. The wind generation
Our procedures to assess whether or not key assumptions
used in the most recent independent valuation remained
appropriate included:
— Using valuation specialists to assess the movement in
the forward electricity price path by comparing the
forward price path used in the independent valuation
to current externally derived market data;
— Using valuation specialists to assess the
appropriateness of the discount rate applied to the
estimated future cash flows by comparing this to
rates used by other market participants;
9899
ANNUAL REPORT 2018INFRATIL
IFT Audit report final 3
The key audit matter How the matter was addressed in our audit
assets carrying value as at 31 March 2018 is $1,237 million,
and the last independent valuation was as at 31 March 2017.
The assumptions included in the valuations that have the
largest impact on fair value are:
— New Zealand and Australian electricity forward price
path forecasts;
— Future generation volumes in New Zealand and
Australia;
— Discount rates applied to the estimated future cash
flows to determine a present day value; and
— Forecast costs of operating the generation schemes.
Management have applied judgement in determining that
there were no significant changes to those assumptions
which would warrant performing a full revaluation at 31
March 2018.
— Comparing forecast generation volumes and
operating costs assumed in the independent
valuation against actual realised volumes and
operating costs incurred in the year to 31 March 2018;
and
— Giving specific consideration to the Electricity
Authority proposal on Avoided Cost of Transmission
and its impact on the fair value of hydro generation
assets.
Land and civil works ($5 28 million) and Buildings ($446
million).
Valuation of land and civil works and buildings, specifically
in relation to airport assets, is considered to be a key audit
matter due to the magnitude and judgement involved in the
assessment of the fair value of these assets by the group’s
Directors. The judge
ment relates to the valuation
methodologies used and the assumptions included in each
of those methodologies.
A revaluation of land and buildings was carried out as at 31
March 2018 due to identified changes in market derived
valuation inputs. The previous independent valuation of
civil works was carried out as at 31 March 2016. The
assumptions that have the largest impact on the valuations
are:
— The potential value of the airport land if there was no
airport on the site primarily driven by weighted
average cost of capital;
— The replacement cost of buildings including the main
terminal building;
— The replacement cost of civil assets including the
runway, taxiways and roads;
— The estimated future cash flows and expected rate of
return from the vehicle assets.
Our procedures to assess the fair value of land and civil
works and buildings included, amongst others:
— Utilising valuation specialists to assess the changes in
key judgemental assumptions which have the largest
impact on the valuation. This included assessing:
— the future cash flows against approved budgets
and historical financial performance;
— the weighted average cost of capital against
observable market data; and
— changes in the cost of buildings and civil assets;
— Comparing the valuation methodologies used by the
valuer for the group, to the valuation methodologies
used by other airports within New Zealand for
comparability.
9999
ANNUAL REPORT 2018
IFT Audit report final 3
The key audit matter How the matter was addressed in our audit
assets carrying value as at 31 March 2018 is $1,237 million,
and the last independent valuation was as at 31 March 2017.
The assumptions included in the valuations that have the
largest impact on fair value are:
— New Zealand and Australian electricity forward price
path forecasts;
— Future generation volumes in New Zealand and
Australia;
— Discount rates applied to the estimated future cash
flows to determine a present day value; and
— Forecast costs of operating the generation schemes.
Management have applied judgement in determining that
there were no significant changes to those assumptions
which would warrant performing a full revaluation at 31
March 2018.
— Comparing forecast generation volumes and
operating costs assumed in the independent
valuation against actual realised volumes and
operating costs incurred in the year to 31 March 2018;
and
— Giving specific consideration to the Electricity
Authority proposal on Avoided Cost of Transmission
and its impact on the fair value of hydro generation
assets.
Land and civil works ($528 million) and Buildings ($446
million).
Valuation of land and civil works and buildings, specifically
in relation to airport assets, is considered to be a key audit
matter due to the magnitude and judgement involved in the
assessment of the fair value of these assets by the group’s
Directors. The judgement relates to the valuation
methodologies used and the assumptions included in each
of those methodologies.
A revaluation of land and buildings was carried out as at 31
March 2018 due to identified changes in market derived
valuation inputs. The previous independent valuation of
civil works was carried out as at 31 March 2016. The
assumptions that have the largest impact on the valuations
are:
— The potential value of the airport land if there was no
airport on the site primarily driven by weighted
average cost of capital;
— The replacement cost of buildings including the main
terminal building;
— The replacement cost of civil assets including the
runway, taxiways and roads;
— The estimated future cash flows and expected rate of
return from the vehicle assets.
Our procedures to assess the fair value of land and civil
works and buildings included, amongst others:
— Utilising valuation specialists to assess the changes in
key judgemental assumptions which have the largest
impact on the valuation. This included assessing:
— the future cash flows against approved budgets
and historical financial performance;
— the weighted average cost of capital against
observable market data; and
— changes in the cost of buildings and civil assets;
— Comparing the valuation methodologies used by the
valuer for the group, to the valuation methodologies
used by other airports within New Zealand for
comparability.
IFT Audit report final 4
The key audit matter How the matter was addressed in our audit
Valuation of investment in Canberra Data Centres
The carrying value of the group’s investment in associates
as at 31 March 2018 was $883 million. The recoverability of
the Canberra Data Centres (CDC) investment is considered
a key audit matter due to the magnitude of the investment,
comprising over 50% of the group’s total investment in
associates, and the significant judgement involved in the
assessment of the recoverable amount of the CDC
investment including its forecast future cash flows and the
discount rate applied to the estimated future cash flows to
determine a present day value.
Our procedures performed to assess the recoverability of
our investment into CDC included, amongst others:
— Challenging the reasonableness of the revenue and
cost forecasts by comparing these forecasts to
historic cash flows, and growth rates achieved;
— Utilising our valuation specialists to assess the
reasonableness of the discount rates applied to future
cash flows and the perpetuity growth rate applied;
and
— Performing sensitivity analysis considering a range of
likely outcomes for various scenarios.
Carrying value of goodwill
As disclosed in Note 14 of the financial statements, the
group’s assets include $117 million of goodwill in relation to
acquisition of a controlling interest in Trustpower Limited
(“Trustpower”) during the 2007 financial year. Following the
demerger in October 2016, the goodwill was split between
Trustpower and Tilt Renewables Limited (“TILT”).
The recoverable amount of TILT is considered to be a key
audit matter due to TILT’s market capitalisation at year end
being below the group’s share of TILT
net assets plus
goodwill, which is an indication of impairment.
Our procedures performed to assess the carrying value of
goodwill included:
— Determining the recoverable amount of Infratil’s
investment in TILT taking into account the group’s
shareholding and observed relevant market values
applied to such a shareholding within the Australian
context; and
— Comparing our valuation against those assessed by
other market observers and recent market
transactions.
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual Report. Other
information includes the report of the Chairman and the Chief Executive, investment performance, disclosures relating to
corporate governance and statutory information. Our opinion on the consolidated financial statements does not cover any
other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been undertaken so that
we might state to the shareholders those matters we are required to state to them in the independent auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
100101
ANNUAL REPORT 2018INFRATIL
IFT Audit report final 5
than the shareholders as a body for our audit work, this independent auditor’s report, or any of the opinions we have
formed.
Responsibilities of the Directors for the consolidated financial statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally accepted
accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting Standards);
— implementing necessary internal control to enable the preparation of a consolidated set of financial statements that is
fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they either intend to liquidate or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements. A further description of our responsibilities for the audit of these consolidated financial statements is located
at the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Ross Buckley.
For and on behalf of
KPMG
Wellington
16 May 2018
101101
ANNUAL REPORT 2018
IFT Audit report final 5
than the shareholders as a body for our audit work, this independent auditor’s report, or any of the opinions we have
formed.
Responsibilities of the Directors for the consolidated financial statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally accepted
accounting practice in New Zealand (being New Zealand Equivalents to International Financial Reporting Standards);
— implementing necessary internal control to enable the preparation of a consolidated set of financial statements that is
fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they either intend to liquidate or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial
statements. A further description of our responsibilities for the audit of these consolidated financial statements is located
at the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Ross Buckley.
For and on behalf of
KPMG
Wellington
16 May 2018
The Board is committed to undertaking its role in accordance with
internationally accepted best practice, within the context of Infratil’s
business. Infratil’s corporate governance practices have been prepared
with reference to the Financial Markets Authority’s Corporate Governance
Handbook, the requirements of the NZX Main Board Rules and the
recommendations in the NZX Corporate Governance Code 2017
(‘NZX Code’).
Copies of Infratil’s key corporate governance documents are available on
the corporate governance section of Infratil’s website: www.infratil.com/
about-us/corporate-governance/. These include Infratil’s Constitution, the
Management Agreement, the Board and Committee Charters and key
corporate governance policies.
CORPORATE GOVERNANCE STRUCTURE
The Board is elected by the shareholders with overall responsibility for
the governance of Infratil, while the day to day management of Infratil
has been delegated to Morrison & Co. The respective roles of the Board
and Morrison & Co within this corporate governance structure are
summarised below.
THE BOARD
Role of the Board
The primary role of the Board is to approve and monitor the strategic
direction of Infratil recommended by Morrison & Co and add long-term
value to Infratil’s shares, having appropriate regard to the interests of all
material stakeholders. In addition:
•
The Board establishes Infratil’s objectives, overall policy framework
within which the business is conducted and confirms strategies for
achieving these objectives.
•
The Board monitors performance and ensures that procedures are in
place to provide effective internal financial control.
•
Although the day to day management of Infratil has been delegated to
Morrison & Co, Board approval is required for:
- all investments and divestments;
- Infratil’s capital management, capital structure and risk
management/appetite;
- Infratil’s portfolio management.
The Board’s role and responsibilities are set out in the Board Charter.
Board Committees
The Board has established four standing committees, and other committees
may be formed when it is efficient or necessary to facilitate efficient
decision-making or when required by law:
• Audit and Risk Committee
The Board has established this Committee to oversee financial reporting,
accounting policies, financial management, internal control systems,
risk management systems, systems for protecting assets and
compliance. The Committee also:
− keeps under review the scope and results of audit work, its cost
effectiveness and performance and the independence and objectivity
of the auditors;
− reviews the financial statements and the release to the NZX and ASX
of financial results; and
− receives regular reports from Morrison & Co, including reports on
financial and business performance, risk management, financial
derivative exposures and accounting and internal control matters.
During Financial Year 2018, the Committee comprised two independent
Directors (A Gerry (Chair) and M Tume) and one non-independent
Director (M Bogoievski). However, the Board has, following the end of
the Financial Year 2018, resolved to change the composition of the
Committee so it comprises solely of independent Directors and, as a
result of this, M Bogoievski has resigned from, and P Springford has
been appointed a member of, the Committee. Manager representatives
will attend meetings of the Committee as appropriate, at the invitation
of the Committee Chair.
The Committee will meet at least quarterly to fulfil its obligations. The
Committee Chair may convene a meeting if he or she considers one is
required, and will also convene a meeting upon request of any
Committee member who considers it necessary.
The Committee’s role and responsibilities, and membership
requirements, are set out in the Audit and Risk Committee Charter.
• Nomination and Remuneration Committee
The Board has established this Committee (which was formerly called
the Board Nomination Committee) to manage the identification,
consideration and recommendation of director appointments to the
Board, succession planning for Directors, ensuring written agreements
are in place for all Directors and the induction programme for new
Directors. The Board has, following the end of the Financial Year 2018,
resolved to expand the mandate of this Committee to include
recommending remuneration for directors for consideration by
shareholders.
Nominations will be put to the annual meeting in accordance with
Infratil’s constitution and the relevant legislation and listing rules. The
filling of casual vacancies must be approved by the Board, and then
approved by shareholders at the next general meeting.
The Committee comprises three independent Directors (M Tume (Chair),
A Gerry and P Gough), with attendances by appropriate Manager
representatives.
The Committee will meet at least annually to fulfil its obligations. The
Committee Chair may convene a meeting if he or she considers one is
required, and will also convene a meeting upon request of any
Committee member who considers it necessary.
The Committee’s role and responsibilities, and membership
requirements, are set out in the Nomination and Remuneration
Committee Charter.
• Manager Engagement Committee
The Board recognises that the interests of Infratil shareholders and
Morrison & Co have the potential to conflict, and that an important role
of the Board is to be aware of and assess potential conflicts in relation to
Infratil’s capital structure and strategies adopted, and the resulting
potential Morrison & Co revenues. Accordingly, the Board has, following
the end of the Financial Year 2018, resolved to establish a Manager
Engagement Committee to monitor Morrison & Co’s performance and
compliance with the Management Agreement (previously, the Board
dealt with these matters by a meeting of the independent Directors,
without representatives of Morrison & Co present, as a standing item for
regularly scheduled Board meetings). This Committee is also
responsible for managing any potential conflicts between the interests
of Infratil shareholders and Morrison & Co (for instance, in agreeing the
terms of governance arrangements for investment joint ventures with
other Morrison & Co clients).
CORPORATE GOVERNANCE
102103
ANNUAL REPORT 2018INFRATIL
The Committee must comprise solely of independent Directors (with a
minimum of three members). The Committee currently comprises all
five independent Directors. Manager representatives do not attend
meetings of the Committee.
The Committee will meet at least biannually to fulfil its obligations.
The Committee Chair may convene a meeting if he or she considers one
is required, and will also convene a meeting upon request of any
Committee member who considers it necessary.
The Committee’s role and responsibilities, and membership
requirements, are set out in the Manager Engagement Committee
Charter.
Board Membership
The number of Directors is determined by the Board, in accordance with
Infratil’s constitution, to ensure it is large enough to provide a range of
knowledge, views and experience relevant to Infratil’s business. The
composition of the Board will reflect the duties and responsibilities it is to
discharge and perform in setting Infratil’s strategy and seeing that it is
implemented.
The Board currently comprises six Directors: five independent Directors and
one non-independent Director. The Board Charter requires both a majority
of the Board, and the Chairman, to be independent Directors. The
composition of the Board, experience and Board tenure are set out below:
Mark Tume (BBS, Dip Bkg Stud) – Chairman and Independent Director
Mark Tume has been Chairman since 2013 and a director since 2007. He is
Chair of RetireAustralia and Te Atiawa Iwi Holdings and a director of the
New Zealand Refining Company. His professional experience has been in
banking and funds management.
Marko Bogoievski (BCA, MBA, FCA) – Non-Independent Director
Marko Bogoievski is Chief Executive of Infratil and its Manager,
Morrison & Co. He joined the Infratil board in 2009. He is Chairman of
Longroad Energy and a director of Morrison & Co. He was previously
Chief Financial Officer of Telecom New Zealand and has held board roles
with Trustpower and Auckland Airport. Mr Bogoievski has an interest in
Morrison & Co, which has a Management Agreement with Infratil.
Alison Gerry (BMS(Hons), MAppFin) – Independent Director
Alison Gerry joined the Infratil board in 2014 and is Chair of the Audit and
Risk Committee. She is a director of Wellington International Airport, Spark
New Zealand and Vero Insurance New Zealand. She has been a professional
director from 2007. Previously, Alison worked for both corporates and
financial institutions in Australia, Asia and London in trading, finance and
risk roles.
Paul Gough (BCom(Hons)) – Independent Director
Paul Gough joined the Infratil board in 2012. He is managing partner of
the UK private equity fund STAR Capital. He is a director of several
international companies and previously worked for Credit Suisse First
Boston in New Zealand and London.
Humphry Rolleston – Independent Director
Humphry Rolleston joined the Infratil board in 2006. He is a director of
NZX listed Property for Industry and owns private companies involved in
tourism, security, disruptive technology, manufacturing and finance. He
is a Fellow of the New Zealand Institute of Directors and the Institute of
Management.
Peter Springford (MBA) – Independent Director
Peter Springford joined the Infratil board in 2016. He has extensive
experience in managing companies in Australia, New Zealand and Asia,
including five years based in Hong Kong as President of International Paper
(Asia) and four years as Chief Executive Officer and Managing Director of
Carter Holt Harvey. He is a chartered member of the
New Zealand Institute of Directors.
Independence
The Board Charter sets out the standards for determining whether a
Director is independent for the purposes of service on the Board and
committees. These standards reflect the requirements of the NZX Main
Board Rules.
A Director is independent if the Board affirmatively determines that the
Director satisfies these standards. The Board has determined that:
•
All the non-executive Directors (namely, M Tume, A Gerry, P Gough,
P Springford and H Rolleston) are independent Directors.
•
The Chief Executive (M Bogoievski), as an employee of Morrison & Co
(and occupying a position analogous to an executive Director), is not an
independent Director.
Tenure
Directors are not appointed for fixed terms. However, the Constitution and
the NZX Main Board Rules require that:
•
One third (or the number nearest to one third) of the Directors
(excluding any Director appointed since the previous annual meeting)
must retire by rotation at each annual meeting. The Directors to retire
are those who have been longest in office since their last election.
Directors retiring by rotation may, if eligible, stand for re-election.
•
A Director appointed by the Board to fill a casual vacancy must stand for
election at the following annual meeting.
M Bogoievski, the Chief Executive, is subject to the same rotation
requirements as the other Directors (as he is not an employee of Infratil).
Board and Committee Meetings
The Board will normally hold at least six meetings in each year, and
additional Board meetings are held where necessary in order to prioritise
and respond to issues as they arise.
The Board and Committee meetings and attendance in Financial Year 2018
are set out below:
FULL
AGENDA BOARD
MEETINGS
LIMITED
AGENDA BOARD
MEETINGS
AUDIT AND
RISK
COMMITTEE
NOMINATION
AND
REMUNERATION
COMMITTEE
†
M Tume7 / 71 / 15 / 50 / 0
M Bogoievski7 / 71 / 15 / 5-
A Gerry7 / 71 / 15 / 50 / 0
P Gough7 / 71 / 1-0 / 0
P M Springford7 / 71 / 1--
H J D Rolleston7 / 71 / 1--
†
The Nomination Committee did not meet in Financial Year 2018 as neither the Chair nor a
member considered a meeting necessary.
103103
ANNUAL REPORT 2018
Independent Professional Advice and Training
With the approval of the Chairman, Directors are entitled to seek
independent professional advice on any aspect of the Directors’ duties, at
Infratil’s expense. Directors are also encouraged to identify and undertake
training and development opportunities.
Board Performance and Skills
The Board, the Audit and Risk Committee and individual Directors are
subject to a performance appraisal from time to time (the Chairman
initiates a review of Board performance annually, and an external review of
the Board was conducted in Financial Year 2018). Appropriate strategies for
improvement are agreed and actioned.
The skills and capabilities of the Board are continually assessed through the
Chairman and the Board, including potential gaps in skills and experience.
Infratil has developed a Board skills matrix of the skills and experience
currently regarded as being important to Infratil (and which is set out in the
table below). The Board considers that this mix of skills and experience is
currently represented on the Board (and this conclusion was supported by
the external review of the Board conducted in Financial Year 2018).
Skill/Experience
Governance and stakeholder management
Infrastructure asset management and private markets
Financial/accounting
Capital markets and funds management
People and performance
Technology and innovation
Regulation
Marketing and consumer intelligence
Directors’ and Officers’ Insurance
Infratil has arranged Directors’ and Officers’ liability insurance covering
Directors acting on behalf of Infratil. Cover is for damages, judgements,
fines, penalties, legal costs awarded and defence costs arising from
wrongful acts committed while acting for Infratil. The types of acts that are
not covered are dishonest, fraudulent, malicious acts or omissions, wilful
breach of statute or regulations or duty to Infratil, improper use of
information to the detriment of Infratil, or breach of professional duty.
Takeover Protocols
The Board has approved protocols that set out the procedure to be followed
if there is a takeover for Infratil, which reflect the requirements of the
Takeovers Code, market practice and recommendations by the Takeovers
Panel.
MORRISON & CO
Role of Morrison & Co
The day to day management responsibilities have been delegated to
Morrison & Co under the Management Agreement. The Management
Agreement specifies the duties and powers of Morrison & Co, and the
management fee payable to Morrison & Co (which is summarised in note
26 to the Financial Statements on page 94 of this annual report).
The Board determines and agrees with Morrison & Co specific goals and
objectives, with a view to achieving the strategic goals of Infratil. Between
Board meetings, the Chairman maintains an informal link between the
Board and Morrison & Co, and is kept informed by Morrison & Co on all
important matters. The Chairman is available to Morrison & Co to provide
counsel and advice where appropriate. Decisions of the Board are binding
on Morrison & Co. Morrison & Co is accountable to the Board for the
achievement of the strategic goals of Infratil. At each of its Board meetings,
the Board receives reports from or through Morrison & Co including
financial, operational and other reports and proposals.
Infratil’s management comprises people employed by Morrison & Co
(including the Chief Executive and Chief Financial Officer), and people
employed by Infratil’s subsidiaries and investee companies.
Manager Performance
A key responsibility of the Board is monitoring Morrison & Co’s
performance and compliance with the Management Agreement (including
potential conflicts between the interests of Morrison & Co and the interests
of Infratil shareholders):
•
This responsibility is set out expressly in the Board Charter, and was
previously dealt with by meetings of the independent Directors (without
representatives of Morrison & Co present). However, given the
importance of this responsibility in the context of Infratil’s business, the
Board has now established the Management Engagement Committee
to deal with these matters, to allow the Board to continue to discharge
this responsibility through a dedicated Board committee.
•
The Board also recognises the potential for conflicts to arise in the
allocation of investment opportunities among clients of Morrison & Co
(including Infratil). Infratil has used investment joint ventures for many
years and expects to continue to do so, and the Board encourages
Morrison & Co to identify aligned parties with which Infratil can
co-invest. Accordingly, the Board and Morrison & Co has a deal allocation
process so Infratil has visibility of all investment opportunities that fit
with Infratil’s investment strategy and clear investment rights in respect
of those opportunities.
The Board initiates a review of the Management Agreement from time to
time. An external review of the management fee payable to Morrison & Co
under the Management Agreement was conducted in Financial Year 2018.
Having assessed the terms of the Management Agreement in relation to
the terms in samples of management contracts for similar funds, the
consultant concluded that:
•
The fees in the Management Agreement are more favourable to Infratil
that those which would be negotiated in the current market between
unrelated parties on an arm’s length basis for the management and
administration of an unlisted private infrastructure fund.
•
Morrison and Co arguably bears a greater compliance burden because
Infratil is a listed entity and, therefore, the terms and conditions of the
fees are fair to Infratil shareholders.
HEALTH AND SAFETY
Health and safety is managed by Infratil’s operational businesses and
Morrison & Co (rather than in aggregate at a group level), and the Board
is provided with regular health and safety reports for those operating
businesses and Morrison & Co.
DIVERSITY
Infratil has a Diversity Policy, which applies to Infratil and its wholly-owned
subsidiaries (currently, NZ Bus and Snapper). This policy does not apply to
portfolio businesses which are not wholly-owned subsidiaries of Infratil:
•
Trustpower and Tilt Renewables (which, in aggregate, comprise
approximately 57.7% of Infratil’s assets and employees approximately
25.6% of the people employed in Infratil’s operational businesses) have
their own diversity policies for their business, which are available on
104105
ANNUAL REPORT 2018INFRATIL
their websites: https://www.trustpower.co.nz/Company-And-Investor-
Information/Governance-Documents and https://www.tiltrenewables.
com/investors-landowners/governance-documents/.
•
Infratil encourages its other portfolio businesses to adopt diversity
policies which are appropriate for their businesses.
The Infratil Diversity Policy recognises that diversity of thought at all levels
of the business, in an inclusive environment, is beneficial to decision
making, improving and increasing corporate and shareholder value,
enhancing talent recruitment and retention, increasing employee
satisfaction and enhancing the probability of achieving Infratil’s objectives
(‘Principle’). Infratil ensures that it has (and encourages other wholly-owned
subsidiaries to have) strategies, initiatives and practices to promote
behaviours and processes that are consistent with the Principle. Infratil
recognises that these strategies, initiative and practices will be different for
each wholly-owned subsidiary depending on its specific business
requirements and accordingly it believes that it is better to engage with
each wholly-owned subsidiary on diversity rather than impose specific
objectives on each company. For the same reason, the Infratil Diversity
Policy does not include measurable objectives, as the appropriate
measurable objectives will be different for each portfolio business (and
Trustpower and Tilt Renewables have set, and report in their Annual Reports
on, gender diversity objectives as part of their diversity policies).
Management monitors, reviews and reports to the Board on Infratil’s
progress under this Policy.
At 31 March 2018, the Infratil Board comprised five male Directors
and one female Director (31 March 2017: five male Directors and one
female Director).
The following tables provide the proportion of women employees in the
organisation, women in senior executive positions and women on the
Board (senior executives are defined as a CEO or CEO direct report, or a
position that effectively carries executive responsibilities):
2018
POSITION
NUMBERPROPORTION
FEMALEMALEFEMALEMALE
Board1517%83%
Senior Executive
Positions
1,2
196124%76%
Organisation1,0912,39131%69%
2017
POSITION
NUMBERPROPORTION
FEMALEMALEFEMALEMALE
Board1517%83%
Senior Executive
Positions
1,2
206324%76%
Organisation1,8522,58442%58%
1
Senior Executive Positions include Morrison & Co
2
The gender proportions of Senior Executive Positions (Infratil Group excluding associates) was
10 female executives 24% and 31 male executives 76% in 2018 and 11 female executives
(19%) and 47 male executives (81%) in 2016
RISK MANAGEMENT
Risk Management and Compliance
The Audit and Risk Committee is responsible for ensuring that Infratil has
an effective risk management framework to identify, treat and monitor key
business risks and regulatory compliance, and also reviews management
practices in these areas. Formal systems have been introduced for regular
reporting to the Board on business risk, including impacts and mitigation
strategies and compliance matters.
Morrison & Co (via the Chief Executive and Chief Financial Officer) is
required to, and has confirmed to the Audit and Risk Committee and the
Board in writing that, in its opinion:
•
Financial records have been properly maintained and Infratil’s financial
statements present a true and fair view, in all material respects, of
Infratil’s financial condition, and operating results are in accordance with
relevant accounting standards;
•
The financial statements have been prepared in accordance with
New Zealand Generally Accepted Accounting Practice and comply with
International Financial Reporting Standards and other applicable
financial reporting standards for profit-oriented entities;
•
This opinion has been formed on the basis of a sound system of risk
management and internal control which is operating effectively; and
•
That system of risk management and internal control is appropriate and
effective internal controls and risk management practices are in place to
safeguard and protect Infratil’s assets, to identify, assess, monitor and
manage risk, and identify material changes to Infratil’s risk profile.
Internal Financial Control
The Board has overall responsibility for Infratil’s system of internal financial
control. Infratil does not have a separate internal audit function, however
the Board has established procedures and policies that are designed to
provide effective internal financial control:
•
Annual budgets, forecasts and reports on the strategic direction of
Infratil are prepared regularly and reviewed and agreed by the Board.
•
Financial and business performance reports are prepared monthly and
reviewed by the Board throughout the year to monitor performance
against financial and non-financial targets and strategic objectives.
External Auditor
The Audit and Risk Committee is also responsible for the selection and
appointment of the external auditor (which is included within the External
Audit Relationship section of the Audit and Risk Committee Charter), and
ensuring that the external auditor or lead audit partner is changed at least
every five years.
Going Concern
After reviewing the current results and detailed forecasts, taking into
account available credit facilities and making further enquiries as
considered appropriate, the Directors are satisfied that Infratil has adequate
resources to enable it to continue in business for the foreseeable future. For
this reason, the Directors believe it is appropriate to adopt the going
concern basis in preparing the financial statements.
REPORTING AND DISCLOSURE
Disclosure
Infratil is committed to promoting investor confidence by providing
forthright, timely, accurate, complete and equal access to information, and
to providing comprehensive continuous disclosure to shareholders and
other stakeholders, in compliance with the NZX Main Board Rules. This
commitment is reflected in Infratil’s Disclosure and Communications Policy.
105105
ANNUAL REPORT 2018
Under this policy:
•
All shareholder communications and market releases are subject to
review by Morrison & Co (including Chief Executive, Chief Financial
Officer and legal counsel), and information is only released after proper
review and reasonable inquiry.
•
Full year and half year results releases are approved by the Audit and
Risk Committee and by the Board.
Shareholder and other stakeholder communications
Infratil aims to communicate effectively, give ready access to balanced and
understandable information about Infratil group and corporate proposals
and make it easy to participate in general meetings. Infratil seeks to ensure
its shareholders are appropriately informed on its operations and results,
with the delivery of timely and focused communication, and the holding of
shareholder meetings in a manner conducive to achieving shareholder
participation. To ensure shareholders and other stakeholders have access to
relevant information Infratil:
•
holds regular investor road shows and an annual investor day, and
sends interested parties the dates and invitations to attend;
•
sends security holders its annual and half year review, which is a
summary of Infratil’s operating and financial performance for the
relevant period, and periodic operational updates;
•
ensures its website contains media releases, full year and half year
financial information and presentations, current and past annual
reports, Infratil bond documents, dividend histories, notices of meeting,
details of Directors and Morrison & Co, a list of shareholders’ frequently
asked questions and other information about Infratil;
•
makes available printed half year and annual reports and encourages
shareholders to access these documents on the website and to receive
advice of their availability by email;
•
publishes press releases on issues/events that may have material
information content that could impact on the price of its traded
securities and sends email updates to interested stakeholders;
•
webcasts its half year and full year results so that a wide group of
interested parties can review and participate in discussions on
performance, and advises interested parties of the dates and how to
participate in the webcast; and
•
provides additional explanatory information where circumstances
require.
Shareholder meetings are generally held in a location and at a time which
is intended to maximise participation by shareholders. Meetings are
typically alternated between Wellington, Auckland and Christchurch. Full
participation of shareholders at the annual meeting is encouraged to
ensure a high level of accountability and identification with Infratil’s
strategies and goals. Shareholders have the opportunity to submit
questions prior to each meeting and Morrison & Co, senior management of
subsidiary companies and auditors are present to assist in and provide
answers to questions raised by shareholders. There is also an opportunity
for informal discussion with Directors, Morrison & Co and senior
management for a period after the meeting concludes.
Infratil supports the efforts of the New Zealand Shareholders’ Association
(“NZSA”) to raise the quality of relations between public companies and
their shareholders. Shareholders wishing to learn more about the NZSA can
find information on its website (http://www.nzshareholders.co.nz). While
Infratil supports the general aims and objectives of the NZSA, its specific
actions and views are not necessarily endorsed by Infratil, or representative
of Infratil’s view.
ETHICAL BEHAVIOUR
Code of Conduct and Ethics Policy
Infratil has always required the highest standards of honesty and integrity
from its Directors, Manager and employees, and this commitment is
reflected in Infratil’s Ethics and Code of Conduct Policy. The policy
recognises Infratil’s commitment to maintaining the highest standards of
integrity and its legal and other obligations to all legitimate stakeholders,
and applies to Directors, Morrison & Co and all employees.
The policy sets the ethical and behavioural standards and professional
conduct for which Directors, Morrison & Co and employees of Infratil and its
subsidiaries are expected to conduct their work life. Infratil has
communicated the policy to employees and provided training on it, and
failure to follow the standards provided in this Code will result in the
appropriate staff or other performance management practices being
invoked and may lead to disciplinary action (including dismissal).
Financial Products Trading Policy
Infratil has a financial products trading policy applicable to Directors,
Morrison & Co and all employees of Infratil and its subsidiaries who intend
to trade in Infratil Financial Products (which includes quoted financial
products issued by Trustpower, Tilt Renewables and WIAL, in addition to
those issued by Infratil).
All trading in Infratil Financial Products by Directors, Morrison & Co and
employees of Infratil and its subsidiaries must comply with this policy. The
policy includes a fundamental prohibition on insider trading and
obligations of confidentiality when dealing with material information. The
policy also requires Directors, Morrison & Co and other employees who
have, or may have, access to market sensitive information to obtain consent
prior to trading (although these obligations do not apply to employees of
Trustpower or Tilt Renewables, which as separate listed companies have
their own procedures for dealing with trading).
INVESTMENT STRATEGY
Infratil’s investments are long-term, and its objective is to deliver above
average returns to shareholders over the its-term. The first part of this goal
is to position Infratil in sectors where there will be opportunities to invest
capital to meet customer and community needs. The second part is to make
sure that Infratil’s businesses meet those needs with value-for-money
services and facilities.
Infratil will invest where it has expertise, or can partner with expertise,
and where it can influence the strategic and operational directions of the
companies it invests in.
Further information is available on Infratil’s website: www.infratil.com/
about-us/strategy/.
RESPONSIBLE INVESTMENT
As an infrastructure investor, Infratil has a special opportunity to contribute
to society’s greatest long-term challenges. Infratil recognises that
environmental, social and governance (‘ESG’) issues can be value accretive
and, accordingly, ESG issues are central to Infratil’s investment strategy and
asset management processes.
The Board recognises that investors are increasingly interested to
understand how these risks are viewed at the Infratil group level. Infratil’s
current approach to policies for, and reporting on, ESG issues is
summarised below. However, the Board is considering ways to provide
better visibility of ESG themes for Infratil, including:
•
considering the appropriateness for Infratil of internationally recognised
ESG reporting frameworks (e.g. the Sustainable Stock Exchange
Initiative);
106107
ANNUAL REPORT 2018INFRATIL
•
how to provide appropriate visibility of ESG themes in aggregate at a
group level, acknowledging that the ESG issues vary across Infratil’s
operating businesses and, therefore, those operating businesses will
generally be primarily responsible for considering, managing and
reporting on the ESG issues affecting their businesses (although
Morrison & Co has ongoing responsibility, on Infratil’s behalf as an
owner of those businesses, for ensuring that these ESG issues are
considered, managed and reported on by the operating businesses);
•
considering how to reflect the Infratil’s varying level of influence as an
owner of the operating businesses in relation to ESG issues, two of
which (Trustpower and Tilt Renewables) are separate listed companies
and others of which (e.g. RetireAustralia) are joint ventures.
Infratil will engage with the operating businesses on ESG issues and with
key stakeholders on reporting of these issues, and expects to provide
further reporting on this in the next annual report.
Responsible Investment Policy
Infratil believes that a long-term orientation is fundamental to the
operational management of assets, and there is a strong sense of duty,
awareness of responsibilities and stewardship (kaitiakitanga) that goes
beyond the financial aspects of the investment process. Sustainable
investment is a key part of Infratil’s purpose, values and vision, and is
embedded in the way Infratil and Morrison & Co operate. Morrison & Co
has also been a signatory to the UN Principles for Responsible Investment
since 2010, and Morrison & Co is committed to the implementation of
these Principles in Infratil’s operations.
Morrison & Co, in performing its duties and powers under the
Management Agreement, operates in accordance with Morrison & Co’s
Responsible Investment Policy. Under this policy, ESG issues form part of
the review of all investments and are revisited regularly. This is managed at
all stages of the investment cycle, from due diligence through to on-going
management and operation of the asset, by a four-stage process:
1. OPPORTUNITY
SCREENING
•
Sustainability opportunity
“lens” must be applied at
origination, in line with our
Responsible Investing policy.
E.g.,
- Renewable energy
- Assets with material
improvements in energy
efficiency
- “Best in class” assets which
can be scaled
•
ESG issues are actively
discussed and considered by
Morrison & Co and are included
in investment papers
•
Prohibited investments are
eliminated during the
screening process (e.g. coal
generation, nuclear assets)
2. DETAILED
DUE DILIGENCE
•
NPV positive sustainability
initiatives identified at asset
level and quantified. E.g.,
- Adoption of low emission
technology
- Energy efficiency savings
- Carbon intensity reductions
•
Morrison & Co’s Sustainability
Approach framework used to
guide due diligence
•
Morrison & Co undertakes
detailed environmental, health
and safety reviews as part of its
core due diligence processes
3. TRANSITION
MANAGEMENT
•
Sustainability due diligence
confirmed
•
During the transition stage,
100 day asset management
plan includes detailed
implementation plans for
sustainability initiatives
4. ONGOING
MANAGEMENT
& GOVERNANCE
•
Implementation of initiatives
post 100 days
•
Morrison & Co representatives
on operating business boards
have ongoing executive
responsibility for ensuring ESG
compliance is regularly
discussed and reviewed
•
Ongoing monitoring and
assessment against targets,
benchmarks and sustainability
outcomes
•
ESG initiatives and progress are
reported as an integral part of
client communications
107107
ANNUAL REPORT 2018
Operating Businesses
Infratil’s operating businesses are responsible for developing policies for, and reporting on, ESG issues as they affect their businesses. ESG initiatives are
actively implemented at this level, and examples of these include the following:
TRUSTPOWERNZ BUSRETIREAUSTRALIA
•
Trustpower is New Zealand’s fifth largest
electricity retailer and fifth largest electricity
generator, with electricity produced
exclusively from renewable energy sources.
•
Some examples of Trustpower’s sustainability
targets include:
- Zero significant resource consent breaches;
- Year on year reduction in carbon emissions
per customer;
- Maintain a strong corporate profile in all
areas in which it operates and build
relationships with those communities;
- No resource consents turned down due to
lack of consultation;
- 75% of roles filled by internal promotion;
- Costs benchmarked at below industry
average; and
- New projects all economically viable.
•
Trustpower operates the Trustpower
Community Awards, a partnership with local
district and city councils which has been
running for 20 years.
•
As the biggest operator of urban bus services
in New Zealand, NZ Bus is reducing New
Zealand’s carbon footprint by promoting the
use of public transport.
•
NZ Bus won two awards at the NZI
Sustainable Business Network Awards in
November 2016 (EECA Business Energy
Management Award and the Renewables
Innovation Award).
•
Demonstrated leadership in the sector by
investing in clean technology to electrify its
fleet.
•
The NZ Bus approach to sustainability is
embedded into procurement programmes,
training programmes and facilities design
and management.
A number of ESG initiatives have been
implemented at RetireAustralia villages
including:
•
Implementation of carbon footprint
assessment on new villages.
•
Installation of solar panels at selected
villages.
•
Retrofitting existing portfolio facilities with
insulation, LED lighting and energy efficiency
appliances, efficient HVAC, chiller and hot
water and commercial refrigeration systems.
•
Applying energy efficiency guidelines to new
development sites, with specific parameters
relating to passive building design, natural
ventilation and use of building materials to
minimise energy use, heating and cooling
(e.g. German Passive House system).
•
Conversion of common use resident vehicle
fleet to electric (or low emission gas) (i.e.
resident buses).
Further information on ESG issues is also available on the websites and in the reports of Infratil’s key operating businesses:
•
Trustpower: https://www.trustpower.co.nz/Company-And-Investor-Information
•
Tilt Renewables: https://www.tiltrenewables.com/investors-landowners/
•
WIAL: https://www.wellingtonairport.co.nz/about/social-responsibility/
REMUNERATION AND PERFORMANCE
Directors’ Remuneration
The Board determines the level of remuneration paid to Directors within
the amounts approved from time to time by Shareholders (for the year
ended 31 March 2018, this was $940,923 per annum, which was fixed at
the 2015 annual meeting). Directors are paid a base fee and may also be
paid, as additional remuneration:
•
an appropriate extra fee as Chairman or Member of a Board Committee;
•
an appropriate extra fee as a director of an Infratil subsidiary (other than
Trustpower and Tilt Renewables); and
•
an appropriate extra fee for any special service as a Director as approved
by the Board.
In addition, Directors are entitled to be reimbursed for costs directly
associated with the performance of their role as Directors, including travel
costs. The Chairman approves all Directors’ expenses, and the Chair of the
Audit and Risk Committee approves the Chairman’s expenses.
Mr Bogoievski is paid fees in his capacity as a Director, but he receives no
remuneration from Infratil for his role as Chief Executive (and his
remuneration as Chief Executive is paid by Morrison & Co).
Remuneration is reviewed annually by the Board, and fees are reviewed
against fee benchmarks in New Zealand and Australia and to take into
account the size and complexity of Infratil’s business. The fee structure
approved by the Board for the year ended 31 March 2018 is set out below:
ANNUAL FEE STRUCTURE
FINANCIAL YEAR
2018 (NZD)
Base Fees:
Chairman of the Board200,000
Director100,000
Overseas Director (P Gough)124,876
Board Committee Fees:
Audit and Risk Committee
Chair20,000
Member10,000
Nominations Committee
ChairNil
MemberNil
108109
ANNUAL REPORT 2018INFRATIL
Remuneration paid to Directors (as a Director of Infratil and, where
applicable, as a director of an Infratil subsidiary) in respect of the year
ended 31 March 2018 (and 31 March 2017) is set out below (note that all
amounts exclude GST or VAT where appropriate):
Directors’ Remuneration paid by Infratil
Directors’ remuneration (in their capacity as such) in respect of the year
ended 31 March 2018 and 31 March 2017 paid by the Company was as
follows (these amounts exclude GST, where appropriate):
DIRECTOR
FINANCIAL YEAR
2018 (NZD)
FINANCIAL YEAR
2017 (NZD)
M Tume (Chairman)200,000180,000
M Bogoievski110,000100,000
A Gerry 120,000108,422
P Gough124,876112,501
P M Springford*100,00045,000
H J D Rolleston 100,00090,000
Total750,376680,923
* Mr Springford was appointed on 1 November 2016.
Directors’ Remuneration paid by Infratil Subsidiaries
Directors’ remuneration (in their capacity as such) in respect of the year
ended 31 March 2018 and 31 March 2017 paid by subsidiaries was as
follows (these amounts exclude GST where appropriate):
DIRECTOR
FINANCIAL YEAR
2018 (NZD)
FINANCIAL YEAR
2017 (NZD)
M Bogoievski
(Trustpower Limited)
45,71092,000
A Gerry (Wellington International
Airport Limited)*
89,00012,272
* Ms Gerry was appointed on 1 February 2017.
No other benefits have been provided by Infratil or its subsidiaries to a
Director for services as a Director or in any other capacity, other than as
disclosed in the related party note to the financial statements, or in the
ordinary course of business. No loans have been made by Infratil or its
subsidiaries to a Director, nor has Infratil or its subsidiaries guaranteed any
debts incurred by a Director.
Directors’ Shareholding
Under Infratil’s Constitution, Directors are not required to hold shares in
Infratil. However, in recognition of the benefits of aligning Directors’
interests with those of shareholders, non-executive Directors have the
option to take up a portion of their fees paid through the issue of shares to
those Directors. All Directors who take up this option either hold those
shares themselves or those shares are held by organisations to which they
are associated parties. Directors will not normally make investments in
listed infrastructure or utilities securities in areas targeted by Infratil.
Management Fee
As noted earlier, Infratil is managed by Morrison & Co, under a
Management Agreement. The Management Agreement sets out the terms
of the services provided by Morrison & Co and the basis of fees, including
base fees and incentive fees. Details of fees paid to Morrison & Co are
disclosed in this annual report, including:
•
Note 26 to the Financial Statements on page 94: components of the
Management Fee.
•
Note 25 to the Financial Statements on page 110: related party
disclosures in respect of Morrison & Co and fees paid to Morrison & Co.
•
In the statutory information section on page 93, the interests of the
Director associated with Morrison & Co, and Director’s fees.
Any director’s fee paid to a Morrison & Co appointee on the board of an
Infratil portfolio business is paid either by the relevant business or by
Infratil (but not by both of them).
Chief Executive Remuneration
The Chief Executive is employed by Morrison & Co, not Infratil. The only cost
to Infratil of the Chief Executive is the Management Fee payable to
Morrison & Co (referred to above) and Infratil does not have (and therefore
cannot disclose) any information on his remuneration.
Remuneration Model: New Zealand Group
The disclosures provided below relate to the remuneration of executives
employed by unlisted New Zealand-incorporated subsidiaries of Infratil
(‘New Zealand Group’):
•
These disclosures do not relate to employees of Morrison & Co, as these
employees are remunerated by Morrison & Co. The only cost to Infratil of
these employees is the Management Fee payable to Morrison & Co
(referred to above) and Infratil does not have (and therefore cannot
disclose) any information on their remuneration. Employees of Morrison &
Co include most of the management team listed on pages 8 and 9 of this
annual report (including the Chief Executive and Chief Financial Officer).
•
These disclosures do not relate to employees of Trustpower or Tilt
Renewables. Although both of these companies are subsidiaries of
Infratil, both are listed on the NZX Main Board, and are responsible for
determining the remuneration of their executives (and these
remuneration structures are disclosed in those companies’ reporting to
shareholders).
•
These disclosures do not relate to employees of investee companies
which are not subsidiaries of Infratil (e.g. RetireAustralia and Canberra
Data Centres). These investee companies are responsible for
determining the remuneration of their executives.
Executives of the New Zealand Group are remunerated with a mix of:
Base salary and benefits
The determination of fixed remuneration is based on responsibilities,
individual performance and experience, and market data. At-risk/variable
remuneration comprises short term incentives and, for senior and key
employees, long-term incentives. Infratil’s executives are employed by
subsidiary companies, and executive remuneration policies are determined
and approved by the subsidiary company boards within high level
principles established by the Infratil Board. Incentives are directly related to
the performance area controlled by the executive, while longer term
incentives are intended to align with shareholder interests. Remuneration
of executives of subsidiary companies is overseen by non-executive
directors of those subsidiary companies.
Performance reviews of executives are carried out regularly and at least
annually, and involve feedback by the Board on performance of Morrison &
Co, and subsidiary Directors’ review of subsidiary company’s Chief
Executive and executives’ performance. Performance reviews include the
setting of goals and objectives at the beginning of the year, and reviewing
the achievement of those goals and objectives at the end of the year.
Performance measures will normally include both qualitative and
quantitative measures. Performance evaluations have taken place in
accordance with this process during the reporting year.
109109
ANNUAL REPORT 2018
Short term incentives
In the New Zealand Group, variable remuneration recognises and rewards
high-performing individuals whose contribution supports business goals
and objectives, and who meet their individual goals agreed with the Board
or their Chief Executive (as appropriate).
Short term incentives (STIs) comprise cash payments based on performance
measured against key performance indicators (KPIs). Different levels of
incentives are determined reflecting the nature of the roles in Infratil. KPIs
may comprise entity or individual business, team and individual targets.
These targets are designed to create goals that will support an achievement
and performance-oriented culture. The STI programme is designed to
differentiate reward for exceptional, outstanding and good performance.
Long term incentives
The principal objective of long term incentives is to align executives’
performance with shareholder interests and provide equity-based
incentives that help retain valuable employees. Long term incentive
arrangements for the New Zealand Group are currently under review:
•
Infratil has previously operated an Infratil Executive Scheme (which is
outlined in note 24 to the Financial Statements on page 93 for selected
senior and key employees of the New Zealand Group. However, the only
Executive Shares currently outstanding under this scheme are the
433,000 Executive Shares granted on 17 June 2016 in respect of the
2016 financial year (no allocation of shares was made in respect of the
2017 or 2018 financial years, and no allocation is proposed in respect of
the 2019 financial year). If the vesting conditions for this tranche are
met on 17 June 2019, the maximum number of fully paid ordinary
shares into which these Executive Shares would converted is 433,000
ordinary shares.
•
WIAL is currently considering the introduction of long term incentive
arrangements for its employees.
Employee remuneration
During the year ended 31 March 2018, the following number of
employees (and former employees) and Infratil and its subsidiaries
received remuneration and other benefits in their capacity as employees of
at least $100,000. This does not include employees of Morrison & Co (who
include most of the management team listed on pages 8 and 9 of this
annual report, including the Chief Executive and Chief Financial Officer), as
these employees are remunerated by Morrison & Co and the only cost to
Infratil of these employees is the Management Fee payable to Morrison &
Co (referred to above).
REMUNERATION RANGENUMBER OF EMPLOYEES
$100,000 to $110,00032
$110,001 to $120,00032
$120,001 to $130,00034
$130,001 to $140,00028
$140,001 to $150,00023
$150,001 to $160,00025
$160,001 to $170,0006
$170,001 to $180,0008
$180,001 to $190,0007
$190,001 to $200,00013
$200,001 to $210,0003
$210,001 to $220,0003
$220,001 to $230,0002
$230,001 to $240,0007
$240,001 to $250,0003
$250,001 to $260,0003
$260,001 to $270,0003
$270,001 to $280,0004
$280,001 to $290,0002
$300,001 to $310,0002
$310,001 to $320,0002
$320,001 to $330,0001
$330,001 to $340,0001
$340,001 to $350,0004
$350,001 to $360,0001
$360,001 to $370,0001
$380,001 to $390,0003
$400,001 to $410,0001
$440,001 to $450,0002
$490,001 to $500,0001
$550,001 to $560,0001
$620,001 to $630,0001
$680,001 to $690,0001
$710,001 to $720,0001
$750,001 to $760,0001
$820,001 to $830,0001
$1,530,001 to $1,540,0001
110111
ANNUAL REPORT 2018INFRATIL
DISCLOSURES
Directors Holding Office
Infratil’s Directors as at 31 March 2018 are:
•
Mark Tume (Chairman)
•
Marko Bogoievski
•
Alison Gerry
•
Paul Gough
•
Peter Springford
•
Humphry Rolleston
Entries in the Interests Register
Statement of Directors’ Interests (as at 31 March 2018)
As at 31 March 2018, Directors had relevant interests (as defined in the
Financial Markets Conduct Act 2013) in quoted financial products of Infratil
or any related body corporate of Infratil, as follows:
BENEFICIAL INTERESTSNON-BENEFICIAL INTERESTS
Infratil (IFT) Ordinary Shares
M Tume39,9775,792
M Bogoievski1,618,299
A Gerry21,588
P Gough159,000
P M Springford25,000
H J D Rolleston42,460
Trustpower (TPW) Ordinary Shares
M Bogoievski26,318
Tilt Renewables (TLT) Ordinary Shares
M Bogoievski26,318
IFT210 Bonds
P M Springford40,000
WIA030 Bonds
P M Springford30,000
As at 31 March 2018, Directors and senior executives (employed by
Morrison & Co) held, in aggregate, 6% of the Infratil ordinary shares.
Dealing in Securities
The following table shows transactions by Directors recorded in respect of
those securities during the period from 1 April 2017 to 31 March 2018:
DIRECTOR
NO OF SECURITIES
BOUGHT/(SOLD)COST/(PROCEEDS) NZD
P Gough – beneficial
On-market acquisition
– 29/03/18
159,000494,490
Use of Company information
During the period the Board has received no notices from any Director of
the Company or its subsidiaries requesting to use company information
received in their capacity as a Director, which would not otherwise have
been available to them.
Directors’ Relevant Interests
The following are relevant interests of the Company’s Directors as at
31 March 2018:
M Tume
Director of Yeo Family Trustee Limited
Director of Long Board Limited
Director of Welltest Limited
Director of New Zealand Refining Company Ltd
Director of Koau Capital Partners Ltd
Director of Rearden Capital Pty Limited
Director of various Infratil wholly owned companies
Chair of RetireAustralia Pty Limited
Chair of Te Atiawa Iwi Holdings Limited Partnership
Director of Ngai Tahu Holdings Corporation Limited
M Bogoievski
Director of Zig Zag Farm Limited
Director of various Infratil wholly owned companies
Chief Executive of the H.R.L. Morrison & Co group, and Director of
H.R.L. Morrison & Co Group GP Limited and companies wholly-owned
by the H.R.L. Morrison & Co Group Limited Partnership
A Gerry
Director of Wellington International Airport Limited
Director of Spark New Zealand Limited
Director of Lindis Crossing Vineyard Limited
Director of Glendora Holdings Limited
Director of Glendora Avocados Limited
Director of Vero Insurance New Zealand Limited
Director of Vero Liability Insurance New Zealand Limited
Director of Asteron Life Limited
Director of On Being Bold Limited
Director of Sharesies Limited
Director of Avokaha Limited
111111
ANNUAL REPORT 2018
P Gough
Partner of STAR Capital Partners
Director of various STAR Capital Group entities
Director of Star Asset Finance Limited
Director of First Capital Finance Limited
Director of Kennet Equipment Leasing Limited
Director of Ignition Credit PLC
Director of Gough Capital Limited
Director of OPM Investments Limited
Director of Tipu Capital Limited
Director of STAR Mayan Limited
Director of Urban Splash Residential Limited and various Urban Splash
Residential Group entities
Director of STAR Errigal Topco Limited
Director of STAR Errigal Midco Limited
Director of STAR Errigal BidCo Limited
P M Springford
Director and Shareholder of Springford and Newick Limited
Director of Loncel Technologies 2014 Limited
Director and Shareholder of NZ Frost Fans Limited
Director and Shareholder of New Zealand Wood Products Limited
Director and Shareholder of Aussie Frost Fans 2012 Limited
Director and Shareholder of Omahu Ventures Limited
Director of Mondiale Technologies Limited
Director of Zespri Group Limited
H J D Rolleston
Director of Property for Industry Limited
Chairman of ANZCRO Pty Limited
Director and shareholder of Matrix Security Group Ltd.
Director of Asset Management Limited
Director of Spaceships Limited
Director and Shareholder of Stray Limited
Director and Shareholder of Media Metro Limited
Director and Shareholder of McRaes Global Engineering Limited
Director and Shareholder of Save a Watt Holdings Limited
Board member of Regenerate Christchurch
All Directors (other than A Gerry and P M Springford)
Aotea Energy Limited effected, from 23 July 2013, public offering of
securities insurance brokered by Marsh & McLennan Agency Limited for the
benefit of Z Energy Limited, Aotea Energy Investments Limited, Aotea
Energy Holdings Limited and its subsidiaries, NZSF Aotea Limited and its
subsidiaries, Guardians of New Zealand Superannuation as manager and
administrator of the New Zealand Superannuation Fund as shareholder of
NZSF Aotea Limited, Infratil Limited and its subsidiaries, Morrison & Co and
its subsidiaries (subject to a professional indemnity exclusion), and the
directors and employees of the foregoing. Full details of the POSI policy are
available from Morrison & Co.
All Directors
Infratil has arranged Directors’ and Officers’ liability insurance covering any
past, present or future director, officer (e.g. company secretary), executive
officer, non-executive director or employee acting in a managerial or
supervisory capacity or named as a co-defendant with Infratil or a subsidiary
of Infratil. Cover is for damages, judgements, fines, penalties, legal costs
awarded and defence costs arising from wrongful acts committed while
acting for Infratil or a subsidiary, but excluding dishonest, fraudulent,
malicious acts or omissions, wilful breach of statute or regulations or duty
to Infratil or a subsidiary, improper use of information to the detriment of
Infratil or a subsidiary, or breach of professional duty. The period of
insurance is 1 July 2017 to 1 July 2018. The limit of Indemnity is
$120 million for any one claim (or $90 million for any securities claim)
and in aggregate, with a deductible for each and every claim (inclusive of
costs) of $20,000 (or $35,000 in respect of the USA) for claims except
securities claims, and $50,000 (or $135,000 in respect of the USA) for
securities claims. In addition, separate defence costs cover of $20 million
has been placed.
As permitted by its Constitution, Infratil has entered into a deed of
indemnity, access and insurance indemnifying certain directors and senior
employees of Infratil, its wholly-owned subsidiaries and other approved
subsidiaries and investment entities (Indemnified Persons) for potential
liabilities, losses, costs and expenses they may incur for acts or omissions in
their capacity as directors or senior employees, and agreeing to effect
directors’ and officers’ liability insurance for the Indemnified Persons, in
each case subject to the limitations set out in the Companies Act 1993. The
deed was executed 31 July 2015.
112113
ANNUAL REPORT 2018INFRATIL
Directors of Infratil Subsidiary Companies
SUBSIDIARY COMPANYDIRECTOR OF SUBSIDIARY
Aotea Energy Holdings Limited M Bogoievski and M Tume
Aotea Energy Holdings No 2 Limited M Bogoievski and M Tume
Aotea Energy Investments Limited M Bogoievski and M Tume
Aotea Energy Limited M Bogoievski and M Tume
Auckland Integrated Ticketing LimitedW Dalbeth, D Hudson, C Inwards, A Ritchie and S Thorne
Blayney and Crookwell WindFarm Pty LtdD Campbell and G Swier
Church Lane Wind Farm Pty LtdD Campbell and G Swier
Cityline (NZ) LimitedZ Fulljames, S McMahon (ceased 23 June 2017), C Stratton and S Thorne
Dundonnell Wind Farm Pty LtdD Campbell and G Swier
Dysart 1 Pty LtdD Campbell and G Swier
GSP Energy Pty LtdG Swier and V Hawksworth
Hopsta LimitedA Bickers and V Hawksworth
Infratil 1998 LimitedM Bogoievski and M Tume
Infratil 2016 LimitedM Bogoievski and M Tume
Infratil Australia LimitedM Bogoievski and M Tume
Infratil Energy LimitedM Bogoievski and M Tume
Infratil Energy New Zealand LimitedM Bogoievski and K Baker
Infratil Europe LimitedM Bogoievski and M Tume
Infratil Finance LimitedM Bogoievski and M Tume
Infratil Gas LimitedM Bogoievski and M Tume
Infratil Infrastructure Property LimitedM Bogoievski, K Baker and P Coman
Infratil Investments LimitedM Bogoievski and M Tume
Infratil No. 1 LimitedM Bogoievski and M Tume
Infratil No. 5 LimitedM Bogoievski and M Tume
Infratil Outdoor Media Limited M Bogoievski
Infratil Power Pty LimitedR Crawford
Infratil PPP Limited M Bogoievski and K Baker
Infratil Renewable Power Pty LimitedR Crawford
Infratil Renewables LimitedM Bogoievski and M Tume
Infratil RV LimitedM Bogoievski and M Tume
Infratil Securities LimitedM Bogoievski and M Tume
Infratil Trustee Company LimitedM Bogoievski and M Tume
Infratil UK LimitedM Bogoievski and M Tume
Infratil US Renewables, IncM Bogoievski and V Vallabh
Infratil Ventures LimitedM Bogoievski and M Tume
Infratil Ventures 2 LimitedM Bogoievski and M Tume
King Country Energy Holdings LtdV Hawksworth
King Country Energy LtdK Palmer, P Calderwood
Nebo 1 Pty LtdD Campbell and G Swier
New Lynn Central LimitedP Coman, A Lamb and A Young
New Zealand Bus Finance Company Limited K Baker, J Boyes, S Proctor and K Tempest
New Zealand Bus LimitedK Baker, J Boyes, S Proctor and K Tempest
North City Bus LimitedZ Fulljames, S McMahon (ceased 23 June 2017), C Stratton and S Thorne
North West Auckland Airport LimitedM Bogoievski and T Brown
NZ Airports LimitedM Bogoievski and M Tume
Perth Energy Holdings Pty LimitedJ Biesse, R Crawford, S Fitzgerald, and S Jones
113113
ANNUAL REPORT 2018
SUBSIDIARY COMPANYDIRECTOR OF SUBSIDIARY
Perth Energy Pty LimitedJ Biesse, R Crawford, S Fitzgerald, and S Jones
Renew Nominees LimitedM Bogoievski and K Baker
Rye Park Renewable Energy Pty LtdD Campbell and G Swier
Salt Creek Wind Farm Pty LtdD Campbell and G Swier
Snapper Services LimitedP Harford, K Waddell and R Phillippo
Snowtown North Solar Pty LtdD Campbell and G Swier
Snowtown South Wind Farm Pty LtdD Campbell and G Swier
Snowtown Wind Farm Pty LtdD Campbell and G Swier
Snowtown Wind Farm Stage 2 Pty LtdD Campbell and G Swier
Swift Transport LimitedM Bogoievski and M Tume
Swift Transport No.1 LimitedK Baker, J Boyes and S Proctor
Tararua Wind Power LimitedB Harker and F Oliver
Tilt Renewables LimitedB Harker, P Newfield, F Oliver, P Strachan, G Swier, V Vallabh
Tilt Renewables Australia Pty LtdD Campbell and G Swier
Tilt Renewables Investments Pty LtdD Campbell and G Swier
Tilt Renewables Market Services Pty LtdD Campbell and G Swier
Transportation Auckland Corporation LimitedZ Fulljames, S McMahon (ceased 23 June 2017) and C Stratton and S Thorne
Trustpower Insurance LimitedA Bickers and V Hawksworth
Trustpower LimitedR Aitken, A Bickers, M Bogoievski, S Knowles, S Peterson, P Ridley-Smith
and G Swier
Trustpower Metering LimitedV Hawksworth
WA Power Exchange Pty LimitedJ Biesse, R Crawford, S Jones and S Fitzgerald
Waddi Wind Farm Pty LtdD Campbell and G Swier
Wellington Airport Noise Treatment LimitedM Harrington and S Sanderson
Wellington City Transport LimitedZ Fulljames, S McMahon (ceased 23 June 2017), C Stratton and S Thorne
Wellington Integrated Ticketing LimitedT Martin and S Thorne
Wellington International Airport LimitedT Brown, A Gerry, K Sutton, J Boyes and A Foster and P Walker
Western Energy Holdings Pty LimitedJ Biesse, R Crawford, S Jones and S Fitzgerald
Western Energy Pty LimitedJ Biesse, R Crawford, S Jones and S Fitzgerald
Wingeel Wind Farm Pty LtdD Campbell and G Swier
Directors’ Fees paid by Infratil Subsidiary Companies
(not otherwise disclosed in the Annual Report)
SUBSIDIARY COMPANYDIRECTOR OF SUBSIDIARYCURRENCYFINANCIAL YEAR 2018 (NZD)
New Zealand Bus LimitedKevin BakerNZD89,103
Jason BoyesNZD43,202
Steven ProctorNZD43,202
Keith TempestNZD43,202
Perth Energy Pty LimitedRoger CrawfordAUD50,223
Steven FitzgeraldAUD100,443
Shane JonesAUD50,223
Snapper Services LimitedPhillippa HarfordNZD37,800
Rhoda PhillippoNZD57,000
Kerry WaddellNZD37,801
114115
ANNUAL REPORT 2018INFRATIL
SUBSIDIARY COMPANYDIRECTOR OF SUBSIDIARYCURRENCYFINANCIAL YEAR 2018 (NZD)
Tilt Renewables LimitedBruce HarkerAUD190,000
Paul NewfieldAUD95,000
Fiona OliverAUD108,000
Phillip StrachanAUD103,500
Geoffrey SwierAUD130,500
Vimal VallabhAUD85,000
Trustpower LimitedRichard AitkenNZD86,000
Alan BickersNZD86,000
Marko BogoievskiNZD45,710
Steven FitzgeraldNZD40,290
Sam KnowlesNZD101,000
Susan PetersonNZD101,000
Paul Ridley-SmithNZD177,000
Geoffrey SwierNZD131,000
Wellington International Airport LimitedJason BoyesNZD67,500
Tim Brown (Chairman)NZD142,500
Andrew FosterNZD67,500
Alison GerryNZD89,000
Keith SuttonNZD85,000
Phillip WalkerNZD77,500
Donations
Infratil made donations of $0.7 million during the year ended
31 March 2018.
Auditors
It is proposed that KPMG be reappointed automatically at the annual
meeting pursuant to section 207T(1) of the Companies Act 1993.
NZX Waivers
Infratil was granted a standing waiver from NZX Main Board Listing Rule
9.2.1 on 8 April 2017. The effect of the waiver is to waive the requirement
for Infratil to obtain an Ordinary Resolution from shareholders to enter into
a Material Transaction with a Related Party to the extent required to allow
Infratil to enter into transactions with co-investors that have also engaged
an entity related to H.R.L. Morrison & Co Group LP for investment
management or advisory services. The waiver is provided on the conditions
specified in paragraph 2 of the waiver decision, which is available on
Infratil’s website: www.infratil.com/for-investors/announcements. No
transaction was entered into in reliance on this waiver during the year
ended 31 March 2018.
Credit Rating
Infratil does not have a credit rating. Wellington International Airport
Limited has a Standard & Poor’s credit rating of BBB+ stable.
Continuing share buyback programme
Infratil maintains an ongoing share buyback programme, as outlined in its
2017 Notice of Meeting. As at 31 March 2018, Infratil had repurchased
775,000 shares pursuant to that programme (which allows up to
50,000,000 shares to be bought back).
Shareholder information programme
Infratil is incorporated in New Zealand and is not subject to Chapters 6, 6A,
6B and 6C of the Australian Corporations Act 2001. The acquisition of
securities in Infratil may be limited under New Zealand law by the
Takeovers Code (which restricts the acquisition of control rights of more
than 20% of Infratil other than via a takeover offer under the Code) or the
effect of the Overseas Investment Act 2005 (which restricts the acquisition
of New Zealand assets by overseas persons).
Substantial Product Holders
The following information is pursuant to Section 293 of the Financial
Markets Conduct Act 2013. According to Infratil’s records and notices
received by Infratil under that Act, the following person was a substantial
product holder in Infratil as at 31 March 2018:
ORDINARY SHARESNUMBER HELD
Accident Compensation Corporation*47,340,037
* The Accident Compensation Corporation substantial product holder notice includes the
following employees who have qualified powers to exercise control of rights to vote and of
acquisition or disposal - Nicholas Bagnall, Paul Robertshawe, Blair Tallott, Blair Cooper, Jason
Familton, Jason Lindsay, Ian Purdy and Jonathan Davis.
Voting Securities
The total number of voting securities of the Company on issue as at
31 March 2018 was 560,053,166 fully paid ordinary shares.
115115
ANNUAL REPORT 2018
Twenty Largest Shareholders as at 31 March 2018
Accident Compensation Corporation 47,340,037
JPMORGAN Chase Bank 39,746,548
HSBC Nominees (New Zealand) Limited 31,790,888
Citibank Nominees (NZ) Ltd 28,910,953
Tea Custodians Limited 26,503,520
HSBC Nominees (New Zealand) Limited 25,852,682
FNZ Custodians Limited 21,638,718
Forsyth Barr Custodians Limited 20,953,123
JBWERE (NZ) Nominees Limited 13,231,997
New Zealand Permanent Trustees Limited 12,485,280
Robert William Bentley Morrison & Andrew Stewart &
Anthony Howard
11,082,245
Cogent Nominees Limited 10,371,696
Premier Nominees Limited 7,988,554
New Zealand Superannuation Fund Nominees Limited 7,525,750
Custodial Services Limited 6,313,623
Hettinger Nominees Limited 6,179,103
New Zealand Depository Nominee Limited 4,626,420
Custodial Services Limited 3,953,276
Custodial Services Limited 3,158,739
BNP Paribas Nominees NZ Limited 3,039,417
In the above table, the shareholding of New Zealand Central Securities
Depositary Limited (NZCSD) has been re-allocated to the applicable
members of NZCSD.
Spread of Shareholders as at 31 March 2018
NUMBER OF SHARES*
NUMBER OF
HOLDERS
TOTAL SHARES
HELD%
1 – 1,000 2,549 1,500,031 0.30%
1,001 – 5,000 6,928 19,952,563 3.60%
5,001 – 10,000 3,666 27,453,961 4.90%
10,001 – 50,000 3,957 82,574,058 14.70%
50,001 – 100,000 410 28,977,723 5.20%
100,001 and Over 207 399,594,830 71.30%
Total 17,717 560,053,166 100.00%
* 235 shareholders hold less than a marketable parcel of Infratil shares
Twenty Largest Infrastructure Bondholders as at 31 March 2018
Forsyth Barr Custodians 92,115,700
FNZ Custodians Limited 74,793,229
JBWERE (NZ) Nominees Limited 53,285,413
New Zealand Central Securities Depository Limited 38,144,450
Custodial Services Limited 37,888,633
Lynette Therese Erceg & Darryl Edward Gregory &
Catherine Agnes Quinn
36,298,500
Custodial Services Limited 23,143,200
Investment Custodial Services Limited 20,862,912
Custodial Services Limited 17,565,534
Custodial Services Limited 12,730,490
Forsyth Barr Custodians Limited 5,663,000
Custodial Services Limited 5,458,000
Tappenden Holdings Limited 4,770,000
FNZ Custodians Limited 4,069,500
Mr Garth Barfoot 4,000,000
Sterling Holdings Limited 3,553,000
Custodial Services Limited 3,278,000
NZ Methodist Trust Association 3,050,000
FNZ Custodians Limited 2,545,000
JBWERE (NZ) Nominees Limited 2,000,000
Spread of Infrastructure Bondholders as at 31 March 2018
NUMBER OF BONDS
NUMBER OF
HOLDERSTOTAL BONDS HELD%
1 – 1,000 5 4,500 -
1,001 – 5,000 1,598 7,938,067 0.80%
5,001 – 10,000 3,920 37,630,180 3.80%
10,001 – 50,000 9,640 269,798,872 26.90%
50,001 – 100,000 1,363 111,150,807 11.10%
100,001 and Over 675 575,022,399 57.40%
Total 17,201 1,001,544,825 100.00%
Comparative Financial Review
FINANCIAL PERFORMANCE
(31 MARCH YEAR ENDED)
2018
$ MILLIONS
2017
$ MILLIONS
2016
$ MILLIONS
2015
$ MILLIONS
2014
$ MILLIONS
2013
$ MILLIONS
2012
$ MILLIONS
2011
$ MILLIONS
2010
$ MILLIONS
2009
$ MILLIONS
Operating revenue1,730.1
4
1,786.5
4
1,706.4
4
1,624.7
4
1,514.9
4
2,368.7
4
2,166.4
4
1,984.8
4
1,835.9 1,733.8
Underlying EBITDAF525.8
4
488.0
4
462.1
4
452.5
4
437.4
2,4
527.6
4
520.2
4
470.9
1,4
363.3 356.3
Operating earnings
3
155.7 155.2 149.4 120.3 164.2 183.5 199.3 252.9 90.0 77.2
Net gain/(loss) on foreign
exchange and derviatives
7.8 28.1 (13.6) (36.3) 70.7 (14.4) 19.2 (3.9) (67.5) 8.0
Investment realisations,
revaluations and (impairments)
12.5 (55.2) (51.8) 29.5 222.2 (5.9) 4.3 (0.5) 83.8 (179.4)
Net surplus after taxation,
discontinued operations and
minorities
60.5 66.1 438.3 383.5 198.9 3.4 51.6 64.5 29.0 (191.0)
Dividends paid 89.6 82.9 110.4 148.8 57.0 48.2 44.1 37.6 36.2 31.3
Financial position
Represented by
Investments
946.5 882.9 534.3 532.3 294.1 334.2 340.9 323.7 9.7 162.4
Non-currents assets 5,057.1 5,170.4 5,085.2 4,830.6 4,613.3 4,435.2 4,328.8 4,193.7 3,963.6 3,891.5
Current assets 618.0 743.4 1,007.5 584.8 542.4 670.0 623.7 515.7 535.1 653.8
Total assets 6,621.6 6,796.7 6,627.0 5,947.7 5,449.8 5,439.4 5,293.4 5,033.1 4,508.4 4,707.7
Current liabilities 451.9 672.7 559.0 344.0 623.6 679.6 547.5 415.7 647.6 445.6
Non-current liabilities 2,042.6 1,984.8 2,048.2 2,066.5 1,810.4 1,920.0 1,887.7 1,919.7 1,382.1 1,879.0
Infrastructure bonds 994.4 998.3 949.8 981.9 979.9 904.3 851.6 854.8 747.4 748.7
Total Liabilities 3,488.9 3,655.8 3,557.0 3,392.4 3,413.9 3,503.9 3,286.8 3,190.2 2,777.1 3,073.3
Net Assets 3,132.7 3,140.9 3,070.0 2,555.3 2,035.9 1,935.5 2,006.6 1,842.9 1,731.3 1,634.4
Outside equity interest in
subsidiaries
1,198.3 1,182.6 1,145.3 1,061.4 916.6 931.1 932.0 843.5 850.6 843.4
Equity 1,934.4 1,959.3 1,924.7 1,493.9 1,119.3 1,004.4 1,074.6 999.4 880.7 791.0
Total Equity 3,132.7 3,141.9 3,070.0 2,555.3 2,035.9 1,935.5 2,006.6 1,842.9 1,731.3 1,634.4
Dividends per share16.0014.7519.6526.509.758.257.256.256.256.25
Shares on issue (‘000)559,278560,053562,326561,875561,618583,321586,931602,806567,655520,211
Partly paid instalment
shares (‘000)---------
1 Prior to fair value gains on acquisition recognised by associates of $60.7 million.
2 Prior to fair value gains on acquisition recognised by associates of $33.1 million.
3 Operating earnings is earnings after depreciation, amortisation and interest.
4 Operating revenue and Underlying EBITDAF relate to continuing operations.
INFRATIL
116
Directors
M Tume (Chairman)
M Bogoievski
A Gerry
P Gough
P M Springford
H J D Rolleston
Company Secretary
N Lough
Registered Office - New Zealand
5 Market Lane
PO Box 320
Wellington
Telephone: +64 4 473 3663
Internet address: www.infratil.com
Registered Office - Australia
C/- H.R.L. Morrison & Co Private Markets
Level 37, Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Telephone: +61 2 8098 7500
Manager
Morrison & Co Infrastructure Management Limited
5 Market Lane
PO Box 1395
Wellington
Telephone: +64 4 473 2399
Facsimile: +64 4 473 2388
Internet address: www.hrlmorrison.com
Share Registrar - New Zealand
Link Market Services
Level 11, Deloitte House
80 Queen Street
PO Box 91976
Auckland
Telephone: +64 9 375 5998
Email: enquiries@linkmarketservices.co.nz
Internet address: www.linkmarketservices.co.nz
Share Registrar - Australia
Link Market Services
Level 12
680 George Street
Sydney NSW 2000
Telephone: +61 2 8280 7100
Email: registrars@linkmarketservices.com.au
Internet address: www.linkmarketservices.com.au
Auditor
KPMG
10 Customhouse Quay
PO Box 996
Wellington
Calendar
Final Dividend Paid
18 June 2018
Annual Meeting
24 August 2018
Infratil Update Publication
June 2018
Half Year End
30 September 2018
Interim Report Release
13 November 2018
Infratil Update Publication
December 2018
Financial year end
31 March 2019
Updates/Information
Infratil produces an Annual Report and Interim Report each year.
It also produces other Updates newsletters on matters of relevance
to the Company. Last year Infratil produced an Update in May 2017
explaining why Infratil has invested in Canberra Data Centres,
Longroad Energy and Tilt Renewables, and outlined the investment
plans of each of those businesses.
In addition, Infratil produces occasional reports on the operations of
its subsidiaries. These are available at www.infratil.com.
All Infratil’s reports and releases are on the website, which also
contains profiles of Infratil’s businesses and links.
DIRECTORY
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- MFT — Mainfreight Limited: Mainfreight Full Year Results to 31 March 20182018-05-29
“MFT | Mainfreight Limited | 2018-05-29 | FLLYR | Mainfreight Full Year Results to 31 March 2018…”
- IPL — Investore Property Limited: Investore Property Limited – FY18 Annual Results2018-05-28
“IMMEDIATE – 28 MAY 2018 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • --- ANNUAL REPORT 2018 CONTENTS HIGHLIGHTS…”