asx announcement australian infrastructure fund (aix ... · making an investment decision you...

www.hfm.com.au

ASX Announcement Australian Infrastructure Fund (AIX) Total pages: 22

21 February 2008

Presentation – Results for the half year ended 31 December 2007

Attached is a presentation in relation to the AIX results for the half year ended 31 December 2007.

For further enquiries, please contact:

Steve Boulton Chief Executive Hastings Funds Management Tel: +61 3 9654 4477 Fax: +61 3 9650 6555 Email: [email protected] Website: www.hfm.com.au

Simon Ondaatje Head of Investor Relations Hastings Funds Management Tel: +61 3 9654 4477 Fax: +61 3 9650 6555 Email: [email protected] Website: www.hfm.com.au

Claire Filson Company Secretary Australian Infrastructure Fund

Unless otherwise stated, the information contained in this document is for informational purposes only. It does not constitute an offer of securities and should not be relied upon as financial advice. The information has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person or entity. Before making an investment decision you should consider, with or without the assistance of a financial adviser, whether any investments are appropriate in light of your particular investment needs, objectives and financial circumstances. Neither Hastings, nor any of its related parties, guarantees the repayment of capital or performance of any of the entities referred to in this document and past performance is no guarantee of future performance. Hastings, as the Manager or Trustee of various funds, is entitled to receive management and performance fees.

For

per

sona

l use

onl

y

February 2008

Australian Infrastructure Fund31 December 2007 Half Year Results

For

per

sona

l use

onl

y

2

Australian Infrastructure Fund

DisclaimerThis presentation has been prepared by Hastings Funds Management Limited, holder of Australian Financial Services Licence number 238309, as responsible entity of the Australian Infrastructure Fund Trust (Trust or AIFT) and as manager of Australian Infrastructure Fund Limited (Company or AIFL). Together, the Company and the Trust comprise the Australian Infrastructure Fund (AIX). Hastings is a subsidiary of Westpac Banking Corporation (Westpac).

The information contained in this presentation is for informational purposes only and does not constitute an offer to issue or arrange to issue, financial products. The information contained in this presentation is not financial product advice. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should read the publicly available information carefully and consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance.

Neither Hastings, Westpac nor any other member of the Westpac Group gives any guarantee or assurance as to the performance of AIX or the repayment of capital. Investments in AIX are not investments, deposits or other liabilities of Hastings, Westpac or other members of the Westpac Group. Members of the Westpac Group may invest in or lend or provide other services to AIX and may be paid fees, including expenses in relation to this Offer and fees in relation to Hastings’ role as responsible entity or manager.

All data in this presentation has been calculated using the most accurate sources available, however any rates or totals manually calculated may differ from those provided due to rounding.

For

per

sona

l use

onl

y

3


Agenda

• Portfolio strategy

• Highlights for the half year

• Summary financial statements

• Portfolio performance

• Capital structure and debt considerations

• Outlook

• Summary

For

per

sona

l use

onl

y

4


Portfolio strategy

• Focusing on transport infrastructure assets

• Seeking quality investments

• Actively managing the asset portfolio

• Applying stringent investment criteria

• Working closely with technical partners

• Paying increasing full year distributions from cash flows

• Maintaining appropriate asset gearing levels

For

per

sona

l use

onl

y

5


Financial highlights for the half year

Normalised(4) gross cash flows from assets were up 20% for the half year to 31 December 2007.

(1) Revenue up due to unrealised gains from increased valuations of a number of assets in the AIX portfolio, as measured by an independent valuer (KPMG).

(2) Gross cash flows from assets down due to (a) deferral of dividends from APAC and NT Airports to the second half of the year pending completion of the sale by BAA of its interests in these assets, and (b) special distributions received in 2006 from the refinancing of Port of Portland and Port of Geelong.

(3) NTA as at 31 December 2006 has been restated to represent the net tangible assets of the consolidated AIX entity.(4) Half year to December 2007 adjusted to include deferred dividends from APAC and NT Airports (estimated at December

2006 levels). Half year to December 2006 adjusted to exclude refinancing cash flows from Geelong and Portland.

Change from previous

corresponding period

Half Year to 31 Dec 2007


Revenue from ordinary activities ($’000) (1) Up 127% 161,342 71,141

Net profit after tax ($’000) Up 135% 139,785 59,535

Gross cash flows from assets ($’000) (2) Down 34% 16,985 25,603

Distributions per security (cps) Up 7% 8.0 7.5

NTA backing per stapled security (cps)(3) Up 21% 293.13 242.60

For

per

sona

l use

onl

y

6


Financial highlights for the half year

• As a result of the strong performance of the portfolio, distributions increased to 8.0 cents per security during the December 2007 half from 7.5 cents per security from the previous corresponding period – an increase of 6.7%

Historical Distributions (cps)

5.5 6.0 7.0 7.5

6.0 7.08.0

11.513.0

14.5 15.5

8.0

7.5

FY2004 FY2005 FY2006 FY2007 HY2008

Interim Final3-year CAGR

10.5%

6.7%

13.0%

11.5%6.9%

For

per

sona

l use

onl

y

7


Key operating highlights

• Strong passenger growth across airport portfolio

• Commencement of Tiger Airways and AirAsia X services

• Key development milestones at Gold Coast Airport and Melbourne Airport

• Acquisition of additional stakes in APAC, Perth Airport and NT Airports

• Initial acquisition price of $146.3 million, including costs

• Minimum investment of $125.9 million, following any selldown to minority shareholders

• Additional 2.0% interest in APAC acquired at historical EV/EBITDA multiple of 15.2x

• Additional 4.4% interest in Perth Airport acquired at multiple of 14.8x

• Additional 2.8% interest in NT Airports acquired at multiple of 12.3x

• Also acquired 15.0% of convertible notes at Perth Airport

• Strong pipeline of development projects at existing assets

For

per

sona

l use

onl

y

8


Summary profit & loss

Normalised(5) dividends, distributions and interest were up 19% for the half year to 31 December 2007.

(1) Unrealised profit from investments is higher as a result of increased asset valuations.(2) Operating expenses are higher due to transaction costs relating to the BAA acquisition and related funding.(3) Interest expense has increased in line with the drawdown under the multi option facility to fund the BAA acquisition.(4) Income tax expense is higher in line with the material increase in profit before tax.(5) Half year to December 2007 adjusted to include deferred dividends from APAC and NT Airports (estimated at December 2006

levels). Half year to December 2006 adjusted to exclude refinancing cash flows from Geelong and Portland.




($’000)


($’000)

Unrealised profit from investments (1) Up 199% 150,126 50,269

Dividends, distributions, interest and other income Down 46% 11,216 20,872

Total revenue Up 127% 161,342 71,141

Operating expenses (2) Up 33% (8,206) (6,167)

Operating profit before interest and tax Up 136% 153,136 64,974

Interest expense (3) Up 368% (1,881) (402)

Profit before tax Up 134% 151,255 64,572

Income tax expense (4) Up 128% (11,470) (5,037)

Net profit after tax Up 135% 139,785 59,535

For

per

sona

l use

onl

y

9


Summary statement of cash flows Change from

previous corresponding

period


($’000)


($’000)

Operating cash flows from assets (1) Down 51% 11,398 23,066

Less operational expenses paid Up 6% (6,796) (6,406)

Less interest and other costs of finance paid Up 1084% (1,895) (160)

Less income taxes paid (314) -

Net cash flows from operating activities Down 85% 2,393 16,500 Proceeds from unlisted security loan repayments and returns of capital Up 120% 5,587 2,537

Net cash flows from assets Down 58% 7,980 19,037

Other cash flows from investing and financing activities (36,221) (22,662)

Net movement in cash (28,241) (3,625)

Cash at beginning of year 74,041 57,493

Cash at end of year Down 15% 45,801 53,868

(1) Operating cash flows from assets comprise dividends/distributions and interest/other income received from assets.(2) Half year to December 2007 adjusted to include deferred dividends from APAC and NT Airports (estimated at December 2006

levels). Half year to December 2006 adjusted to exclude refinancing cash flows from Geelong and Portland.

Normalised(2) net cash flows from assets were up 11% for the half year to 31 December 2007.

For

per

sona

l use

onl

y

10


Cash flow from diverse sources

Half year to 31 Dec 2007

Asset ownership

(%)

Dividends, distributions and interest

($’000)

Returns of capital/loan repayments

($’000)

Total cash flow for period ($’000)

Franking credits

received ($’000)

Perth Airport 30.75 1,129 5,585 6,714 -

APAC 10.14 - - - -

HOCHTIEF AirPort Capital 40.02 3,957 - 3,957 -

Queensland Airports 49.07 1,093 2 1,095 -

NT Airports 29.85 - - - -

Port of Portland 50.00 1,100 - 1,100 471

Port of Geelong 35.00 870 - 870 21

Statewide Roads 6.20 1,394 - 1,394 597

Metro Transport Sydney 38.89 - - - -

Bank Interest n/a 1,855 - 1,855 -

Total 11,398 5,587 16,985 1,089 Dividends from APAC and NT Airports deferred to the second half of the year pending completion of the sale by BAA of its interests in these assets.

For

per

sona

l use

onl

y

11


Strong returns from asset portfolio

(1) The internal rate of return (IRR) for the half year to 31 December 2007 reflects the percentage return on investment for each asset over the six month period based on the gross return on assets including franking credits received by AIX.

(2) IRR since inception reflects the annualised percentage return on investment for each asset based on the gross return on assets including franking credits received by AIX.

(3) Portfolio returns do not include any provision for capital gains tax on divestment of assets.(4) Weightings for Perth and NT Airports include minority allocations from BAA acquisition that may be sold down at a later stage.

Asset

IRR for the half year to

31 Dec 2007 (%)(1)(3)

IRR since inception

(% p.a.)(2)(3) Weighting

%

Perth Airport (4) 19.49 20.81 28.1

APAC 22.68 28.00 24.3

HOCHTIEF AirPort Capital 11.91 12.75 20.2

Queensland Airports 9.61 54.50 14.1

NT Airports (4) 36.79 31.14 5.9

Total Airports 17.41 24.14 92.6

Port of Portland 7.39 29.12 3.9

Port of Geelong 10.20 28.36 1.7

Total Seaports 8.21 28.90 5.6

Statewide Roads 5.27 10.17 1.6

Metro Transport Sydney (23.08) (31.52) 0.2

Total Roads and Rail 2.11 1.76 1.8

Total Transport Assets 16.42 20.14 100.0

Metro Transport Sydney

0.2%

Queensland Airports14.1%

APAC24.3%

HOCHTIEF AirPort Capital20.2%

Perth Airport28.1%

NT Airports5.9%

Statewide Roads1.6%

Port of Portland3.9%

Port of Geelong1.7%

For

per

sona

l use

onl

y

12


Continued growth in asset values

(1) Investment valuations include accrued interest at date of valuation.(2) Valuations for Port of Portland and Port of Geelong also include accrued distributions at date of valuation.

Asset

Cost of Equity 31 Dec 2007

(%)

Valuation 31 Dec 2007

($’000)(1)

Valuation 30 Jun 2007

($’000)(1) Change

(%)

Perth Airport 13.35 348,045 233,400 49.1

APAC 11.60 303,300 197,400 53.6

HOCHTIEF AirPort Capital 12.50 251,001 227,579 10.3

Queensland Airports 16.20 176,100 161,700 8.9

NT Airports 16.20 73,887 46,000 60.6

Port of Portland (2) 12.10 48,900 47,000 4.0

Port of Geelong (2) 12.10 20,900 19,800 5.6

Statewide Roads 8.90 19,800 20,700 (4.3)

Metro Transport Sydney n/a 2,000 2,600 (23.1)

Total/Weighted Average 13.16 1,243,933 956,179 30.1

For

per

sona

l use

onl

y

13


Passenger growth – Airport portfolio

(1) APAC passenger statistics represent combined totals for Melbourne and Launceston Airports.(2) Queensland Airports statistics represent combined totals for Gold Coast, Townsville and Mount Isa Airports.(3) NT Airports statistics represent combined totals for Darwin, Alice Springs and Tennant Creek Airports.

Passenger growth, weighted by AIX’s investment in each airport, was 8.2% for the half year, highlighting the benefits of a diversified portfolio, careful investment selection and portfolio management.

Airport

Domestic Passengers Half Year to

31 Dec 2007 (000’s)

International Passengers Half Year to

31 Dec 2007 (000’s)

Total Passengers Half Year to

31 Dec 2007 (000’s)

Total Passengers Half Year to

31 Dec 2006 (000’s)



HOCHTIEF AirPort Capital − Athens 3,215 5,893 9,107 8,332 Up 9.3% − Düsseldorf 2,250 7,406 9,657 8,915 Up 8.3% − Hamburg 2,842 4,009 6,851 6,232 Up 9.9% − Sydney 11,255 5,306 16,561 15,667 Up 5.7% Perth Airport 3,307 1,272 4,580 4,041 Up 13.3% APAC(1) 10,130 2,396 12,526 11,904 Up 5.2% Queensland Airports(2) 2,812 116 2,928 2,699 Up 8.5% NT Airports(3) 1,008 107 1,115 1,061 Up 5.1% Total 36,820 26,505 63,324 58,850 Up 7.6% Weighted by value of AIX Investment Up 8.2%

For

per

sona

l use

onl

y

14


Other assets

• Total volume up due to strong fertiliser throughput compared to pcp• Grain tonnage down for half, likely to be offset by other anticipated revenues

Port of Portland

• Strengthening performance of both monorail and light rail attributed to economic conditions, particularly domestic tourism, as well as organic growth supported by successful marketing activity

Metro Transport Sydney

• Performance in line with expectationsStatewide Roads

• Total volume down slightly, however fertiliser volume up over 40% on 2006Port of Geelong

Unit of measurement

(000’s)

Total volume Half Year to 31 Dec 2007

Total volume Half Year to 31 Dec 2006


corresponding period (%)

Port of Portland Cargo tonnes 1,622 1,505 Up 7.7

Port of Geelong Cargo tonnes 4,855 4,949 Down 1.9

Statewide Roads Average daily traffic 111 107 Up 3.6

Metro Transport Sydney Passengers 2,959 2,645 Up 11.9

For

per

sona

l use

onl

y

15


Asset development – highlights

• Contractors appointed for terminal developments at Gold Coast (ADCO) and Melbourne (John Holland) Airports

• At Melbourne Airport, international terminal (T2) expansion will provide an additional 25,000m2 of space by late 2011 for a total cost of $330 million

• At Gold Coast Airport, the main terminal will undergo a $100 million redevelopment to more than double the floor space of the existing facility by late 2009F

or p

erso

nal u

se o

nly

16


Asset development – planned program

• “Maritim Düsseldorf” Hotel and Convention Centre opened December 2007, the largest conference hotel in North Rhine Westphalia

• 23ha land available for development, with ‘Airport City’ concept progressing

Düsseldorf

• Announcement of $100m home centre developmentDarwin

• Hardwood chip facility under consideration at both portsPort of Portland Port of Geelong

• Central retail mall between T1 and T2 to be completed in 2008, along with link to suburban rail network

• Radisson SAS Hotel to be opened in 2009

Hamburg

• ADCO appointed as contractor for terminal expansion• Focus on property opportunities – negotiations with Southern Cross University

Gold Coast

• 2007 – 2012 capex program on terminals, taxiways, car parks• $275m budget includes $100m for property activities

Perth

• Major new office development in partnership with Investa Property Group, with approximately 11 hectares of development to be completed by end 2009

• Commenced international terminal (T2) expansion, completion by late 2011

Melbourne

For

per

sona

l use

onl

y

17


Capital structure – scope for growth

(1) Net Debt/EV reflects net senior debt and independent equity valuations as at 31 December 2007(2) Senior ICR reflects EBITDA for the six months to 31 December 2007 divided by the corresponding senior interest expense net of interest

received on cash balances.(3) Net Debt/EV and Senior ICR for HTAC have been estimated by Hastings. (4) Metro Transport Sydney has zero debt on its balance sheet at 31 December 2007.(5) Implied portfolio net debt has been calculated using proportionate net debt for each asset, plus portfolio debt, less portfolio cash.

Asset Asset

ownership (%) Valuation as at 31 Dec 2007 ($’000)

Net Debt/EV (%)(1)

Senior ICR (x)(2)

Perth Airport 30.75 348,045 32.4 2.8

APAC 10.14 303,300 31.0 3.8

HOCHTIEF AirPort Capital (3) 40.02 251,001 48.7 3.2

Queensland Airports 49.07 176,100 41.4 2.6

NT Airports 29.85 73,887 38.2 3.7

Port of Portland 50.00 48,900 40.0 2.2

Port of Geelong 35.00 20,900 45.7 3.2

Statewide Roads 6.20 19,800 15.2 16.8

Metro Transport Sydney (4) 38.89 2,000 n/a n/a

Weighted average asset ratios 1,243,933 37.1 3.3

Implied portfolio net debt and gearing (5) 756,110 37.8 For

per

sona

l use

onl

y

18


Capital management – asset debt maturity profile

0

50

100

150

200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017+Financial Year

AIX

pro

porti

onat

e de

bt ($

'000

)

Perth AirportMelbourne AirportHOCHTIEF AirPort CapitalQueensland AirportsNT AirportsPort of PortlandPort of GeelongStatewide Roads

(AIX proportionate interest)

Weighted average maturity ~5 years

For

per

sona

l use

onl

y

19


Debt market considerations• One asset refinancing due in the next 12 months

(APAC $450m)- Preliminary discussion with banks suggest

refinancing is achievable on acceptable terms• Balance of debt at asset level largely hedged

- Approximately 80% of current debt is hedged or fixed for the next 2 years

- Portfolio gearing is conservative at a weighted average of less than 40%

- ICR is comfortable with EBITDA at 3.3x net senior interest expense

• BAA Acquisition funded by existing multi-option facility (MOF)

- MOF extended to December 2008- Full range of refinancing options being

considered

Level of fixed or hedged debt at AIX assets

0%

20%

40%

60%

80%

100%

FY2008 FY2009 FY2010 FY2011 FY2012

% o

f dra

wn

debt

hed

ged

Note: HTAC fixed/hedged debt levels estimated by Hastings.

For

per

sona

l use

onl

y

20


Outlook

• Active asset management- Strong growth in passenger numbers set to continue- Recent “open skies” agreement between Australia and the US likely to increase

capacity and passenger throughput- Continued investment in existing assets remains central to AIX’s strategy

• Prudent capital management - Flexibility to fund both organic and acquisition growth given level of gearing in capital

structure• Acquisition opportunities

- Asset pricing remains competitive, however recent market developments provide AIX with potential M&A growth opportunities

• Ongoing review of non-core assets continues- Decision made not to exercise call option to participate in State Highway 130

(Segments 5 & 6) toll road project in Texas, USA• Jeff Pollock appointed as AIX CEO in January 2008, commencing in April 2008

For

per

sona

l use

onl

y

21


Summary

• Portfolio performing well - Strong financial performance in

December half with net profit after tax up 135%

- Strong passenger growth• Track record of cash flow coverage of

distributions• Multiple growth options

- Organic growth at existing assets- Potential for new acquisitions

• Flexible capital structure- Well positioned to deliver value to

investors in current environment- History of disciplined acquisitionF

or p

erso

nal u

se o

nly

asx announcement australian infrastructure fund (aix ... · making an investment decision you...

Documents