KEY POINTS:
With much of the fallout from the credit crunch yet to come, infrastructure investment company Infratil says the crisis has not produced the acquisition opportunities it hoped for.
The Lloyd Morrison-led company yesterday posted a full-year after-tax loss of $1.7 million against last year's $68.2 million profit.
Morrison said Infratil had weathered the worst of the crisis largely unscathed, but it had been a lacklustre year for shareholders.
Had shareholders reinvested dividends and bonus issues, they would have suffered a 16.5 per cent loss over the year.
At March 31 Infratil's shares were trading at $2.13 against their pre-split price of $5.62 a year earlier.
While Morrison said the company's returns over the year were consistent with the wider market, they were still "inadequate".
He believed financial markets were largely through the high-risk credit crunch period but expected difficult conditions in the next 18 months for which Infratil was prepared because of its enviable capital structure.
In the early stages of the credit crunch last year, he said Infratil was positioned to benefit from the fallout by pouncing on assets from distressed sellers.
Yesterday, however, he was ruing the lack of opportunities thrown up.
"I'm slightly disappointed the market fallout hasn't been more severe. I guess we would have hoped for a little bit more blood on the street, especially in Australia."
Despite the market turmoil which claimed one or two high-profile victims in Australia, infrastructure was a "seriously hot" asset class internationally.
"The bad news from that is it won't be easy to buy assets cheaply. The good news is that if you own good assets, your ability to realise them and rewards for making them work are high." Infratil's operating revenue of $1.36 billion was well up on last year's $689.9 million, largely due to the consolidation of 50.1 per cent-owned Trustpower in the company's full-year results for the first time.
The operating surplus at $87.8 million from $32.4 million was similarly boosted by the inclusion of Trustpower.
Weighing on the company's bottom line was a net $15.4 million negative impact from realisations and impairments against a $43.7 million gain the year before.
Infratil's net interest bill also rose sharply, to $148.8 million from $76.5 million a year ago, with $41.3 million of the increase being attributable to Trustpower.
Shareholder funds declined $144 million over the year as the market value of listed investments, primarily Energy Developments and Auckland International Airport, fell. Infratil spent $125 million building up a 3.3 per cent stake in the airport when it was subject to two takeover proposals.
However the shares have now retreated, leaving Infratil's stake worth just over $90 million.
Across Infratil's businesses, Morrison said Trustpower had performed robustly despite difficult conditions.
Further penetration of the New Zealand and transtasman aviation market by low-cost carriers was set to increase traffic through Wellington and Auckland Airports.
Infratil Energy Australia had survived high wholesale electricity and gas prices over the year which had forced out other small players.
While Infratil's European airports continued to do it tough, the long-term outlook was still good.
Shares closed down 5c at $2.30 yesterday.
