Finding a Path Infratil

Infratil Annual Report Finding a path 2020 Contents Calendar Strategy. Governance. Final dividend paid Management. Environment 03 15 June 2020 Financial highlights. Annual meeting Corporate structure 10 20 August 2020 Reports of the Chief Executive Half year end and the Chair 12 30 September 2020 Financial trends 20 Half year results released 12 November 2020 Financial summary for shareholders & bondholders 22 Financial year end 31 March 2021 Infratil’s businesses 30 Updates/Information Financial statements & statutory information 60 Infratil produces an Annual Report and Interim Report each year. 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. Finding a path Shareholders in any company The test posed by COVID-19 is being want transparency around the met. While some of Infratil’s businesses risk and return features of the have suffered harm and value loss, business they have invested in. others have thrived or coped well, and Infratil’s solid funding and cash As an infrastructure investment flows are allowing both a return to company, Infratil seeks to provide this shareholders and the continued clarity by describing and reporting on execution of growth plans. its investment strategy, its approach Next year holds many uncertainties. to risk management, and the key The COVID-19 crisis seems likely to metrics of its businesses. In addition, become synonymous with disease, two years ago we set out the returns digitalisation and debt. Each is likely to which are expected to be provided to have profound consequences, not least shareholders over the following decade. because of the enormous increase in The COVID-19 crisis is a significant test government engagement in personal of whether the strategy has been well and business activities through the formulated and executed. collection of information, the reprioritisation of health services, and As set out in prior years’ annual reports, the many forms of public economic Infratil’s investment approach entails assistance. How these engagements (amongst other things): evolve as the crisis recedes will influence • Owning infrastructure businesses peoples’ behaviour and the nature of benefitting from demand growth that the economic recovery. have good prospects of providing fair Infratil must find a path through these returns by investing to meet that uncertainties. Keeping people safe. demand. Assisting its businesses that are • Ensuring funding and investment struggling. Pursuing opportunities while diversity so that changes within the ensuring that our shareholders and portfolio of businesses can be bond holders remain well informed and withstood and opportunities taken. supportive. 01 202 Strategy and execution Infratil’s track record reflects a disciplined Business Sectors approach to capital allocation and liability management. • Investment is in businesses where Infratil has the expertise to manage risks and opportunities, and which are consistent with the shareholder mandate. • Because Infratil’s businesses provide critical services to communities and users, they must be well managed to meet user needs with the highest standards of probity. • Investment and funding must be resilient and reflect the reality of the capital markets’ fluctuating risk appetite and supply and demand for assets and capital. • Infratil’s businesses should be able to take advantage of fundamental trends: energy decarbonisation, the transportation and storage of data, an aging population, and expanding middle classes. Over the last five years the key sources of returns have been from utility-scale renewable energy projects, the increasing Renewable Energy Connectivity & Data demand for data storage and the underlying digital Airports infrastructure, and ultra-low interest rates. Retirement Other In the future, while the trends will continue, who will benefit and how is less clear: • Transportation and storage of data: Since the 2007 Capital Structure introduction of the iPhone, the capacity of mobile networks has expanded 25,000 times. It is estimated that over the last two years more manmade data was created and stored than in the previous ten thousand years. • Decarbonisation: Atmospheric carbon dioxide has risen 15% since Infratil’s establishment in 1994 because of approximately 36 billion tonnes a year of human attributable emissions. Over the same period the cost of solar and wind generated electricity has fallen up to 95% (on a per unit of energy basis). • Aging: Since 1994, New Zealand’s over 65 population has grown 90% to over 700,000 people (the under 65 population is up 38%) and life expectancy has risen 4.8 years to 81.6 years. Australia’s over 65 population has risen 112% to 4.2 million people (the under 65 population rose 35%) with life expectancy up 5.6 years to 83.5 years. • Growing middle classes: Since 2010, the per capita real GDP of both China and India more than doubled, and their Equity combined populations rose by 300 million people. Perpetual debt • Interest rates: The New Zealand five-year government Bonds Bank funding bond yield was 6.8% per annum the day Infratil listed in 1994, and 0.7% per annum 26 years later. 03 Governance & Direction Infratil’s shareholders elect Mark Tume, independent chair As a Kiwi who works in London I’m very directors for three year terms to appointed 2007, last elected 2018. aware of how global events impact in New Zealand and Australia. In London represent them and to look after Member of the Nomination & Remuneration and Management I manage investments in similar fields their interests. Engagement, and (ex officio) Audit to Infratil’s, but often with more To this end, the board is open to & Risk committees. development risk. Achieving the best outcome requires the best from people. dialogue with shareholders, whether at I maintain ties with Infratil’s many The focus on performance and people the annual meeting or informally. stakeholders and ensure that the board is consistent with what I see at Infratil. Director responsibilities include: is delivering on its responsibilities. My experience in finance and on the boards Kirsty Mactaggart, independent director • Maintaining an ongoing dialogue of Transpower, Kiwi Rail, Guardians of NZ appointed and elected in 2019. Member with shareholders. Superannuation Fund, and Ngai Tahu of the Audit & Risk and Management • Proactively participating in the Holdings gives me an appreciation of Engagement committees. the issues faced by Infratil and its formulation and evolution of the I have 25 years of financial market businesses and an appreciation of the Company’s strategy. experience across multiple countries concept of social licence. • Ensuring effective articulation to and sectors. My transactional external stakeholders of strategy, Marko Bogoievski, director and chief experience as a banker; and goals, risks and performance. executive. Appointed 2009. Last elected governance focus as an investor will be 2017 and due for re-election in 2020. applied to Morrison & Co to ensure the • Monitoring strategy implementation, manager delivers transparency and financial performance, risks and legal As CEO of Morrison & Co I have the responsibility of ensuring our team is performance to all Infratil stakeholders. compliance. focused and active on the Infratil Catherine Savage, independent • Maintaining awareness of relevant mandate. Our job is to identify director appointed and elected in 2019. societal and market developments. proprietary opportunities and to deliver Member of the Audit & Risk and • Providing diversity of perspective and strong long-term returns for an Management Engagement committees. acceptable level of risk. We are knowledge relevant to the Company. I have 30 years of involvement in fortunate to have significant experience New Zealand and global funds • Monitoring the performance of supporting our investment and asset management and capital markets. Infratil’s manager H.R.L. Morrison & Co management programmes. Being part of a company that maintains (“Morrison & Co”). Morrison & Co is a Alison Gerry, independent director the highest standard of corporate specialist manager of infrastructure appointed 2014, last elected 2019. governance and transparency to deliver investments and performs this role for Chair of the Audit & Risk committee, and long term value to its stakeholders is Infratil under an investment member of the Nomination & extremely important to me. Infratil and its management agreement. Infratil Remuneration, and Management manager, Morrison & Co, are positioned benefits from having a management Engagement committees. to deliver long-term value add from team with great breadth and depth My experience in finance and risk investing in strategic opportunities and of skills, however the board must be management helps me appreciate focusing on people and culture. vigilant about potential conflicts of Infratil’s strategic opportunities and Peter Springford, independent director interest and satisfied that the cost is threats from financial markets, appointed 2016. Last elected 2017 and reasonable relative to alternatives. technology, regulation and the natural due for re-election in 2020. Member of Further commentary on the role of the environment. Executing strategy is the Management Engagement board, the credentials of directors and about allocating capital and about committee. developing

Load more