IFT - Infratil

[Toddy]

Toddy Who in there right mind would buy a bus company off them and this is in my opinion is the millstone around their neck. Removed it from my watch list the moment they even suggested buying a bus company. How many have gone bust and how many have made a good profit in the last 20 years do some research you will be supprised.

Possum

No one expected IFT to enter into the bus business. However, Morrison & Co had experience in this area so backed themselves to make it work. It has been a tough road so far as the local and central govt influence has been difficult to digest. Having said that, progress has been made and the business is building. IFT added to the bus business as recently as January 08.
The public transport model is an interesting one and all of the right noises are being made to reduce green house emmissions and put more bums on seats.
I think that IFT can grow this business but if you are looking for large p&l figures then you will only be dissapointed. Its not politically correct to disclose large profits from providing public services. The benefits from owning such a business come from the large and consistent stream of cashflows which you then use to run and build other parts of your business where you can disclose larger bottom lines.


I do agree however that the rewards so far do not match the enormous effort and resources that IFT management have contributed to building this business for the benefit of themselves and the NZ Public . You can rest assure that every lesson learnt from Morrisons team will be taken on board to deliver a better performance in the future as the Govt grows the public transport model.

For the record, I do not think that the bus business has anything to do with the current softness in the SP. There are a number of factors contributing, some of which are, current market risk (softness in global markets), lower spot electricity prices for the first nine months of the year (which has now corrected itself), Australian energy business (opposite problem, spot prices were too high during the first six months but have come down during the last quarter), questions around the European airport business (The Prestwick landing fees vs new terminal debate for example. Kent is a long term hold and will work out well, Lubeck, who cares as IFT have an out option if their plans cannot progress), questions over where the AIA holding is heading, the current strength of the NZ dollar, what is the cash from the latest capital raising going to be used for etc etc

I'm picking that the IFT ducks will all line up again before the end of the year is out but one does lose a little sleep in these uncertain times. Hopefully the quarterly report with be a little more informative than usual to quantify a few of the perceived and real risks to the IFT shareholders.

[POSSUM THE CAT]

Macduffy & Toddy to me the bus business represents 80% of the down size risk. To buy a business that is not for sale and have the owner say yess thank you. Either the business is performing poorly or the premium is to tempting to resist. This is in my opinion a crazy way to do business. Hence I basically stopped considering this company as an investment. Have A look at the history of the big private bus companies of the past and the government even gave the bigest one away for less than the value of the busses

[Toddy]

We can put a tick in the Airport box for not being the cause of the 'collapse' of the SP.

And we already know that its nothing to do with Trustpower.

So that leaves the Aussie energy business and the NZ Bus business. We can already say that its unlikely to be the bus business with a great level of confidence. So, if the Aussie energy assets are making money then where is the added risk to justify the sell off.



Infratil Email Update

13 February 2008

Wellington Airport Monthly Overview - January 2008

The benefits of competition in the domestic market cannot be demonstrated
more clearly than occurred in January with passenger growth up 29.7% on
January 2007. While Pacific Blue's market entry created the impetus for the
growth the January result also reflects the benefits of a significant
competitive response by the established airlines. Available domestic capacity
increased by 28.8% from the previous year with aircraft loadings growing
marginally above the previous year. Year to date, domestic passengers are now
6.1% above the previous year following the substantial growth in recent
months.

The international market continues to be severely constrained at Wellington.
Growth in international passenger numbers for December was 1.4%% above the
previous year with seat capacity unchanged. The average airline load factor
continued to exceed 80%. The average loads were also above 80% on all of the
Australian routes serviced from WIAL. Until more capacity is offered many
Wellingtonians will be forced to travel through Auckland or Christchurch to
cross the Tasman, or may not travel at all. Year to date growth in
international passengers now stands at 4.2%, with seats having fallen by
3.9%.

WIAL's construction programme continued in January. A further new aircraft
gate is shortly to be brought on line with works scheduled for completion in
mid February. The replacement of two existing air bridges will also commence
in February. Work remains in progress to review the use of Wellington's apron
facilities to ensure short term demands can be met. With all of the airlines
making public comment about further expansion of domestic services, the
development programme must continue, to ensure this growth can be
accommodated.

The expansion of WIAL's international terminal will also commence in the near
future. Details of the expansion plans are soon to be made public.

Works continue on WIAL's North runway end safety enhancement to meet
increased international safety requirements. The works will be completed by
mid 2008. Infratil Airports Europe Monthly Overview - January 2008



Glasgow Prestwick Airport

Glasgow Prestwick handled 145,550 passengers in January, down 1% on January
2007. The year-to-date passenger total of 2,068,511 shows a marginal
improvement on the equivalent period for the prior year.

Wizz services to Gdansk and Warsaw improved against the prior year while
Katowice, introduced in September 2007, continues to perform well. Glasgow
Prestwick was also named Best Overall Airport by Wizz for the month of
December, following a second place finish the previous month.

Based on criteria such as aircraft turnaround times and baggage processing,
this accolade clearly demonstrates not only the ability, but the dedication
and teamwork shown by the Prestwick Handling department.

The airport handled 1,804 tonnes of freight during the month, 7% down on
January 2007. The adverse variance is partly a result of weather conditions
causing three inbound aircraft to divert elsewhere.

Year to date freight volume is 4% ahead of the equivalent period for the
prior year, with Cargolux and Polar showing improved performances for FY08.

The airport continues to benefit from new commercial developments and
investment, with Seguro Holidays opening a new purpose-built travel agency
and call centre in the main concourse, and The Change Group taking over the
foreign currency exchange concession with an enhanced airside unit planned.

Kent International Airport

Kent International handled 3,729 tonnes of freight during the month, an
improvement of 32% on January 2007 but 9% down on December's seasonal peak
total.

All scheduled carriers showed improvements on both the prior year and
year-to-date freight volume which, at 25,056 tonnes, is currently 20% ahead
of the equivalent period for the prior year.

Luebeck Airport

Luebeck Airport handled 29,477 passengers in January. This is down 22% on
January last year with year to date passengers of 495,531 being 14% down on
the equivalent period last year.
These lower levers of passenger traffic reflect a 24% reduction in overall
capacity against January 2007. This reduction is due largely to the
withdrawal of services to London however this will be offset in the future to
an extent by Ryanair's introduction of three additional weekly London
Stansted services.

The airport recently benefited from the opening of the new News and Books
store and a new larger food and beverage facility, both located airside,
while The Change Group have taken over the foreign currency exchange
concession.

[Zaphod]

IFT
19/02/2008
GENERAL

REL: 1139 HRS Infratil Limited

GENERAL: IFT: Wellington Airport unveils New Zealand's newest icon

Wellington International Airport today revealed the design of its
international passenger terminal, which will complete the terminal's
expansion and upgrade. The building encapsulates Wellington's individuality
and creativity and will undoubtedly create a unique and memorable visitor
experience.

The bold and dramatic design, affectionately tagged "The Rock", is in
contrast to the bland halls that typify most international airports. The
airport's South Coast location is represented by the inside aesthetics and
outside shell of the building. Coloured fragments of glass in the roof
fissure let in a warm, natural light by day and backlighting at night creates
a glow which will be seen from the air.

"Our radical departure from traditional airport design worldwide is entirely
deliberate. What is set to become New Zealand's newest iconic building, The
Rock combines functionality and capacity with what will be a memorable
visitor experience. It's edgy and in keeping with our Wild at Heart attitude,
reflecting Wellington's status as a vibrant and daring cultural city. With
our commitment to regional tourism and further developing international
services, we are creating the airport to take Wellington into the next
decade," said Steven Fitzgerald, Wellington Airport CEO.

Two of New Zealand's leading design personalities have endorsed the project's
design.

"It is incredibly inspiring to think that Wellington will have a truly iconic
building at the doorstep to the city. Hooray to all involved in this highly
creative development at the Wellington Airport, as this wonderfully dynamic
architectural highlight will be a shining star for our city's future."
(Richard Taylor, Weta Workshop)

"Well done to Wellington Airport for being so bold in rejecting the ordinary
and embracing the extraordinary. WOW! The design of the International
Terminal makes a dramatic theatrical statement; it encapsulates beautifully
the personality of Wellingtonians and their surrounding environment."
(Suzie Moncrieff, World of Wearable Art)

Wellington Mayor Kerry Prendergast said the design of the international
terminal truly reflected the uniqueness and creativity of Wellington and
Wellingtonians.

"Wellington is the Creative Capital of New Zealand. We welcome and celebrate
creativity and innovation. It's great to see Wellington businesses thinking
outside the square and capturing the uniqueness of our city in this way. I
have no doubt this terminal will become a talking point, not just nationally,
but internationally, once again putting Wellington on the map. It's fantastic
and I congratulate all those involved."

And, from Tim Cossar, Positively Wellington Tourism CEO,
"Wellington has established a reputation for being leading-edge and
innovative. Wellington Airport's new international passenger terminal further
confirms that reputation. Its design is eye-catching and iconic, giving
visitors a feel for Wellington's creative spirit, right from the moment they
arrive. This is just the sort of new development Wellington needs to keep
positioning itself competitively in domestic and international markets."

Member for Rongotai, The Hon Annette King, said
"Wellington has consistently shown it is prepared to take bold approaches to
developing infrastructure and amenities. This design is another dramatic
example."

Functionality

The Rock element is a small proportion of the entire international terminal
upgrade. The new facility will complete the immense improvement in the
passenger's intuitive journey from the departure point from the main terminal
to the aircraft door.

The international passenger terminal upgrade is in two stages. Stage 1,
completed in December 2007, includes:
- A better defined international departure farewell area;
- Improved queuing for Customs;
- Enhancements to customs and MAF processing and aviation security
screening (doubling processing capability);
- Reconfigured and consolidated duty free shopping areas with a new
duty free concessionaire;
- Access to an additional international baggage belt;
- Additional aerobridge and domestic gates with international swing
capacity (being used to accommodate Pacific Blue domestic services and
increased services from other airlines).

Stage 2 is expected to be completed at the end of 2009, will involve a number
of components which are significant projects in their own right:
- Expanded and redesigned international departure lounge building with
extra lounge seating for 660 seats;
- Improved waiting and queuing areas to gates;
- Additional toilets and a new cafe;
- Another aerobridge (bringing the total number from 6 to 8 available
to international aircraft)
- New fuel hydrants and apron works.

Design efficiency and environmental sustainability

As well as creating a memorable visitor experience, and optimum
functionality, the architectural brief required planning efficiency and
economy in building materials and construction.

The construction itself uses standardised and economical building components
in a creative way. Examples include:

- incorporation of plywood and fibre-cement in the carcass of the
building
- windows are aluminium with plywood reveals

Meticulus planning has gone into recycling, refurbishing and salvaging.
Examples include:
- reuse of mechanical plant
- refurbishment of lifts and toilets
- reuse and salvaging of ceiling tiles, security cameras, PA, lights,
phones and gate signs
- reupholstering of lounge seats
- refurbishing of aerobridges
- retaining existing shear walls which would otherwise be expensive to
remove

Strong Environmentally Design features include:
- ramps instead of escalators or lifts where possible
- energy saving features such as double and laminated glazing, sun
protection louvres, natural daylight via skylights, low flow bathroom
fittings
- environmental range paint specifications
- low velocity mechanical thermal plant

Passenger growth

Wellington Airport's announcement is consistent with the current trend toward
better New Zealand airport infrastructure and the resulting capacity growth.
International passengers grew by 5.1% in the last 12 months compared to the
previous 12 months (Jan to Jan), a trend that is expected to continue.

The terminal expansion will address current passenger congestion and prepare
for future growth by doubling international processing capacity to 1000
passengers/hour.

Planning efficiencies and future flexibility have been accommodated in the
design to allow for growth:
- baggage swing belts and operable walls with domestic and
international capability
- additional AVSEC screening and customs facilities
- spare mezzanine space within the lounge for additional seating or
further amenities

Importantly, the aerobridges can accommodate existing trans-Tasman aircraft
as well as the B787, in fit with Wellington Airport's strategy of encouraging
airlines to provide long haul services.

Cost recovery

The new passenger terminal is expected to cost $39 million. The airport and
airlines discussed the allocation of aeronautical income towards this
investment during pricing consulations concluded in June 2007. Aeoronautical
charges were marginally increased in July 2007 by 2.85% (around 30c/pax) for
the next 5 years to fund the two-staged terminal upgrade ($53m) and other
aeronautical projects such as the runway end safety areas ($31m). There will
be no rise in the international departure fee.

Wellington architects Studio Pacific Architecture in association with Warren
and Mahoney have designed both stages of the terminal development.

ENDS

Issued by: Wellington International Airport Limited

Enquiries:
Louise Murray
Media Relations
ph: 027 256 8352
End CA:00160672 For:IFT Type:GENERAL Time:2008-02-19:11:39:36

[Toddy]

The quarterly results are out. It sounds to me like IFT may take the cash on the AIA deal.

'The bid for a partial take-over of Auckland Airport may also be decided by a contest between short-term share price considerations on the one hand versus long-term value
on the other.'

REL: 1710 HRS Infratil Limited

QUARTER: IFT: Infratil Result for the Nine Months ended 31 December 2007

Infratil's results over the third quarter were flat, which is consistent with
the first half. Standout developments were registered at Wellington Airport
and Infratil Energy Australia, which resumed growth in its energy retailing
operations.

Shareholders will naturally be disappointed by the worldwide decline in
equity values, which reflect both credit concerns in capital markets and
apprehension about a weaker world economy. Fortunately, Infratil's airports,
energy and public transport operations are likely to be relatively resilient
to the fallout. There are however real consequences.

At present Infratil's businesses are investing in bus services, airport
facilities, generation plant and energy retail growth, but the timing of
these investments may be reviewed as the cost of capital rises and the value
offered by other opportunities becomes more attractive. The bid for a partial
take-over of Auckland Airport may also be decided by a contest between
short-term share price considerations on the one hand versus long-term value
on the other.

Underlining Infratil's focus on delivering returns to its shareholders over
the long-term has been the recent recruitment of senior executives to the
management team.

FINANCIAL

Infratil's earnings before interest, tax, depreciation, amortisation,
realisations and impairments, and fair value movements of financial
instruments ("EBITDAF") increased to $240.5 million from $101.3 million in
the previous comparative period. The operating surplus was $85.7 million
($29.4 million) and the net surplus attributable to Infratil shareholders was
$4.1 million ($62.4 million previously, higher predominantly from
realisations).

The growth in EBITDAF continues to mainly reflect the consolidation of
TrustPower from 31 December 2006, which also contributed to increases in
depreciation and interest costs.
As has always been its policy, Infratil's priority is growth in value rather
than immediate period income.

LIABILITIES & RISK MANAGEMENT

Over the quarter Infratil raised $88 million through an issue of shares
partly paid to $1 each. The second $1 instalment on these shares is due in
July-August 2008.

As at 31 December 2007 net bank debt of Infratil and wholly owned
subsidiaries made up 13% of capitalisation. Total debt, including
Infrastructure Bonds, comprised 42% of capitalisation, reducing to 38% if the
$88 million second instalment is included. Since 31 December 2007 Infratil
has renewed its bank facilities to provide additional capacity and duration
to its funding.

In addition to taking a conservative approach to its capital, Infratil has
also purchased a small amount of insurance against falls in the value of the
share market. This is designed to provide some protection should the
fluctuations in the share market increase and to ensure there is appropriate
focus on global market risk. Risk identification and management has been, and
continues to be, a hallmark of Infratil's approach.

BUSINESSES

Wellington Airport was the stand out performer for the quarter with net
profit up $5.9 million, 32% on a year earlier. This was driven by the launch
of Pacific Blue's services to Christchurch and Auckland and the robust
competitive response of Air New Zealand and Qantas. In November and December
450,000 passengers travelled through the airport, up from 396,000 a year
earlier. In January 2008 domestic passenger numbers were 30% higher than the
same month in 2007.

For the nine months, EBITDAF was up 18% to $44.1 million. Passenger services
income was $16.2 million with per passenger income $4.47 as against $4.05 for
the year earlier period.

This increase in activity has only been possible because of the Airport's
investment in facilities and work continues on the enhancement of the
terminals, car parking, bus access and runway, as well as the off-airport
retail centre.

Infratil Energy Australia group (IEA) resumed the growth of its energy
retailing operations, which had 252,765 billable accounts as at 31 December
2007, up 66,732 in the year to date. The resumption of profitable growth has
been possible because retail tariffs have risen and wholesale energy prices
have returned to more normal levels after being driven up by drought
conditions in winter 2007. Prior to that occurring, IEA had been gaining
15,000 to 20,000 accounts a month and with growth once again underway, the
next milestone is 300,000 accounts.

IEA's 30MW Hunter peaker power station is on schedule for completion in March
and work also progressed on the dual-fuel 120MW Perth generation station.

TrustPower continues to be a dominant influence on Infratil's results, and
value. For the latest quarter net profit was $15.8 million from $28.7 million
a year earlier. While low generation from TrustPower's hydro power stations
impacted the quarterly result this was within normal bounds.

TrustPower's investment in additional capacity progressed favourably. The
South Australian windfarm was increased in size by approximately 10%, to
almost 100MW, and remains on track for completion later this calendar year.
Consenting progressed in respect of the 72MW Wairau and 46MW Arnold hydros
and the 200MW Lake Mahinerangi and 240MW Kaiwera Downs wind schemes.

Infratil Airport Europe achieved good freight results at both Glasgow and
Kent while passenger aviation activity was weak at both Glasgow and L?beck.
Work continues on marketing the airports to potential users with incremental
progress against a backdrop of a weak European passenger aviation market. The
group delivered a better financial result due to a one off benefit arising
from a lease termination receipt.

NZ Bus passenger numbers continue to disappoint indicating the urgency of the
service upgrades that are now underway. NZ Bus is actively engaged with
Auckland and Wellington transport agencies and councils to deliver better
public transport services and users will start to experience the outcome of
these collaborations this calendar year.

CONCLUSION

Infratil's businesses are performing well in creating long-term value for
shareholders. The developments at Wellington Airport and Infratil Energy
Australia were stand-outs during the last quarter.

Infratil's financial position is solid with bank facilities recently
re-financed, very long term subordinated bond financing, additional equity to
arise from the second instalment on the partly paid shares and, next year,
the option expiry and some market-hedging protection. If capital market
turmoil continues, the Company should be well positioned to take advantage of
any discounted asset opportunities which arise.

[POSSUM THE CAT]

So just as I said the main problem is the bus services. A sale might be the best answer if they can find anybody silly enough to buy them.

[Zaphod]

NZ Bus definitely has potential for expansion in Auckland. The per capita utilisation of public transport is about on par now, with what it was during the mid 1980's when utilisation peaked. Given that the population has increased markedly, the significant rise in fuel and general vehicle costs, the increased costs of parking, increased congestion, pressures on incomes, and the new focus on so-called "Green issues" will all contribute positively. I think things will look up for them.
Having said that it's probably going to be a long hard slog getting people back onto PT. Morrison & Co's experience with GoBus has probably made them a little too enthusiastic.

[POSSUM THE CAT]

Zaphod untill they cut fares by at least 50% they will never get the increase in bus patronidge you are dreaming about. As in most places in Auckland I can drive a big V8 car in peak hour in half the time in a bus and only spend half the price of the fare on petrol and be able to go where I want to not where the bus goes to. The common law of business is if you offer a price for a business that is not for sale and they say thank you. You have payed far more than you should have. This is my understanding of what infratil did and interest rates were approximately half what they are now so cost of holding has increased dramatically. Please correct me if my belief is in correct.

[CJ]

As in most places in Auckland I can drive a big V8 car in peak hour in half the time in a bus and only spend half the price of the fare on petrol and be able to go where I want to not where the bus goes to.

What about parking costs?

However, i do agree about ticket pricing. They also need a fully interegrated ticket like Londons Oyster card - all you can travel (in certain areas), regardless of provider, for one flat monthly fee.

[Zaphod]

Zaphod untill they cut fares by at least 50% they will never get the increase in bus patronidge you are dreaming about. As in most places in Auckland I can drive a big V8 car in peak hour in half the time in a bus and only spend half the price of the fare on petrol and be able to go where I want to not where the bus goes to.

I'd suggest you take a hard look at the calculation you're using to determine the running costs of a V8, or even a smaller 2.0L car. Not only do you have petrol costs (which I suspect you are underestimating), you have parking, repairs and maintenance, depreciation, etc. Using public transport is in most cases significantly cheaper than running a car.

Just think what the government’s carbon tax regime and other 'brilliant' regulatory plans will do to the costs of private vehicle ownership....

The common law of business is if you offer a price for a business that is not for sale and they say thank you. You have payed far more than you should have. This is my understanding of what infratil did and interest rates were approximately half what they are now so cost of holding has increased dramatically. Please correct me if my belief is in correct.

Yes, I do share your concerns about methodology employed to purchase the business. Infratil have previously indicated that they believed that they could work closely with the two relevant councils, to overcome the logistical and legislative issues that Stagecoach could not overcome. I don't think this has been as easy as Infratil first thought.