Passenger downturn prompts slump in Prestwick airport’s valuation
Passenger numbers at Prestwick in 2011 half the level of 2007. There were 1.2 million passengers in 2011. This fall in passengers has greatly reduced the price of the airport, which Infratil is trying to sell. Financial figures put the value of Prestwick and Kent Manston airports at £33 million ($64.7 million), down from £44m a year ago. Prestwick and Manston contributed an after-tax loss of $37.4 million (£17.9 million) in the year. Both airports were put on the market in March after Infratil said they were not performing. A buyer has yet to be identified for Prestwick. One reason for the slump of passenger numbers to the lowest level in a decade is the decision by Ryanair to focus growth at Edinburgh airport. Aviation analysts have questioned whether Prestwick would be able to recover from the decline that began late in 2008. It has long been reliant almost entirely on services offered by Ryanair.
THE value of Glasgow Prestwick airport has slumped dramatically after a downturn in passenger numbers ahead of a proposed sale by its New Zealand-based owner.
Financial figures published yesterday by Infratil put the value of Prestwick and Kent Manston airports at £33 million, down from £44m a year ago. Both airports were put on the market in March after Infratil chief executive Marco Bogoievski said they were not performing.
A buyer has yet to be identified for the Ayrshire airport, although Infratil yesterday announced the appointment of accountancy firm PwC to advise on the sale, which is expected to take place within the next 12 months. Passenger numbers have slumped to their lowest level in a decade at Prestwick following a decision by Ryanair to focus growth at Edinburgh airport.
Figures published earlier this month show 1.2 million people took flights in the 12 months to April 2012, around half the number recorded in 2007 following a rapid expansion of the low-cost aviation sector.
The financial statement published yesterday by Infratil said: “The key assumptions in these valuations include future passenger and freight volumes, commercial revenue yields, the ongoing operating and maintenance costs for each airport and the appropriate discount and capitalisation rates.
“The directors’ valuation at 31 March, 2012, fair valued the airports at (New Zealand dollars, not US) $64.7m (£32.7m) (2011: $92.7m.”
Experts have contrasted the sale of Prestwick to that of Edinburgh, which attracted a number of interested parties after BAA put it on the market, and was eventually sold last month for £807m to Global Infrastructure Partners, which also owns Gatwick.
However, Cara Haffey, corporate finance director at PwC in Scotland and part of the Infratil advisory team, said Prestwick was a “critical asset”.
She said: “Prestwick is a critical asset which offers potential investors the opportunity to invest and develop, attracting more airlines and routes, benefiting not only the region but the rest of the country.”
Aviation analysts have questioned whether Prestwick would be able to recover from the decline that began late in 2008. It has long been reliant almost entirely on services offered by Ryanair and has recently seen more competition.
Infratil boosts dividend as full-year earnings beat forecast
By Paul McBeth
15.5.2012 (Scoop, Business)
(BusinessDesk) – Infratil, the infrastructure investment firm whose founder Lloyd Morrison died this year, lifted its full-year dividend after earnings beat expectations.
Earnings before interest, tax, depreciation, amortisation and unrealised changes in fair value (EBITDAF) rose to $520.2 million in the year ended March 31 from $470.9 million a year earlier, and beat guidance in March of $500 million, the Wellington-based company said in a statement.
Infratil will pay a final dividend of 5 cents per share, taking the annual pay-out to 8 cents, up from 6.75 cents in 2011. The company expects 2013 EBITDAF to rise to between $530 million and $560 million.
“Infratil’s strong current position and earnings momentum reflects how the group has prioritised capital to deliver disciplined growth in difficult commercial and financial markets,” the company said. “Infratil’s businesses are operating well and are well-placed to grow.”
Net profit attributable to shareholders fell to $51.6 million, or 8.6 cents per share, from $64.5 million, or 10.7 cents per share, a year earlier.
Last week, Infratil’s biggest investment, TrustPower, lifted underlying profit 16 percent as it achieved wider margins on its power prices, even as it shed customers in a tight retail market.
TrustPower contributed $300.2 million to Infratil’s group earnings, followed by $206.2 million by Z Energy, $76.3 million from Wellington International Airport, $49.8 million from Infratil Energy Australia, and $46 million from NZ Bus.
Infratil’s Glasgow Prestwick and Manston Airports contributed an after-tax loss of $37.4 million in the year. [If that is in New Zealand dollars, that is £17.9 million) The airports’ operating loss widened to $11.9 million from $11.3 million, and the value of the assets was written down by $26 million, on top of the $34.4 million impairment charge in 2011. That puts their fair value at $64.7 million as at March 31, down from $92.7 million a year earlier.
The company flagged its intention to sell the airports at an investor day in March after holding the Glasgow airport since 2001 and the Kent Manston gateway since 2005. Both assets are expected to be sold this year.
Earlier this month, the Herald Scotland reported the number of passengers travelling through the Glasgow Prestwick airport slumped to a decade low after budget airline Ryanair reduced its services. The paper reported Infratil selected PricewaterhouseCoopers to undertake the sale and that talks were progressing positively.
Infratil paid an $18.3 million management fee to Morrison & Co Infrastructure Management though it didn’t pay an incentive fee in the year. In 2011, the management fee was $17.7 million and the incentive fee $5.9 million.
The company spent $246 million on capital investment, which is expected to rise to between $240 million and $280 million in the 2013 financial year, before including TrustPower’s SnowTown II initiative in Australia.
The shares were unchanged at $2.03 and have gained 8.5 percent this year.