Assumption: I am assuming that because Infratil's investment in CDC is below 50%, CDC is not consolidated in the Infratil accounts.
I am framing my 'title question' from the point of view of new shareholders buying into IFT at 'book value' on the FY2024 balance date.
a/ Net Profit as Reported
From AR2024 p80, that is showing that the carrying value of CDC on the Infratil books is $1,403.4m.
The IFT Group share of NPAT, given IFT owns 48.24% of CDC, is 0.4824 x $201.9m= $97.40m
This means Infratil's investment in CDC is being carried on the books at a PE Ratio of $1,403.4/$97.40m = 14.4
Or looking at it another way, an earnings yield of $97.4m / $1,403.4 = 6.9%. (because Australian franking credits are not recognised in NZ, I guess this means that 6.9% is the 'gross earnings yield')
Given the touted growth prospects for CDC, both the PER and yield, as implied by book value, seem very reasonable.
b/ Net Profit as calculated
Muddying the water is slide 27 of the recent Infratil presentation.
https://infratil.com/news/infratil-a...-equity-raise/
In that, the bar graph shows EDITDAF for CDC over FY2024 of $271m, of which I presume the Infratil share is 0.4824x$271m = $130.7m
Total IFT balance sheet assets for FY2024 sum to $16,109.9m. So in a 'total asset picture', the IFT stake in CDC represents only: $1,403.4m/$16.109.9m= 8.71% of all assets. The net financing expense over the FY2024 year was $366.7m. 8.71% of that figure is $31.9m. So I take $31.9m as 'allocated net interest' that must be offset against against any profit from holding CDC.
i/ We make an assessment that the depreciation and amortisation of CDC assets is systematically charged over 20 years (buildings will probably be more and computer equipment less) .
ii/ We guess that the CDC assets in operation today earn 10% on the original capital outlay. This means the price of assets on the books is $97.4m/0.1= $974m.
Now, 1/20th of that figure is $48.7m. Assuming 'F' (which is generally reserved for one off non-operational transactions), is zero, we can calculate the implied IFT share of NPAT from the EBITDAF figure quoted as follows:
0.7 x ($130.7m - $31.9m - $48.7m) = $35.1m
Comparison Conclusion
$35.1m is well below the $97.4m of NPAT implied in AR2024 on page 80. This could mean a couple of things.
i/ My estimates for 'I' and 'DA' are wrong - could be, I invite readers to comment on my assumptions OR
ii/ there is a large one off gain F which has increased the CDC profit over FY2024 (AR2024 page 80).
The term EBITDAF does not appear once in AR2024. So I am finding it very difficult to see what is going on here, and whether that $97.4m IFT share of CDC profits has been inflated by one offs. I do find it difficult to assess results when the same company publishes annual results using different yardsticks, for -in this case- CDC. Inconsistent reporting just leaves me the impression that the company that is issuing the results has something to hide. I am in the dark as to whether that $97.4m implied profit share from CDC to Infratil for FY2024 is to any extent sustainable or not.