IFT - Infratil

[Toddy]

I just submitted my discounted share entitlement.
Im taking my full offer.

Onwards and upwards for IFT.

[warthog]

IFT newsletter, for those who don't receive it.

Infratil Newsletter
2 July 2024

We are pleased to report that as we celebrate 30-years of Infratil we continue to build on our legacy of success. During the quarter we announced a strong financial result for the year ended 31 March 2024, while also making significant strides in growing our portfolio.

Since the announcement of our annual results the team has been busy with the announcement of an approximately NZ$1,150 million equity raising to fund further investment into data centre operator CDC’s accelerating growth, as well as provide more flexibility for growth across our global portfolio. Full details of the equity raise are available on our website.

Separately, we have nearly completed our 2024 retail investor roadshow, having met with almost 2,000 investors across 17 presentations throughout New Zealand. These meetings provide a great opportunity for shareholders to raise questions, voice concerns, and engage with management. We appreciate and take on board all the feedback we receive from these sessions.

Thank you to all the investors who were able to attend one of these presentations.

Across our portfolio

Digital

CDC is continuing to see a surge in demand for data centre capacity on the back of cloud adoption and significant investments in Generative AI. This rapid increase in demand has seen CDC enter advanced negotiations with customers for over 400MW of capacity at multiple sites across the CDC footprint. This capacity is expected to come online over the next 4 to 5 years.

In parallel, CDC’s development pipeline continues to expand with the addition of its Marsden Park development, a 720MW campus (more than double CDC’s current operating capacity), bringing CDC’s total planned capacity to around 1,870MW targeted to be operating, or under construction, by 2033.

Kao Data has been granted planning permission for a new, 40MW, sustainable data centre in Stockport, Manchester. The 40,000m2 former industrial site, which will become operational in 2026 following its redevelopment, will create a leading infrastructure hub to support Greater Manchester’s fast-growing and diverse technology ecosystem - positioning the region as one of the UK’s largest high-performance computing and artificial intelligence clusters outside of London and the Oxford-Cambridge arc.

On its one-year anniversary, One NZ launched One Wallet, a digital wallet for its customers, best described as like air points to help buy your next mobile phone. Already One NZ has stacked over $30 million dollars in value in its customers' One Wallet as part of its mission to be the best place to buy a new phone in New Zealand. One NZ customers can access their One Wallet balances and watch them grow via their My One NZ app and the balance can be redeemed on any phone purchased on an interest free term.

For the third year running, One NZ has been awarded Aotearoa's ‘Best in Test’ mobile network 2024 by independent benchmarking organisation umlaut company, part of Accenture. Mobile connectivity is now an essential part of daily life, and so you need a mobile network that performs at its best. These results show One NZ leads overall, including on voice and data performance, plus reliability.

Renewables

In May, Longroad Energy welcomed a number of dignitaries, including Arizona Governor Katie Hobbs, to its Sun Streams Complex. The nearly 200 guests celebrated the progress made to date at the 6,000+ acre solar and storage complex and the many benefits it is delivering to Arizona, including generating clean, solar energy to power 200,000 average American homes, supporting 1,000 construction jobs and providing more than $300 million in benefits to Arizona schools and communities through its long-term leases with the Arizona State Land Department and tax remittances.

Manawa Energy has continued to progress and expand its pipeline of renewable development options in New Zealand, now with a development pipeline of more than 1,200MW of secured solar and wind development options. The projects in its pipeline are expected to present exciting, value-accretive growth opportunities to complement Manawa’s existing asset base.

Galileo has announced that it has signed a Corporate Power Purchase Agreement with Cargill, for a new solar PV project to be built in Southern Italy. The planned project will have a total capacity of 79MW and is expected to provide Cargill with approximately 1TWh of green electricity over a period of 10 years, avoiding the emission of more than 450,000 tonnes of CO2.

Gurīn Energy has announced a significant step forward in the development of two solar power plants, Gurīn’s first projects in Thailand. In partnership with WHA Utilities and Power Public Company Limited, Gurīn has signed two 25-year power purchase agreements with the Electricity Generating Authority of Thailand. These agreements involve selling clean, emission-free energy from two solar projects: the 69MW Stella Power 1 in Ratchaburi, set to be commissioned in 2029, and the 59MW Stella Power 2 in Kanchanaburi, set to go online in 2030.

Healthcare

RHCNZ Medical Imaging announced the opening of two new Hamilton branches, including one at Te Kōhao Health Wellness & Diagnostic Centre.

This new clinic, one of the first of its kind, is a partnership between Pacific Radiology and Te Kōhao Health. The clinic will help reduce health inequalities for Māori in the Waikato by providing a new model of care that minimises barriers to access and provides timely, essential health services in an appropriate, whānau-led environment.

RetireAustralia celebrated an important milestone marking the completion of the third and final stage of The Verge at Burleigh G.C., and the opening of its first Care Hub. The Verge offers 168 one, two and three-bedroom independent living apartments, a wellness centre, activities hub, home care services and now a 10-suite Care Hub, an alternative to aged care in an intimate, homelike environment.

Airports

Wellington Airport has welcomed the arrival of a 500,000-litre shipment of Sustainable Aviation Fuel for Air New Zealand, marking the first time the low emissions fuel has been used in the capital and marking a trifecta of decarbonisation wins for the airport in the last year.

It follows Air New Zealand selecting Wellington and Marlborough Airports to host its first all-electric commercial service, transporting cargo across Cook Strait from 2026.

Air New Zealand and Wellington Airport also collaborated on a hydrogen trial earlier this year for charging ground service equipment, supported by Hiringa Energy and Toyota New Zealand.

Elsewhere – Rivers of Wind (pictured above)

Last year our inaugural Sustainability Report and Climate Related Disclosures featured artwork from RIvers of Wind, a digital artwork by Delainy Jamahl. We were delighted to showcase this local artistic talent, especially because it can be interpreted to represent many of the characteristics of Infratil's portfolio through the intersection of climate, renewable energy, digital technology, and of course, Wellington Airport.

Delainy has created a new immersive art space, The Grid, opening in the heart of Wellington this July and August, inviting you to experience art in a whole new light.

Be swept away in Rivers of Wind, a mesmerising immersive experience that draws on 8 years of weather data from the Wellington Airport weather station to visualise the invisible. Rivers of Wind explores the intersection of technology and nature and their effect on the human experience in this captivating exhibition. A continuously looping 48-minute digital artwork, Rivers of Wind is presented in a wrap-around projection environment with a surround soundtrack from renowned New Zealand composer Rhian Sheehan with musician Ed Zuccollo.

We would love for you to support this project over the coming months. The Grid is located at 18 Haining St, Te Aro, with tickets ranging from $15-25.

Thanks again for your continued support of Infratil. We look forward to meeting up with investors in person again at our upcoming Annual Meeting on 22 August in Wellington.

For additional updates, you can also follow Infratil on LinkedIn.

[Swala]

IFT newsletter, for those who don't receive it.

Infratil Newsletter
2 July 2024

We are pleased to report that as we celebrate 30-years of Infratil we continue to build on our legacy of success. During the quarter we announced a strong financial result for the year ended 31 March 2024, while also making significant strides in growing our portfolio.

Since the announcement of our annual results the team has been busy with the announcement of an approximately NZ$1,150 million equity raising to fund further investment into data centre operator CDC’s accelerating growth, as well as provide more flexibility for growth across our global portfolio. Full details of the equity raise are available on our website.

Separately, we have nearly completed our 2024 retail investor roadshow, having met with almost 2,000 investors across 17 presentations throughout New Zealand. These meetings provide a great opportunity for shareholders to raise questions, voice concerns, and engage with management. We appreciate and take on board all the feedback we receive from these sessions.

Thank you to all the investors who were able to attend one of these presentations.

Across our portfolio

Digital

CDC is continuing to see a surge in demand for data centre capacity on the back of cloud adoption and significant investments in Generative AI. This rapid increase in demand has seen CDC enter advanced negotiations with customers for over 400MW of capacity at multiple sites across the CDC footprint. This capacity is expected to come online over the next 4 to 5 years.

In parallel, CDC’s development pipeline continues to expand with the addition of its Marsden Park development, a 720MW campus (more than double CDC’s current operating capacity), bringing CDC’s total planned capacity to around 1,870MW targeted to be operating, or under construction, by 2033.

Kao Data has been granted planning permission for a new, 40MW, sustainable data centre in Stockport, Manchester. The 40,000m2 former industrial site, which will become operational in 2026 following its redevelopment, will create a leading infrastructure hub to support Greater Manchester’s fast-growing and diverse technology ecosystem - positioning the region as one of the UK’s largest high-performance computing and artificial intelligence clusters outside of London and the Oxford-Cambridge arc.

On its one-year anniversary, One NZ launched One Wallet, a digital wallet for its customers, best described as like air points to help buy your next mobile phone. Already One NZ has stacked over $30 million dollars in value in its customers' One Wallet as part of its mission to be the best place to buy a new phone in New Zealand. One NZ customers can access their One Wallet balances and watch them grow via their My One NZ app and the balance can be redeemed on any phone purchased on an interest free term.

For the third year running, One NZ has been awarded Aotearoa's ‘Best in Test’ mobile network 2024 by independent benchmarking organisation umlaut company, part of Accenture. Mobile connectivity is now an essential part of daily life, and so you need a mobile network that performs at its best. These results show One NZ leads overall, including on voice and data performance, plus reliability.

Renewables

In May, Longroad Energy welcomed a number of dignitaries, including Arizona Governor Katie Hobbs, to its Sun Streams Complex. The nearly 200 guests celebrated the progress made to date at the 6,000+ acre solar and storage complex and the many benefits it is delivering to Arizona, including generating clean, solar energy to power 200,000 average American homes, supporting 1,000 construction jobs and providing more than $300 million in benefits to Arizona schools and communities through its long-term leases with the Arizona State Land Department and tax remittances.

Manawa Energy has continued to progress and expand its pipeline of renewable development options in New Zealand, now with a development pipeline of more than 1,200MW of secured solar and wind development options. The projects in its pipeline are expected to present exciting, value-accretive growth opportunities to complement Manawa’s existing asset base.

Galileo has announced that it has signed a Corporate Power Purchase Agreement with Cargill, for a new solar PV project to be built in Southern Italy. The planned project will have a total capacity of 79MW and is expected to provide Cargill with approximately 1TWh of green electricity over a period of 10 years, avoiding the emission of more than 450,000 tonnes of CO2.

Gurīn Energy has announced a significant step forward in the development of two solar power plants, Gurīn’s first projects in Thailand. In partnership with WHA Utilities and Power Public Company Limited, Gurīn has signed two 25-year power purchase agreements with the Electricity Generating Authority of Thailand. These agreements involve selling clean, emission-free energy from two solar projects: the 69MW Stella Power 1 in Ratchaburi, set to be commissioned in 2029, and the 59MW Stella Power 2 in Kanchanaburi, set to go online in 2030.

Healthcare

RHCNZ Medical Imaging announced the opening of two new Hamilton branches, including one at Te Kōhao Health Wellness & Diagnostic Centre.

This new clinic, one of the first of its kind, is a partnership between Pacific Radiology and Te Kōhao Health. The clinic will help reduce health inequalities for Māori in the Waikato by providing a new model of care that minimises barriers to access and provides timely, essential health services in an appropriate, whānau-led environment.

RetireAustralia celebrated an important milestone marking the completion of the third and final stage of The Verge at Burleigh G.C., and the opening of its first Care Hub. The Verge offers 168 one, two and three-bedroom independent living apartments, a wellness centre, activities hub, home care services and now a 10-suite Care Hub, an alternative to aged care in an intimate, homelike environment.

Airports

Wellington Airport has welcomed the arrival of a 500,000-litre shipment of Sustainable Aviation Fuel for Air New Zealand, marking the first time the low emissions fuel has been used in the capital and marking a trifecta of decarbonisation wins for the airport in the last year.

It follows Air New Zealand selecting Wellington and Marlborough Airports to host its first all-electric commercial service, transporting cargo across Cook Strait from 2026.

Air New Zealand and Wellington Airport also collaborated on a hydrogen trial earlier this year for charging ground service equipment, supported by Hiringa Energy and Toyota New Zealand.

Elsewhere – Rivers of Wind (pictured above)

Last year our inaugural Sustainability Report and Climate Related Disclosures featured artwork from RIvers of Wind, a digital artwork by Delainy Jamahl. We were delighted to showcase this local artistic talent, especially because it can be interpreted to represent many of the characteristics of Infratil's portfolio through the intersection of climate, renewable energy, digital technology, and of course, Wellington Airport.

Delainy has created a new immersive art space, The Grid, opening in the heart of Wellington this July and August, inviting you to experience art in a whole new light.

Be swept away in Rivers of Wind, a mesmerising immersive experience that draws on 8 years of weather data from the Wellington Airport weather station to visualise the invisible. Rivers of Wind explores the intersection of technology and nature and their effect on the human experience in this captivating exhibition. A continuously looping 48-minute digital artwork, Rivers of Wind is presented in a wrap-around projection environment with a surround soundtrack from renowned New Zealand composer Rhian Sheehan with musician Ed Zuccollo.

We would love for you to support this project over the coming months. The Grid is located at 18 Haining St, Te Aro, with tickets ranging from $15-25.

Thanks again for your continued support of Infratil. We look forward to meeting up with investors in person again at our upcoming Annual Meeting on 22 August in Wellington.

For additional updates, you can also follow Infratil on LinkedIn.

Looking good. Happy holder!

[Southern Lad]

What happens when all the new shares hit the market? Theres currently around a dollar instant profit to be made, does anyone think there will be a sell down soon after? Personally I am surprised at the premium on market available right now.

Arguably existing holders are selling now to free up funds to participate in the Share Purchase Plan. Given IFT are seeking to deliver enough shares so no holder gets diluted (IFT say 136 new shares per existing 1,000 shares), less risky to sell now to buy rather than be a price taker in a couple of weeks. Added benefit of not needing to fund the SPP shares in the interim.

[fastbike]

Looking good. Happy holder!

You do realise you can trim the quote you are replying to ? Having to scroll through a repost of the IFT newsletter is annoying.

[Ggcc]

Arguably existing holders are selling now to free up funds to participate in the Share Purchase Plan. Given IFT are seeking to deliver enough shares so no holder gets diluted (IFT say 136 new shares per existing 1,000 shares), less risky to sell now to buy rather than be a price taker in a couple of weeks. Added benefit of not needing to fund the SPP shares in the interim.

I feel the sentiment the current share price regarding IFT shows, looks like people believe the SPP will be oversubscribed. It makes me also wonder how much more money IFT will accept.

[Swala]

[QUOTE=fastbike;1059278]You do realise you can trim the quote you are replying to ?

Do now. thanks Fastbike!

[Snoopy]

Snoopy - the CDC accounts are not much of a mystery at all. I gave you the necessary references:

Known CDC values are for FY2024 per AR 2024 p80 and A$m unless otherwise stated:

• EBITDAF NZ$292m (per p25) {edit: this translates to A$271m @ 0.9271}
• Revenues $412m
• NPAT $202m
• Other comprehensive income ($12m)
• Drawn debts $4,055m
• Non-current assets (these are the income producing assets subject to D but will also include capital WIP) $6,666m
• year end balances revalued using a spot rate of 0.9181
• trading values revalued using an average rate of 0.9271
• p5 "EBITDAF is an unaudited non-GAAP measure of net earnings before interest, tax, depreciation, amortisation, financial derivative movements, revaluations, and non-operating gainsor losses on the sales of investments and assets."

Let's assume there are no non-operating gains or sales of investments or assets. Asset revaluations would be part of 'revaluations'. I will wrap 'A' into 'D' given both relate to non-current assets. Financial derivative movements are IFRS adjustments for things such as currency hedges and/or interest rate hedging instruments. Such instruments usually pertain to debt so we can look at I & FDM together. Interest 'I' in the NPBT calculation is non-capitalised interest i.e. 'I (P&L only)'. Capitalised I is part of the capex numbers.

We know:

• EBITDAF = Revenues - Opex
• NPBT = EBITDAF - I +/- FDM - D +/- R
• NPAT = NPBT - T
• TCI = NPAT +/- CI

IFT's share of CDC values further detailed as follows (NZ$m per p80):

• share of NPBT $156m
• share of tax ($51m)

So for CDC we can derive:

• Opex = A$141m (412-271)
• Tax = A$98m (0.9271 x NZ$51/.482) - note this will include deferred tax given FV items are generally non-taxable
• NPBT = A$300m (which is A$202 + A$98 OR it is 0.9271 x NZ$156/.482)
• Total comprehensive income = A$202 - A$12m = A$190m
• I +/- FDM - D +/- R = +A$29m (being $300 NPBT - $271 EBITDAF)

Ferg has put a lot of effort here into unpicking the CDC profit figures for FY2024. I find it rather overwhelming to read in that format. So I have taken Ferg's numbers and represented them as 'Statement of Comprehensive Income'. This way, I think it is easier to see where all the numbers fit in and the 'missing (calculated) numbers' come from.

CDC Statement of Comprehemsive Income FY2024	$A	Reference
Revenue {A}	$412.3m	AR2024 p80
less Operating Expenses	$141.3m	Calculated {A}-{B}
equals EBITDAF {B}	$271.0m	Capital Raising Presentation, p27
less -I-Fdv+Revaluations-Depreciation	$28.7m	Calculated {C}-{B}
equals Net Profit Before Tax {C}	$299.7m	Calculated {E}+{D}
less Tax {D}	$97.8m	0.9272 x $50.9m/0.4824= $97.8m, ref AR2024 p80
equals Net Profit AfterTax {E}	$201.9m	ref AR2024 p80
less Other Comprehensive Income Loss {F}	($12.2m)	ref AR2024 p80
equals Total Comprehensive Income	$189.7m	Calculated {E}-{F}

I have arranged the table to look complete. But the key point is the row where Interest deductions (which are affected by capitalisation issues), supporting foreign derivative changes (unknown) depreciation (not specifically quoted) and revaluation of assets (not separately disclosed) is opaque. We know overall what happened. But we don't know the elements that made up the bigger picture. Nevertheless Ferg has had a crack at demuddying the waters further.

*R cannot be known but we can get the value of (R - D) by looking at the annual change in non-current assets (AR2024 p80 says +A$904m) and deducting known capex of (AR2024 p26 0.9271 x NZ$292/0.482) A$561m leaves a value for R - D of +A$343m. This assumes there are no other transactions impacting non-current assets such as an acquisition of a new subsidiary by CDC which could muddy the waters if there was such a transaction.

There are two ways in which the value of non-current assets can increase:
a/ Some new non-current (i.e. long term) assets are built.
b/ Some existing long term assets are revalued upwards.

The difference in value of non-current assets, on the books, over the FY2024 year, was: $6,666.0m-$5,762.3m= $903.7m. But some of those assets have been built during the year as a result of capital expenditure of $560.8m (AR2024 p26). So this implies that the 'revaluation component' of the increase in long term assets was: $903.7m-$560.8m=$342.9m. However, there will have been a depreciation cost for the year that will have been 'netted off' against any revaluation. So it is more correct to call the $342.9m 'R-D'.

*EBITDAF + (R - D) - NPBT = A$314m which gives the value of 'I +/- FDM'
*FDM is the value of Financial Derivative Movements which mostly pertain to debt.

From the Statement of Comprehensive Income above:

EBITDAF - (I +Fdv) +(R-D) = NPBT
=> $271.0m - (I+Fdv) + $342.9m = $299.7m
=> (I+Fdv) =$314.2m

...where 'I' is the net interest bill and 'Fdv' are foreign currency derivative movements. The FdV's could be related to currency hedging the New Zealand activities of CDC, or perhaps the acquisition of capital equipment from committed contracts most likely priced in USD.

*A$314m / average debt of $3,741

Averaging the long term debt (AR2024 p80) between the FY2023 and FY2024 balance dates:
($4054.6m+$3428.1m) / 2 = $3,741m

gives an implied debt cost of circa 8% (note I say 'debt cost' and not average interest rate.....debt cost being I + FDM). 8% costs assumes no interest is capitalised. However, if some interest is capitalised as part of the capex number, then the average debt cost will be higher - note this is more than the circa 7% IFT get on their advance to CDC but that would be expected if there are FDM losses. This 8% also assumes a gradual increase in total term debts; if however a graphed monthly profile of total debts drawn during the year was either a U shape, or an inverted U shape, then that would change the average debt cost.
*Average MINIMUM debt cost of 8% seems a touch high, especially if holding costs are being capitalised. In the event interest costs are not being capitalised then IFT need to have a word to CDC about correctly accounting for Capital WIP costs. Or it could be there are some financial instruments that are negatively impacting CDC.

CDC is Australian based. However, there is no mention about hedging NZD costs incurred building data centres in Auckland, back to the native AUD currency for CDC. This doesn't mean CDC aren't doing it. But Auckland's EOFY2024 operating capacity of 28MW is only just over 10% of the capacity of CDC. And that proportionate number will be getting smaller with the mega data centre expansions announced in Australia.
https://www.nzx.com/announcements/433951

My inkling is that any foreign exchange contracts will likely be tied to equipment ordered for data centres, equipment that is likely denominated in USD from US based suppliers. So it is probably not correct to see this expenditure as making up part of the 'interest' charges. But that is my speculation. There is no way to know 'for sure.'

SNOOPY

[3141592]

Some very odd observations about ift being in data centres - referring to the growth in demand for their use as a bubble and insinuating MCO are naive and Kiwi focussed. What a load of ill judged tripe! MCO are global, have sector experience and have some of the best corporate minds globally. Idiotic to think they’ve stumbled into some good investments. They’ve manoeuvred their way into fast growing assets through thoughtful future focussed insight. No lottery ticket luck here.s just plain hard graft and patient investment.
The data centres have an average forward contract tenure in multiple decades, and cdc’s growth is not contracted until they’re mostly forward sold. The debt providers that analyse a lot of data centre businesses describe CDC as a unique data centre asset (the best in the world form a credit perspective) given longevity of forward contracts and the high quality of their clients. So pray… explain the risk?
As to the big boys swamping them… ignores CDC’s competitive advantage of being co-owned by AU super and ift (asx/nzx listed entity as helping Govt, and large AU corporations get around cloud based data sovereignty issues. It ignores the quality execution by CDC management to date.
Finally to think AI is some buzz word blip and it’s a passing phase before the bubble bursts demonstrates a remarkably myopic view of technology that I think beggers belief.
Needless to say happy holder and once again we’ll see how it plays out for CDC over the coming years. I suspect I know. Applied for $150k. Bring it on. Ift lining up $2bn plus in capacity growth for CDC. It should be lauded that a NZ originated story is at the epicentre of growth and change. May all NZ KiwiSaver funds benefit.
Let’s back it.

[kiora]

Great insightfull post 3141592 as was your post 22-03-2024
My thoughts said very succinctly

I've stretched my OD to the max getting a swag in the placement & will be topping up more in the retail offer.

My "share" portfolio now 80% IFT, IFT is now 30% of total FUM & share portfolio

I'm expecting earnings to be flatter for next year while they build their pipeline but when they're built ..... on wards & upwards

Over $10 b market cap I expect some indices will have to buy more.

At the investor roadshow I had a chat to Andrew Carroll the CFO.I can't speak more highly of him.He was very open & had his fingers on the pulse of all the IFT divisions even thought he hasn't been in the job for a long time.He told me he felt he works for IFT rather than M&Co.
Regarding M & Co I believe they are considerate of IFT shareholders regarding their fee, that they are entitled to be paid, by accepting IFT shares in liu of the fee.The price that the IFT shares allocated to M & Co is not at discounted rate either in my view.The IFT shares allocated for fees from memory works out only 2%? of total IFT shares issued which in my view is very reasonable for their skills & the value they are creating.IFT/M & Co management is a profit centre on its own.
My view is M& Co contract also works to the benefit in blocking any takeovers.Why would the IFT shareholders accept a 20% premium if they can easily get that by holding the shares for another year plus compounding returns year after year?