26/08/2008 - 09:38

B&B Infrastructure posts FY net loss

26/08/2008 - 09:38

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Babcock and Brown Infrastructure Ltd has reported a full year net loss of $51 million and a cut in distributions, despite acquisitions over the past year including Alinta boosting revenue up 85 per cent.

B&B Infrastructure posts FY net loss

Babcock and Brown Infrastructure Ltd has reported a full year net loss of $51 million and a cut in distributions, despite acquisitions over the past year including Alinta boosting revenue up 85 per cent.

The net loss compares to a net profit reported in the previous year of $113 million.

However, earnings before interest, tax, depreciation and amortisation (EBITDA) for continuing operations rose 42.4 per cent to $742.4 million.

"This reflects the strong performance of each of Babcock & Brown Infrastructures existing assets and the full year contributions of those assets acquired in the 2008 financial year," the company said.

The result came with an 85 per cent rise in revenues from ordinary activities, to $2.361 billion, driven by the Australian Energy Transmission & Distribution (AET&D) businesses acquired from Alinta and the five European port acquisitions made during the reporting period.

"BBI Euroports have increased EBITDA by $94.9 million compared to the prior period reflecting additional EBITDA contribution from the ports acquired during the reporting period," chief executive Jeff Kendrew said.

"The Australian ET&D assets have contributed EBITDA of $83.3 million in the current period.

"These Australian ET&D businesses have mostly performed in line with the Scheme Book forecasts for the ten months since acquisition by BBI after taking into account some one off transition and integration costs and the effects of warmer weather experienced."

The remainder of BBI's businesses also performed in line with expectations except for WestNet Rail whose performance was dragged down by poor grain haulage and the impact of drought.

On the like-for-like basis EBITDA, excluding the impact of new acquisitions, firmed six per cent to $35.8 million.

BBI will pay a final distribution of 2.5 cents per stapled security, unfranked, bringing total annnual distributions to 10 cents, down from 14.25 cents in the previous year.

The company said it would maintain its distribution at 10 cents in 2008/09.

Investors who were registered with the company by June 30 will pocket the interim distribution which is payable around September 15, BBI said.

Going forward, while BBI is forecasting distributions for 2008/09 to remain at 10 cents per security, the payout ratio will be reduced to free up funding for organic growth and deleveraging.

BBI also announced the appointment of David Hamill as independent chairman following a meeting of BBI's boards yesterday and Phil Green's decision last week to step down as Babcock and Brown Ltd's chief executive.

Following his appointment as Babcock and Brown's chief investment officer, Peter Hofbauer will step down from the BBI boards, and BBI has started to look for a replacement, the company said.

Mr Kendrew told analysts in a briefing the company has a "sound liquidity position" and is committed to simplifying and streamlining its portfolio of assets.

The company's 50 per cent interest in US port operator ICS Logistics has been sold at acquisition price to its co-investment partner, a Babcock and Brown managed unlisted fund.

As well, BBI is looking to sell its 20.1 per cent stake in Multinet over the next three to six months.

"We have had a strong level of interest (from interested parties) in that asset," Mr Kendrew said.

The outlook for BBI's transport assets is "strong", but a slowdown in the UK housing market is expected to flow on to BBI's UK gas and electricity assets in the form of a declining number of connections, he added.

Volume growth is expected to continue for BBI's European ports businesses, he said.

BBI's assets have "produced a solid result", Mr Kendrew said, adding that "the true value (of the assets) is not reflected in any way in the current security price."

BBI's current review of its managed funds in the context of the current market downturn is expected to be completed by year's end.

The company's governance arrangements and management agreements will also be reviewed by the end of September 2008 following a decision taken by BBI's independent directors.

Mr Kendrew told analysts the management team would be "ring-fenced" from this process.

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