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Envestra reports record FY14 profit

by Alen Golubovic | Aug 19, 2014

Key points

  1. Net profit after tax is up 42% to $153.0m.
  2. Revenue is up 9% to $554.4m.
  3. EBITDA is up 12% to $402.0m.
  4. Net finance costs are down 18% to $121.1m.
  5. Balance sheet gearing (net debt divided by book value of non-cash assets) is slightly up from 63% at FY13 to 64% at FY14. However, gearing on a market value basis is down from 54% at FY13 to 47% at FY14.
  6. Funds from operations (FFO) / Interest has improved from 2.5x in FY13 to 3.0x in FY14.

Envestra has posted an impressive result for FY14, with a record profit of $153m exceeding profit guidance of around $140m. The result also included the one-off merger/takeover costs for 2014 relating to the APA and CKI merger/takeover processes, which further highlights the strength of the FY14 result. The increase in profitability has resulted from higher revenue due to annual tariff adjustments, tight operating costs and a reduction in finance costs, partly offset by lower gas volumes due to warmer weather in 2014.

The main contributing factors to the large decrease in finance costs were lower floating interest rates on unhedged debt, and the full-year impact of lower rates on fixed interest swaps. Investor returns for those in the Envestra CIBs were not impacted by these lower finance costs as these reductions primarily relate to other Envestra floating rate debt instruments on issue.

Overall, the results highlight the continued strength of Envestra's underlying business, and add further support to the recent rating upgrade by S&P.

Supply is currently very limited in the Envestra 2025 capital indexed bonds, so please speak to your FIIG representative to register interest in these bonds.

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