5th March 2009, 08:00 AM
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Interest bill on $8b debt pushes Sydney Airport into the red
Quote:
Interest bill on $8b debt pushes Sydney Airport into the red
Scott Rochfort
March 5, 2009
SYDNEY AIRPORT has added to the jitters surrounding the state of its financial health, after it reported a $146 million loss and a blow-out in the interest bill on its $8.1 billion of debt.
Its full-year accounts show its income fell well short of its interest bill last year, offering a possible explanation why its major shareholder, Macquarie Airports, announced last week it would divert the bulk of an intended $1 billion share buyback as an equity injection into the airport.
The airport reported earnings before interest and tax (EBIT) of $460.7 million for the year - $47.9 million higher than the previous year.
Despite the rise, it was still $195.1 million short of the $655.8 million in costs Sydney Airport incurred financing its massive pile of debt, which includes $1.5 billion of preference shares which attract a fixed 13.5 per cent dividend rate.
Its financing costs increased $81 million, partly due to the cost of expanding the airport's international terminal.
The airport also revealed it had net liabilities of $1.28 billion on its balance sheet. But it said the $3.48 billion increase in its equity value since the airport's privatisation in 2002 offset this.
It said all its debt covenants had been met and budgeted cash flows for 2009 "show a significant surplus after debt service".
MAp, which owns a 82 per cent stake in the airport with several other Macquarie funds, declined to discuss the audited accounts, which have been quietly released by the airport.
It argued the results were already announced on January 23, when Sydney Airport reported a 2 per cent increase in revenue and a 0.6 per cent rise in earnings before interest, tax, depreciation and amortisation.
At the time, MAp's chief executive, Kerrie Mather said the result demonstrated the airport's "resilient operating model".
The announcement did not disclose the loss after the airport's interest bill, contained in the more detailed accounts released this week.
At MAp's results briefing last week, the fund said it would inject up to $780 million into Sydney Airport from the "surplus" cash on its balance sheet. Following a capital injection announced in November, the latest injection will extinguish a debt due for repayment by the end of this year. Sydney Airport will not have any debts due for repayment until 2011.
One factor that has helped strengthen the airport's balance sheet against its increasing debts has been the rise in the valuation it has put on its asset values. In one striking example, Sydney Airport's operators' licence - which it treats as an intangible on its balance sheet - increased in value from $544 million on June 30 2003 to $1.9 billion on December 31.
Sydney Airport's $8.1 billion of debts - shown in the latest accounts - are more than six times what they were when the asset was sold by the Howard government to a Macquarie-led Southern Cross Airports consortium in June 2002. When the airport was first privatised in 2002 it had borrowings of $1.2 billion.
MAp shares rose 5.5c to $1.45 yesterday. They hit a near six-year low of $1.30 on Tuesday.
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Source: SMH
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