Keppel Infrastructure Trust sinks into the red with $16.21m loss in Q1 2019

The $775m acquisition cost of Ixom hit profits hard.

Keppel Infrastructure Trust (KIT) reversed from a $7.5m profit in 2018 to a $16.21m in loss in Q1 2019 following the heavy acquisition cost of chemical firm Ixom, an announcement revealed.

“Excluding the [Ixom] transaction cost, profit attributable to unitholders of the trust would be higher than last year by $11.4m mainly arising from higher contributions from City Gas and the consolidation of Ixom’s results,” the firm explained.

Also read: Keppel Infrastructure Trust's profits slid 32.7% to $32.02m in 2018

On the other hand, its revenue for the quarter ballooned 98.7% YoY to $318.46m from $160.26m. Its strong revenue performance for Q1 2019 was largely driven by the consolidation of Ixom, which contributed a revenue of $152.4m, according to KIT’s financial statement. Additionally, revenue of $87.4m was recognised from City Gas primarily due to higher town gas tariff. City Gas reportedly achieved 100% plant availability during the period.

Distributable cash flow (DCF) for Q1 2019 also rose 33.7% YoY to $48.43m thanks to the addition of Ixom, and strong performance from KIT’s energy, waste & water, distribution and network, and other segments.

Concessions contributed revenue of $24.4m in Q1 2019 comparable to 2018’s $23.3m, as all four of its plants, comprising City Gas, Basslink, Keppel Merlimau Cogen and Ixom, fulfilled their contractual obligations during the period. Basslink’s revenue for Q1 2019 of approximately $21.8m (A$22.6m) was 6.1% higher YoY compared to 2018’s $22.2m (A$21.3m) as it recorded a higher positive commercial risk sharing mechanism (CRSM) during the quarter.

“In view of developments at Hyflux, KIT has increased its monitoring of operational performance at SingSpring Desalination Plant to ensure that its obligations under the Water Purchase Agreement are satisfactorily discharged,” the firm added. KIT owns a 70% interest in the SingSpring Desalination plant, and the operations of the plant continue to remain unaffected.

On 15 April, KIT successfully completed an equity fund raising (EFR), comprising a Placement and Preferential Offering, which raised total gross proceeds of $500.8m to partially repay the equity bridge loan facility for Ixom’s acquisition. The size of the EFR was increased following strong investor demand for the Placement. Meanwhile, the Preferential Offering saw robust interest and was 1.8 times oversubscribed.