KIT sinks into the red but maintains Q1 DPU at 0.93 cent

KEPPEL Infrastructure Trust (KIT) on Monday reported a flat total distribution per unit (DPU) of 0.93 Singapore cent for the first quarter of financial year 2019.

But it sank into the red with a net loss of S$16.2 million due to transaction cost incurred during the quarter in relation to the acquisition of Australian chemicals group Ixom.

KIT, being a business trust, is allowed to pay distributions to unitholders out of its retained cash and residual cash flows, in accordance with its distribution policy.

The trust maintained the total DPU for the three months ended March 31 despite a dilution in equity as it had a placement which resulted in the total number of outstanding KIT units increasing from 3.9 billion as at Dec 31 last year to 4.5 billion as at March 31, according to a regulatory filing on Monday by the manager of KIT, Keppel Infrastructure Fund Management.

But the trust with businesses in the three sectors of energy, distribution & network, and waste & water saw its bottom line reverse from a profit of S$7.5 million for the corresponding period in the preceding year to a loss of S$16.2 million due to Ixom's acquisition-related transaction cost.

Excluding the transaction cost, profit attributable to unitholders would be higher than last year by S$11.4 million mainly arising from higher contributions from City Gas and the consolidation of Ixom's results from February.

The losses were despite an almost 100 per cent year-on-year increase in its revenue from S$160 million to S$318.5 million, largely driven by the consolidation of the newly acquired Ixom HoldCo in February, which contributed revenue of S$152.4 million. Further, there was a 38.3 per cent hike in other income from S$781,000 to S$1.1 million.

A 230 per cent higher staff costs, coupled with S$107.9 million in chemicals production and distribution costs - due to consolidation of the expenses of Ixom - partly resulted in KIT's total expenses ballooning from S$154.6 million a year ago to S$333.4 million.

Loss per unit for the quarter was 0.41 Singapore cent, compared to an earnings per unit of 0.19 Singapore cent in the preceding year. Excluding the transaction cost, earnings per unit for 1Q FY19 would be 0.48 Singapore cent.

Adjusted net asset value per unit as at March 31 after distribution payable to unitholders would be 27.1 Singapore cents, marginally higher than the 26.4 Singapore cents three months ago.

Gearing as at March 31 was 44.3 per cent, due mainly to the equity bridge loan drawn down to fund the acquisition of Ixom. The weighted average term to maturity (WATM) for KIT's total loans was 2.2 years as at March 31. Excluding the portion of equity bridge loan, which will be partially repaid with proceeds from the equity fundraising, as well as another loan, adjusted gearing and WATM will be 34.8 per cent and 3.1 years respectively.

KIT units closed up one Singapore cent to 48 cents on Monday before the results were announced.