For many years now, National Toll Roads (NTR) has been a cash cow for the Roche family, which owns 38 per cent of the company, and the Irish pension funds that were the main backers of the company's initial project - the East Link bridge in Dublin docklands - in the 1980s.
With the two toll bridges on either side of Dublin generating enormous cash-flow, decidedly modest operating costs and with few other projects to fund, NTR was able to operate an extremely generous dividend policy - to the extent that out of earnings per share of 65 cents last year, no less than 52 cents went into the hands of NTR's shareholders.
That meant no less than €4.5 million (£3.5 million) in dividends for the Roche family. With dividends covered by earnings just 1.25 times, that sort of largesse doesn't leave an awful lot of earnings for reinvestment but all that looks as if it's going to change.
Davy Stockbrokers, which manages an internal market in NTR shares, believes that future dividend policy will mean that dividends will be covered three or four times by earnings, with a far higher proportion being kept in the company to fund further growth. That will mean dividends coming down to 1520 cents a share in the current year from last year's 52 cents.
With NTR having end-2000 debt of €25.7 million compared to cash of €8.2 million the previous year, it really has no option but to be a lot less generous with its shareholders.
Where that growth comes from - and whether NTR ever moves from the private sector to a plc - will depend on a number of factors, particularly whether the joint venture it has set up with Spanish civil engineering group Dragados and HBG-Ascon is successful in the Public Partnership Programme (PPP) contract to build the Waterford bypass and bridge, and the Kilcock-Kinnegad motorway.
NTR, of course, also has the second west link bridge on the drawing board and this is scheduled to begin carrying traffic in two years' time. Davy believes that growth in the existing toll business is likely to be modest in the current year as the two bridges are close to operating at full maturity in terms of volumes.
NTR's existing non-toll revenue generators are the Eirtricity wind energy business and Celtic Waste, the 50 per cent-owned joint venture, which produced turnover of €11 million and after-tax profits of €1.7 million for NTR last year. Celtic Waste is examining eight possible landfill sites to add to its Kilcullen facility but any such development will need planning approval - not a foregone conclusion in the Republic's increasingly "nimby" society.
Given these variables, it's impossible to even begin making forecasts for NTR. But if its joint venture is successful in getting a PPP infrastructural project, if Eirtricity can continue to boost its customer base and if Celtic Waste can add to its landfill business, then the future is very bright. A lot of ifs, it has to be said, so maybe it's just as well that NTR shares are currently in a privately controlled market and not available to the punters.
