3i Infrastructure PLC · LSE:3IN
3i Infrastructure — FY2018 Earnings Presentation
32 slides from 3i Infrastructure's earnings presentation, May 11, 2018
Slide 1: Results for the year to 31 March 2018
Results for the year to 31 March 2018 11 May 2018
Slide 2: Important information
Important information The sole purpose of this information-only presentation (“Presentation”) is to provide information on a The distribution of this Presentation in certain jurisdictions may be restricted by law. Persons into whose non-reliance basis about 3i Infrastructure plc and its subsidiaries
Slide 3: Chairman's introduction: an outstanding year
The Company has had an outstanding year. The realisations of our holdings in Elenia and Anglian Water Group generated exceptional value for shareholders. Richard Laing Chairman
Slide 4: Today's agenda
Today’s agenda Introduction Richard Laing Business review Phil White Financial review James Dawes Q&A All 4
Slide 5: FY18 results: an outstanding year
FY18 results: an outstanding year 28.6% Total return on opening NAV Strong portfolio performance drove NAV growth 211.0p NAV per share Good income progression £156m Total income and non-income cash 7.85pps Full year dividend per share for FY18 Delivered the dividend target 41.4pps Special dividend 8
Slide 6: NAV growth since IPO
NAV growth since IPO 359 279 255 224 180 168 147 155 134 123 113 100 IPO FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Note: This chart shows NAV growth (including dividends) from IPO to 31 March 2018, indexed to 100 6
Slide 7: Business review introduction
Excellent realisations, a high level of new investment, good performance from the portfolio, and a special dividend for shareholders. Phil White Managing Partner, Infrastructure, 3i Investments plc
Slide 8: Clear objectives
Clear objectives Our objectives Our track record Provide shareholders with a total return of 8% to 10% per annum, to be achieved over the medium 16.6% average total return per term, with a progressive annual year over the past five years dividend per share 8
Slide 9: FY18 – continuing to deliver value for our shareholders
FY18 – continuing to deliver value for our shareholders 1 Successful sales of 3iN’s two largest assets 2 Paid £425 million special dividend 3 High level of new investments 9
Slide 10: New investments
New investments £190m £125m £23m £176m Note: Total new investments includes £11m investment in Infinis for organic growth projects 10
Slide 11: Realisation: Anglian Water Group
Realisation: Anglian Water Group Maximising shareholder value through well managed sales Investment Performance (£m) 1 High quality business 3.3x 564 154 451 2 Low yielding investment 147 12 3 Opportune time to sell 173 292 410 173 4 Well managed sale process Cost Sep-17 Total Return Valuation/ Proc
Slide 12: Realisation: Elenia
Realisation: Elenia Maximising shareholder value through well managed sales Investment Performance (£m) 1 Buying well 4.5x 872 106 2 Strong management team 643 100 44 766 3 Asset management 195 499 195 4 Well managed sale process Cost Valuation / Proceeds* Sep-17 Total Return Capital Returns Cash In
Slide 13: A balanced portfolio
A balanced portfolio Greenfield projects India Valorem 2% Infinis 3% 4% ESVAGT 17% 8% XLT 9% £1.8bn 17% WIG 10% Operational projects 10% 10% 10% Attero Oystercatcher TCR Note: Portfolio chart based on commitments as at March 2018 13
Slide 14: FY19 Outlook
FY19 Outlook Well positioned to deliver our objectives Highly competitive market Smart and disciplined investor Regulatory and political risk Exited AWG and Elenia Economic and market risk Unique, diversified portfolio 14
Slide 15: Financial review introduction
We managed the balance sheet actively, distributing surplus cash promptly and avoiding dilution of returns. James Dawes CFO, Infrastructure, 3i Investments plc
Slide 16: Efficient balance sheet
Efficient balance sheet (£m) 284.6 (175.9) (95.6) (31.8) (18.7) Cash balance at 31 March 2018 Attero commitment Expenses Final dividend of Residual cash (including performance fee) 3.925p per share 16
Slide 17: NAV progression in a record year
NAV progression in a record year Growth in underlying NAV after £425m return of capital (£m) 100.0 520.3 2,175.5 (9.0) (131.7) 1,695.9 1,710.2 (465.3) 2 Opening NAV at Capital return Net foreign Total income Net costs NAV before Distributions to Closing NAV at 1 1 April 2017 exchange including advis
Slide 18: Strong asset performance
Strong asset performance (£m) 17.1 522.1 22.0 483.0 Planned value growth and other Discount rate movement Macro-economic assumptions Total value movement asset performance 18
Slide 19: Moving to the UK
Moving to the UK Mitigate the risk of double taxation of income and gains Jersey 19
Slide 20: Income growth from recent investments
Income growth from recent investments (£m) Income Non-income cash 26.6 26.6 (0.6) 56.4 18.2 100.0 85.6 2 Total income and non- Recent investments1 Existing investments Change in other income Total income and non- income cash FY17 income cash FY18 1 WIG, TCR, Valorem and Infinis 2 All other asset
Slide 21: FY19 target dividend growth of 10%
FY19 target dividend growth of 10% Dividend growth since IPO (pence per share) Special dividends Ordinary dividends 41.4 FY19 dividend target 17.0 10.2% 4.2% p.a.1 6.70 7.00 7.25 7.55 7.85 8.65 5.00 5.30 5.50 5.72 5.94 6.49 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 1. Annuali
Slide 22: Dividend fully covered
Dividend fully covered Significant dividend reserves carried forward (£m) 774.1 Dividend surplus: 43.6 (425.0) 345.3 (89.8) 158.5 42.4 (42.8) (72.1) 1 Opening amounts Total income, other Net costs Ordinary dividends Realised profits over Special dividend Performance fee Dividend reserves available f
Slide 23: Q&A
3) Infrastructure plc @ Q&A
Slide 24: Appendix
3) Infrastructure plc Si Appendix
Slide 25: Portfolio summary
Portfolio summary 31 March 2018 (£m) Allocated Directors' Foreign Directors' Underlying Asset total Investment in Divestment in Value foreign Portfolio assets valuation 31 exchange valuation 31 portfolio income return in the the year the year movement exchange March 2017 translation March 2018 in th
Slide 26: Portfolio breakdowns
Portfolio breakdowns Portfolio value by sector Projects by type Transportation / Operational logistics 8% 10% Projects 23% Utilities 34% Primary Projects Communications 17% Natural Resources / 77% energy 31% Social infrastructure Portfolio value by geography Portfolio value by currency UK and Irelan
Slide 27: Weighted average discount rate
Weighted average discount rate Portfolio weighted average discount rate (%) 13.8% 13.2% 12.4% 12.5% 12.6% 12.0% 11.8% 10.2% 10.0% 10.5% 9.9% Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 The weighted average discount rate of the portfolio has increased to 10.5% 27
Slide 28: Sensitivities to total return
Sensitivities to total return Inflation linkage Assets with revenues: 11% 29% Sensitivity Directly linked to UK inflation (for European assets only) +1% point -1% point Partly linked to inflation Change in inflation over £38.9m £(38.4)m underlying assumption for Not linked to inflation next 2 years
Slide 29: FX substantially hedged
FX substantially hedged (£m) FX gains/(losses) before hedging FX losses after hedging Hedged assets (€/SGD/DKK/NOK) 12.1 Unhedged assets (£/rupee) (4.9) (4.9) (4.1) Note: SGD exposure is within Oystercatcher, a euro denominated investment. 29
Slide 30: Moving to the UK
Moving to the UK • Mitigate risk of double taxation of income and gains from investments in portfolio companies • Intention to move management and tax domicile to UK • Effective from 1 October 2018 • Project plan in place and being executed - Application for UK approved investment trust status • Add
Slide 31: Governance and fees
Governance and fees • Independent Chairman, four independent non-executive directors and one 3i Group appointed non-executive director • Committed to observe requirements of the UK Corporate Governance Code Board of • Responsibilities include Directors – acts as Investment Committee / approves inves
Slide 32: 3i Infrastructure plc
3} Infrastructure plc