3i Infrastructure PLC · LSE:3IN
3i Infrastructure — FY2017 Earnings Presentation
48 slides from 3i Infrastructure's earnings presentation, May 11, 2017
Slide 1: Results for the year to 31 March 2017
Results for the year to 31 March 2017 11 May 2017
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: Tenth year delivered well against all targets
For its tenth year, the Company has delivered well against all its targets. Announcing target dividend FY18 of 7.85 pence per share. 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: FY17 results: achieved all targets for the year
FY17 results: achieved all targets for the year 9.4% Total return on opening NAV Good portfolio performance driving NAV growth 169.0p NAV per share Record level of new investment across target markets £479m Good income progression following new investment £86m £20m Cash balance Efficient balance she
Slide 6: Strong and long-term track record
Strong and long-term track record Total shareholder return 3iN FTSE 250 20% 16.1% 15.3% 15% 11.6% 10% 7.9% 5% 0% FY17 Annualised since IPO Outperforming FTSE 250 Low share price volatility through the cycle Source: Bloomberg. 6
Slide 7: Strong and long-term track record
Strong and long-term track record 10-year NAV and dividends growth 279 255 224 180 168 155 147 134 123 113 100 5.00 5.30 5.50 5.72 5.94 6.49 6.70 7.00 7.25 7.55 IPO FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 7
Slide 8: Successfully diversified the portfolio
We have successfully diversified the portfolio through the deployment of all the capital raised into new investments. Phil White Managing Partner, Head of Infrastructure
Slide 9: Clear strategic priorities
Clear strategic priorities Maintaining a balanced portfolio Disciplined approached to new investments Delivering an attractive mix of income yield and Focusing selectively on investments capital growth for our shareholders that are value enhancing to the Company’s portfolio and consistent Investing
Slide 10: A differentiated investment proposition
A differentiated investment proposition Return Examples Ayrshire AWG Hart v. Zuid Infinis A12 Elenia A27/A1 TCR Economic infrastructure Greenfield Projects Large Core economic Operational infrastructure PPP projects Risk Our investment activity continues to focus on areas of the market offering attr
Slide 11: Disciplined approach to target the best new investments
Disciplined approach to target the best new investments Key characteristics: • Asset intensive or long term concessions • Often provide essential services • Strong market position with acceptable element of market risk • Generate stable cash flows • Opportunities to enhance value 11
Slide 12: Diversifying the portfolio: Wireless Infrastructure Group
Diversifying the portfolio Wireless Infrastructure Group £75m investment June 2016 Second largest independent operator of communication towers in the UK 12
Slide 13: Diversifying the portfolio: TCR
Diversifying the portfolio TCR €189m investment July 2016 Europe’s largest independent asset owner of airport ground support equipment 13
Slide 14: Diversifying the portfolio: Valorem
Diversifying the portfolio Valorem €69m investment September 2016 France’s leading independent renewable energy development and operating company 14
Slide 15: Diversifying the portfolio: Infinis
Diversifying the portfolio Infinis £185m investment December 2016 Leading generator of electricity from landfill gas in the UK 15
Slide 16: Diversifying the portfolio: Hart van Zuid
Diversifying the portfolio Hart van Zuid €5m investment April 2016 Renewal and revitalisation of the area surrounding the Zuidplein and Ahoy centres in Rotterdam, the Netherlands 16
Slide 17: Diversifying the portfolio: A27/A1
Diversifying the portfolio A27/A1 €6.5m investment October 2016 Reconstruction of the A27 motorway and of the A1 motorway in the Netherlands 17
Slide 18: Portfolio has grown and diversified since 2015
Portfolio has grown and diversified since 2015 Portfolio value: 31 March 2015 Portfolio value: 31 March 2017 India Projects Elenia Eversholt Elenia 2% Valorem 12% 19% 22% 28% WIG 3% 4% £1.3bn 19% ESVAGT 6% £1.9bn 5% India AWG 15% 6% 12% AWG 9% 8% XLT Projects 9% Oystercatcher 11% 10% XLT TCR Oysterc
Slide 19: Driving value through engaged asset management
Driving value through engaged asset management ESVAGT Oystercatcher • Optimising cost base in tougher • Refinanced part of the bank facility market conditions in the oil and gas through long dated funding in segment Singapore Dollar • Good pipeline of potential contracts • Building a new marine jett
Slide 20: A growing team dedicated to infrastructure investment
A growing team dedicated to infrastructure investment Phil White Managing Partner Bernardo Sottomayor John Cavill Nigel Middleton Scott Moseley Stéphane James Dawes Partner Partner Partner Partner Grandguillaume CFO Partner Aaron Church Anna Dellis Antoine Matton Daniel Faraidon Matt Barker Stephane
Slide 21: Focus for FY18
Focus for FY18 Managing the portfolio intensively Investing in the existing portfolio where there are attractive capital expenditure or acquisition opportunities Selectively sourcing new investments in competitive markets to further diversify and improve the balance of the portfolio 21
Slide 22: Delivering for shareholders
Delivering for shareholders Achieved all of our targets for the period Further diversifying the portfolio and building income Maintaining an efficient balance sheet A strong team with a long term track record 22
Slide 23: Building income and efficient balance sheet
We have been successful in building income during the year, and the Company maintains an efficient balance sheet. James Dawes CFO, Infrastructure, 3i Investments plc
Slide 24: Good NAV progression
Good NAV progression FY17 return driven by good performance of the portfolio in income and capital return (£m) 85.6 21.0 1,773.4 69.4 1,695.9 378.8 1,627.1 (29.7) (77.5) 1,248.3 Opening NAV at 1 Equity Raise Adjusted Opening Capital return Total income Net foreign Net costs NAV before Distribution t
Slide 25: Capital return from delivery of plans
Capital return from delivery of plans (£m) Total asset performance: £39.1m 70.1 16.8 69.4 (0.6) 14.1 (31.0) Planned value growth Other asset Discount rate movement Macro-economic Loss on disposal Capital return performance assumptions 25
Slide 26: Building income from new investments
Building income from new investments (£m) 6.8 C 16.5 (1.4) (0.4) 85.6 64.1 Total income FY 2016 Income from new investments Income from new investments Change in income from Change in other income Total income FY 2017 this year last year existing assets A strong base from which to grow the dividend
Slide 27: Dividend coverage
Dividend coverage FY17 dividend of 7.55pps, or £77.5m (£m) 105.6 (31.4) 55.0 42.4 (77.5) (3.9) Net income: £74.2m (5.4) Opening amounts Total income and other Costs (excl. deal fees) Dividends paid Performance Fee Realised loss over cost Closing amounts available for distribution cash received and p
Slide 28: Disciplined cost management
Disciplined cost management (£m) Deal costs1 Portfolio value2 Advisory fees on new investments Finance costs March 16 March 17 Opex £1,281m £1,879m Ongoing advisory 1.9 fees 7.1 4.8 4.5 2.0 17.2 13.0 2.7 2.6 (1.0) FY16 FY17 FY16 FY17 Ongoing focus on costs drives operational efficiency 1. Deal
Slide 29: FX substantially hedged
FX substantially hedged (£m) 77.8 Hedged assets (£/€/SGD/DKK) Unhedged assets (£/rupee) 71.1 21.0 14.3 6.7 6.7 FX gains before hedging FX gains after hedging Target hedge ratio of 95% on € and DKK exposure Note: SGD exposure is within Oystercatcher, a euro denominated investment. 29
Slide 30: Our flexible funding model
Our flexible funding model Funding Availability • Cash balance of £20m at 31 March 2017 (1% of NAV) Cash • Undrawn RCF of £170m before accordion (£300m facility extended to May 2020) RCF • RCF increased by £200m to £500m through accordion feature RCF Accordion • An equity tap issue could raise c.£20
Slide 31: Q&A
3) Infrastructure plc @ Q&A
Slide 32: Appendix
3) Infrastructure plc Si Appendix
Slide 33: Portfolio summary
Portfolio summary 31 March 2017 (£m) Directors’ Directors’ Allocated Underlying valuation Investment Divestment Foreign valuation foreign Profit/ portfolio Asset total 31 March in the in the Value exchange 31 March exchange (loss) on income in return in Portfolio assets 2016 period period movement t
Slide 34: Portfolio breakdowns
Portfolio breakdowns Economic infrastructure businesses by sector1 Projects by type1 Utilities Operational 5% 7% Projects 29% Transportation / Logistics Primary Projects 30% 58% Natural Resources / Energy 71% Communications Portfolio value by geography1 Portfolio value by currency1 UK and Ireland EU
Slide 35: Elenia
Elenia Operational highlights for the period • Good operational and financial performance • Elenia has continued the roll-out of its long-term investment plan which is designed to improve security of supply − Since acquisition, Elenia has invested approximately €500m Cost £194.8m − The underground c
Slide 36: AWG
AWG Operational highlights for the period • Operational performance and income levels in line with expectations • No major operational incidents during the year and water resource levels are normal for this point in the year despite a dry winter • Focus remains on implementing its cost efficiency an
Slide 37: Oystercatcher
Oystercatcher Operational highlights for the period • All five terminals are performing well, with revenues in line with or above budgeted levels • Capacity at each location remains substantially let and contract renewals are agreed on good terms • In Singapore, a new marine jetty is being built to
Slide 38: Infinis
Infinis New investment in the period • 100% interest acquired for £185m • Leading generator of electricity from landfill gas in the UK with total installed capacity of over 300 MW • Over 120 sites geographically dispersed across the UK Cost £185.0m • Strong management team focused on maximising yiel
Slide 39: TCR
TCR New investment in the period • 50% interest acquired for c.€200m • Europe’s leading independent asset owner and lessor of airport ground support equipment • Provides infrastructure that is critical to the functioning of an airport • Present at over 100 airports across 12 countries Cost £150.9m w
Slide 40: Cross London Trains
Cross London Trains Operational highlights for the period • Train manufacturing programme remains on schedule: − 76 trains completed and delivered for testing, − 55 of which were delivered for testing in the UK • 42 trains have now been accepted and are Cost £62.7m running on the Thameslink network
Slide 41: ESVAGT
ESVAGT Operational highlights for the period • Market conditions remain challenging: the low oil price environment has reduced production profitability and is negatively impacting exploration investment in the North Sea • The current oil price environment is an opportunity for ESVAGT to streamline i
Slide 42: Wireless Infrastructure Group
Wireless Infrastructure Group New investment in the period • 36% interest acquired for c.£75m • Second largest independent tower company in the UK • Operates c.2000 towers and sites, representing c.7% of the UK market • Generates inflation-linked cash flows Cost £74.7m underpinned by long-term contr
Slide 43: Valorem
Valorem New investment in the period • 28.5% interest acquired for c.€69m1 • One of the largest onshore wind developers in France, having developed over 480MW of capacity over the last 10 years • Recurring, inflation-linked cash flows underpinned by a robust regulatory regime Cost £47.9m • Scalable
Slide 44: Projects portfolio development
Projects portfolio development FY14 FY15 FY16 FY17 Mersey Gateway Ayrshire College (UK) Condorcet Campus (FR) Hart van Zuid (NL) Bridge (UK) – £4.6m – €8m – €5m – £13.1m RIVM (NL) – €4.8m A27/A1 (NL) NMM (NL) A12 (NL) West of Duddon Sands – €6.3m OFTO (UK) – €6.5m – €5.3m A9 (NL) – £23.5m – €22.3m L
Slide 45: 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% 9.9% 10.0% Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Changes in the weighted average discount rate (WADR) driven by: • Reduction in the discount rat
Slide 46: Sensitivities to total return
Sensitivities to total return Inflation linkage Assets with revenues: 7% Directly linked to UK inflation Sensitivity 28% (for European assets only) +1% point -1% point Mostly linked to Finnish inflation Change in inflation over £41.2m £(40.8)m 1 42% underlying assumption for Partly linked to inflati
Slide 47: 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 48: 3i Infrastructure plc
3} Infrastructure plc