Challenger Limited · ASX:CGF
Challenger — Challenger Infrastructure Fund — HY12 Earnings Presentation
32 slides from Challenger's earnings presentation, Feb 24, 2012
Slide 1: Challenger Infrastructure Fund
Challenger Infrastructure Fund (ASX: CIF) Emil Pahljina, Chief Executive 24 February 2012
Slide 2: Important Notice
Important Notice Information contained in this publication is current as at 24 February 2012 unless otherwise specified and is provided by Challenger Listed Investments Limited (ABN 94 055 293 644) (AFSL 236887) (“CLIL”), as Responsible Entity of CIF Investment Trust 1 (ARSN 114 139 703) and CIF Inv
Slide 3: CIF – Review of Operations
CIF – Review of Operations Inexus Excellent progress on multi-utility sales during the period adding 13,549 (34,597 UAE) to order book Continued EBITDA and revenue growth Refinancing is being progressed in tandem with potential outcomes from the strategic review LBC Growth in EBITDA and reve
Slide 4: CIF - Strategic Review Progress
CIF - Strategic Review Progress • CIF‟s board have reviewed a number of strategic options and are considering a short list of options • CMSL1 management agreement has been varied to facilitate all potential outcomes of the strategic review • The Board have requested Rothschild and CMSL to explore ma
Slide 5: Inexus Refinance
Inexus Refinance • Inexus refinance, total facilities of £461m and associated swaps, due August 2012 • Refinance is being progressed in tandem with the strategic review • European debt markets remain difficult. Inexus is engaging with a broad range of potential debt providers • A rating agency has c
Slide 6: CIF - Statutory Results
CIF - Statutory Results • EBITDA normalised for currency movements $91.6m, up 2% on pcp • Statutory result adversely impacted by unrealised mark to market movement in the Inexus inflation and interest rate swaps1 $A millions HY12 HY11 % Mvt Trend EBITDA before realised & unrealised 86.3 89.6 (4)% i
Slide 7: CIF – Highlights
CIF – Highlights • HY12 EBITDA of £23.3m, up 1% on HY11 Inexus • Contracts signed on three new sales projects contributing to the total of ~34,597 UAE connections added to the order book in the period • HY12 EBITDA of US $51.4m up 15% on HY11, primarily due to improved performance in France LBC • Co
Slide 8: Inexus
Inexus 8
Slide 9: Inexus – Financial Performance
Inexus – Financial Performance • Continued EBITDA growth underpinned by: Revenues from the continued rollout of existing order book Inflation-linked revenue £ millions HY12 HY11 % Mvt Trend Revenue £32.8 £31.6 4% h Underlying EBITDA £23.3 £23.1 1% h Less: Restructuring costs - £0.1 large i EBITD
Slide 10: Inexus - Key Business Characteristics
Inexus - Key Business Characteristics • Leading market position, at the forefront of Inexus brands regulatory and commercial market development • Largest independent portfolio of “last mile” utility assets in the UK with ~820k existing and contracted connections • Stable and secure inflation-linked
Slide 11: Inexus - Business Focus
Inexus - Business Focus 1. Installed revenue generating assets – Manage operating costs and overheads – Monitoring the regulatory environment 2. Rollout of the current order book – Connect contracted growth – Optimise existing projects economics – Efficiently roll out capex expenditure 3. Future sal
Slide 12: Inexus – Track Record
Inexus – Track Record Underlying EBITDA & margin 50 80% • Continued growth in EBITDA and 70% 40 operating cash flow 60% Millions (£) 50% • Operating cash flow is underpinned 30 40% by stable earnings from the existing 20 30% connections portfolio 20% 10 • Total number of installed 10% connections ha
Slide 13: Inexus - Growth Outlook
Inexus - Growth Outlook • Short to medium term, revenue and Conversion of Order Book to UAEs EBITDA growth will be driven by the Gas 79,202 continued rollout of the order book of 180,942 contracted connections or Electricity 54,543 297,139 Utility Asset Equivalent (UAE) Water 30,394 • 13,549 new sal
Slide 14: Inexus – Current Operating Environment
Inexus – Current Operating Environment UK Consumer Confidence index Market environment • Annual housing starts and completions 120 110 remain subdued in the United Kingdom 100 • Annual new home completions in England 90 80 appear to have settled at circa 60% of their 70 pre- GFC high (December 2007)
Slide 15: Inexus - New Large Multi-Utility Sales
Inexus - New Large Multi-Utility Sales • Major multi-utility sales during the period for the first time in 18 months, as developers are refreshing their existing books Total Project Plots Connection Type Total UAE‟s Connections Cranbrook 3,500 Electricity & Fibre 7,000 17,500 Queen Elizabeth 872 Ele
Slide 16: Inexus – Cranbrook Development
Inexus – Cranbrook Development • A development in Exeter, East Devon for 3,500 homes and associated commercial units • Cranbrook aims to create a self sufficient, low carbon new community • Inexus submitted an integrated utility proposal in January 2009 • In May 2011, Inexus was selected as preferre
Slide 17: Inexus - Oakham North Development
Inexus - Oakham North Development • 1,100 plot development, long term project expected, over 15 years in 10 phases • The development is located 28 km east of Leicester • The planning approval includes sustainable urban expansion, a retirement community, 30 acres of offices, parks and open space, chi
Slide 18: Inexus - Queen Elizabeth Barracks
Inexus - Queen Elizabeth Barracks • 872 plot development, with 1,744 total new connections in north east Hampshire, 39 miles south west of London • On site building works have commenced and connections are forecast to begin late 2012 • The community will have parklands, a new school, recreational fa
Slide 19: LBC
LBC 19
Slide 20: LBC – Financial Performance
LBC – Financial Performance • Revenue up 11% and EBITDA up 15% on pcp Improved commercial performance in France Iberia continues to operate in a challenging environment United States steady and improving EBITDA positively impacted 2% by strengthening average EUR/USD FX $US millions HY12 HY11
Slide 21: LBC - Key Business Characteristics
LBC - Key Business Characteristics • A leading independent global provider of bulk liquid storage • Diversified portfolio in strategic locations including the global hubs Rotterdam, Antwerp and the US Gulf Coast • Significant barriers to entry for new entrants; land constraints; long term customer r
Slide 22: LBC - Business Outline
LBC - Business Outline • LBC is one of the world‟s largest independent operators of bulk liquid storage terminals for chemical and petroleum products • LBC operates 14 terminals at strategic locations in the United States, France, Belgium, Netherlands, Spain, Portugal and China • The LBC terminal po
Slide 23: LBC - Top 10 Customers
LBC - Top 10 Customers • Average length of relationships with top 10 customers – 26 years • Global customer footprint with three of the top 10 customers having relationships across LBC‟s three regions Customer Europe US Asia Products Length of Relationship Oil 30 years Oil 13 years Chemica
Slide 24: LBC - Macro Conditions: Chemical
LBC - Macro Conditions: Chemical 250 US import and export of chemicals1 • The global chemical industry is Trade Flows ($US billions) 200 essential to a broad range of 150 industries, with virtually every product – from automobiles to 100 zippers – using chemical inputs 50 • Worldwide chemical indust
Slide 25: LBC - Macro Conditions: Oil
LBC - Macro Conditions: Oil US Gulf Trade Volumes 1,200,000 • The global trade in petroleum products Total 1,000,000 Finished Petroleum Products has doubled since 2003 on the back of Other Liquids growing structural imbalances in the 800,000 Barrels ('000's) production and consumption of refined 600
Slide 26: LBC – Track Record
LBC – Track Record EBITDA & Revenue 140 • HY12 underlying EBITDA of US $51.4m 120 40% is up 15% on HY11, due to the 100 commercial improvements in France 30% 80 • Utilisation remains high in the United 60 20% States (97%), Northern Europe (92%) and Asia (96%) 40 20 10% • Resilience in underlying EBI
Slide 27: LBC – T100
LBC – T100 Nantes/Bayonne (France) • In Southern France the local supplies of Key statistics bitumen have reduced due to refinery Product Bitumen closures, creating an increased need for Capital Expenditure US$ 23.0m imported supply. Bayonne and Nantes are Capacity (m3) 26,000 key distribution local
Slide 28: LBC – T100
LBC – T100 Antwerp (Belgium) • Antwerp is at full capacity and is Key statistics currently fielding significant enquiries Product Base Oils for storage of base oils Capex US$ 14.6m • LBC Antwerp is looking to capitalise Capacity (m3) 41,000 on demand for base oils storage in No of Tanks 7 Port of An
Slide 29: CIF Outlook
CIF Outlook
Slide 30: CIF – Outlook
CIF – Outlook • Revenue and EBITDA growth is expected to continue Inexus • Refinance of debt facilities on acceptable terms • Conclude sales on three additional projects which are currently in advanced stages of negotiation, total sales of circa 89,000 UAE • Continued growth in underlying EBITDA is
Slide 31: Appendix
Appendix
Slide 32: Inexus Interest Rate Swaps
Inexus Interest Rate Swaps Notional Hedged Hedged • During the half-year, the £'m rate period Inexus inflation-linked Nominal £83.8 5.04% Aug 2030 (implied real rate) and Inflation-linked £251.3 2.84% Aug 2030 nominal interest rate UK Interest Rates Curves swaps mark-to-market 5% liability increased
Challenger Infrastructure Fund — HY12 Earnings Presentation on 6ix