HICL Infrastructure PLC · LSE:HICL
HICL Infrastructure — H1 2025 Earnings Presentation
42 slides from HICL Infrastructure's earnings presentation, Nov 20, 2024
Slide 1: HICL Infrastructure PLC 2024 Interim Results Presentation
HICL Infrastructure PLC 2024 Interim Results Presentation 20 November 2024
Slide 2: Important information
Important information For Investment Professionals (as defined under FSMA 2000). Individuals without professional experience in matters relating to investments should not rely on this information By attending the meeting where this presentation is made, or by reading the presentation slides, you agr
Slide 3: 2024 Interim Results Highlights & Investment Proposition
2024 Interim Results Highlights & Investment Proposition hicl.com | 3
Slide 4: HICL at a glance
HICL at a glance 1. 2. 3. Core Active Established positioning management pedigree ▪ Essential infrastructure ▪ Hands-on approach ▪ Specialist management ▪ Inflation protection ▪ Active asset rotation ▪ 18-year track record ▪ Lower end of risk spectrum ▪ Driving outperformance ▪ Global capability Dor
Slide 5: Key themes in period
Key themes in period Balance sheet Improved cash Positioned for long strengthened generation term growth >£400m available liquidity1 2.06x / 1.07x 9.2% Dividend cash cover Market implied including3 / excluding shareholder net return4 Nil profits on disposal RCF balance Disposal proceeds received2
Slide 6: Solid performance amidst macro volatility
Solid performance amidst macro volatility 156.5p 5.5% NAV per share Annualised underlying portfolio return1 31 March 2024: 158.2p 30 September 2023: 8.2% 8.35p 8.1% Dividend per share Weighted average guidance2 for FY26 discount rate March 2024: 8.0% Cross London Trains, UK 1. Before the impact of c
Slide 7: Attractive long-term real returns from income and capital growth
Attractive long-term real returns from income and capital growth 11% 10% Entry point Net expenses4 9% Below NAV3 1.1% 1.6% 8% Capital Growth 7% 2.3% Equity risk 6% premium 9.2% 3.9% Implied at 15 Nov 2024 5% Shareholder Long-term Return implied 9.7% 4% Real risk-free return Dividend Implied rate 8.1
Slide 8: Financial Performance
Financial Performance hicl.com | 8
Slide 9: Stable valuation reflecting solid operational performance
Stable valuation reflecting solid operational performance 170p ▲4.3 ▼(0.1) ▲0.2 ▼(0.6) ▼(1.4) Net debt2 ▼(4.1) 160p £84.6m 150p Fund gearing3 7% 140p 158.2 156.5 OCR4 130p 1.10% 120p 31 March 2024 Performance 1 Change in other Share buyback Forex loss Expenses Dividend paid 30 September 2024 NAV per
Slide 10: Significant private / public dislocation in infrastructure valuations
Significant private / public dislocation in infrastructure valuations Private infrastructure market activity Number of institutions indicating strategy preference3 Total infrastructure deals1 Core infrastructure deals2 800 120 70 700 100 60 600 50 500 80 40 400 60 30 300 40 200 20 100 20 10 0 0 0 Q4
Slide 11: An inherently defensive portfolio with limited refinancing risk
An inherently defensive portfolio with limited refinancing risk Portfolio Debt Risk premium = 3.9% 2.2% Risk premium = 3.3% 3.2% 1-2 years 10% 3-5 years 9% 86% 14% Weighted Average Discount Rate 8% 5-13 years 7.1% 7% >13 years 6% 5% 4% Refinancing required 0.9% 3% Fixed until concession end 2% 1% 0%
Slide 12: Portfolio Performance
Portfolio Performance hicl.com | 12
Slide 13: HICL's core infrastructure focus
HICL’s core infrastructure focus HICL invests in assets with highly defensive qualities; attractive in volatile markets Cash Flow Quality Stable revenues Less operational complexity Market Positioning Defensive positioning High barriers to entry Criticality Essential assets Social licence hicl.com |
Slide 14: Highly diversified portfolio
Highly diversified portfolio Communications Contracted Revenues Demand-based Revenues Electricity Health Affinity Water 8.8% Regulated Revenues & Water A63 Motorway 7.5% 9% 22% Fortysouth 6.9% 19% Education 29.4 years Fire, Law & 10% weighted average Texas Nevada Transmission 5.6% Order 5% asset lif
Slide 15: Operational update – Affinity Water (8.8% of portfolio)
Operational update – Affinity Water (8.8% of portfolio) ∆ Water-only company (non-sewerage) serving over 3.9m customers across London, the South and South East of the UK ∆ Operational performance slightly ahead of expectations, with both revenue and costs favourable to budget ∆ Maintained strong rel
Slide 16: Operational update – demand-based assets
Operational update – demand-based assets A63 Motorway High Speed 1 (7.5% of portfolio) (4.8% of portfolio) ∆ YoY traffic increase for both light and heavy vehicles; broadly ∆ 8% increase in Eurostar train path revenue YoY; slightly behind in line with expectations forecast due to fewer summer bookin
Slide 17: Operational update – modern economy assets
Operational update – modern economy assets Fortysouth Texas Nevada Transmission (6.9% of portfolio) (5.6% of portfolio) ∆ EBITDA above budget, supported by 40-year anchor tenancy ∆ Operational performance in line with expectations, with both contract with One NZ1 networks achieving 100% availability
Slide 18: Operational update - PPP assets
Operational update - PPP assets PPP assets Case Study: Blankenburg Tunnel (58.0% of portfolio) (2.8% of portfolio) ∆ Operational performance broadly in line with expectations due ∆ Construction began in 2018; HICL acquired its 70% stake in to availability-based contracted revenue streams March 2019
Slide 19: Outlook
Outlook hicl.com | 19
Slide 20: Capital allocation strategy provides foundation for selective investments
Capital allocation strategy provides foundation for selective investments Short-term outlook Longer-term focus Hurdle rate set by buybacks Investment priority for higher returning growth assets Selective Focus on special situations Megatrends continuing to drive growth with outsized returns
Slide 21: Positioned to deliver sustainable income and capital growth
Positioned to deliver sustainable income and capital growth Balance sheet strengthened; RCF fully repaid £50m share buyback programme well underway Increase in dividend cash cover in line with previous forecast HICL positioned to selectively pursue attractive opportunities Altitude Infra (France) hi
Slide 22: Appendix I
Appendix I Company Information
Slide 23: HICL's Vision
HICL’s Vision 45% of portfolio Developing strong social foundations 36% of portfolio connecting communities 19% of portfolio supporting sustainable modern economies By value based on the Directors Valuation of £3,271.0m at 30 September 2024 hicl.com | 23
Slide 24: Board of Directors I
Board of Directors I Non-executive Directors with a broad range of relevant experience and qualifications Mike Bane Kenneth D. Reid Rita Akushie Liz Barber Chair Senior Independent Director Audit Committee Chair Director Mike Bane (British) has been a Guernsey resident Kenneth, a Singapore resident,
Slide 25: Board of Directors II
Board of Directors II Non-executive Directors with a broad range of relevant experience and qualifications Frances Davies Martin Pugh Simon Holden Remuneration Committee Chair Director Risk Committee Chair Frances has more than 30 years of experience Martin Pugh has over 35 years in the infrastructu
Slide 26: Appendix II
Appendix II The Investment Manager
Slide 27: InfraRed Capital Partners - Established infrastructure manager with international reach
InfraRed Capital Partners - Established infrastructure manager with international reach London New York Madrid Seoul KEY Sydney - InfraRed Office 4 6 Infrastructure Fund III Infrastructure 2 Fund VI Infrastructure Fund II Environmental 3 2 4 1 Infrastructure Yield Fund European Infrastructure Fund A
Slide 28: InfraRed Capital Partners - Mid-market specialist driving financial performance
InfraRed Capital Partners - Mid-market specialist driving financial performance Longevity Reach Complementary strategies 25 years #19 Ranked $13bn Investing in infrastructure Manager by Equity under management2 / infrastructure AUM1 11 infrastructure funds launched Investment portfolio Expertise Sus
Slide 29: Appendix III
Appendix III The Investment Portfolio
Slide 30: HICL's Top Assets I
HICL’s Top 10 Assets I Sector: Electricity & Water Affinity Water (UK) % of portfolio: 8.8% (March 2024: 8.3%) HICL holding: 33.2% 1 Affinity Water Limited is the largest water-only supplier in the UK by revenue and population served, covering an area of 4,515 sq. km. Concession life remaining: Inde
Slide 31: HICL's Top Assets II
HICL’s Top 10 Assets II Sector: Health Southmead Hospital (UK) % of portfolio: 3.9% (March 2024: 3.9%) HICL holding: 62.5% 6 Southmead Hospital PPP project is an 832 bed acute hospital concession on a single site at Southmead in North Bristol. Concession life remaining: 21 years Status: Operational
Slide 32: Portfolio Diversification
Portfolio Diversification HICL’s Portfolio, as at 30 September 20241 REVENUE TYPE GEOGRAPHIC LOCATION ▲ Contracted Revenues 65% ▲ UK 65% ▲ Demand-based Revenues 13% ▲ Europe (exc UK) 21% ▲ Regulated Revenues 22% ▲ North America 7% ▲ Australia / New Zealand 7% INVESTMENT STATUS SECTOR ▲ Fully operati
Slide 33: Track record of highly selective divestments
Track record of highly selective divestments Disposal track record: 27 >£1bn 9.8p Asset disposals Total proceeds since NAV outperformance since IPO IPO since IPO Disposal methodology: Result in an overall positive impact on HICL accretion metrics; Disposal process only Improve sector or geographic d
Slide 34: 2024 Sustainability Report highlights
2024 Sustainability Report highlights HICL has a role in society that extends beyond its shareholders Environment Communities ▲ Detailed net zero transition plan for HICL’s ▲ InfraRed Portfolio Impact initiatives rolled portfolio – asset specific transition plans out across several HICL assets ▲ Inf
Slide 35: Appendix IV
Appendix IV Valuation assumptions and metrics
Slide 36: Key Valuation Assumptions
Key Valuation Assumptions 31 September 2024 31 March 2024 Discount Rate Weighted Average 8.1% 8.0% UK (RPI2 & RPIx2) 3.00% to March 2025, 3.00% to March 2025, 2.75% to March 2026, 3.25% to March 2030, 2.50% thereafter 2.75% to March 2026, 3.25% to March 2030, 2.50% thereafter UK (CPI/CPIH3) 2.25% to
Slide 37: Solid portfolio performance
Solid portfolio performance Directors’ Valuation1 of £3,271.0m as at 30 September 2024 £3,500m 3,333.4 ▼(0.0) ▼(115.1) ▲86.3 - ▼(2.4) ▼(29.4) £3,300m ▼(1.8) 3,271.0 3,218.3 £3,100m 2.7% 0.0% (0.1)% (0.9)% Income Statement Revenue 3,268.9 £2,900m Future commitments 3,208.3 3,153.8 £2,700m £2,500m 31
Slide 38: Weighted average discount rate of 8.1%
Weighted average discount rate of 8.1% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep 06 06 07 07 08 08 09 09 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18
Slide 39: Balanced portfolio construction
Balanced portfolio construction Discount Rate +/- 0.5% (7.8) 8.5 HICL’s inflation correlation provides an offset to adverse Inflation -/+ 0.5% (6.6) 7.5 discount rate movements Tax Rate +/- 5% (4.3) 4.3 GDP -/+ 0.5% (2.8) 1.9 Interest Rate (Cash) -/+ 1% (2.2) 2.2 The portfolio is relatively insensit
Slide 40: Appendix V
Appendix V Summary financial statements
Slide 41: Financial Performance
Financial Performance Income Statement Six months to 30 September 2024 Six months to 30 September 2023 Investment Basis1 £m £m Total income 71.7 10.9 Fund expenses (18.0) (20.5) Finance costs (8.7) (18.0) Tax - - Total return 45.0 (27.6) Earnings / (Loss) per share 2.2p (1.4)p Ongoing charges2 1.10%
Slide 42: Summary Cash Flow Statement
Summary Cash Flow Statement Figures presented on an Investment Basis1 Six months to 30 September 2024 Six months to 30 September 2023 £m £m Opening net (debt) (303.9) (147.6) Net cash flow before capital movements 89.8 88.2 Investments - (415.5) Disposals 221.6 66.3 Movement in payables 0.4 - Debt a