Infratil Limited · NZX:IFT
Infratil — Investor Day (April 2016)
94 slides from Infratil's investor day presentation, Apr 13, 2016
Slide 1: Infratil Investor Day
For personal use only 13 April 2016 Infratil Investor Day Infratil has released the full package of presentation material for its annual Investor Day. Those attending include representatives of shareholders, fund managers, broker analysts, regulatory agencies, business partners and commentators. The
Slide 2: 2017 guidance and 2016 outlook
2 Infratil also remains committed to its goal of increasing its dividends. Infratil’s outlook for the year ended 31 March 2016 is at the lower end of the guidance provided in November last year, after removing the contribution of iSite which was sold in December. Preliminary guidance has also been p
Slide 3: Infratil Investor Day 13 April 2016
For personal use only Infratil Investor Day 13 April 2016
Slide 4: The Infratil plan for the next phase
For personal use only The Infratil plan for the next phase: Execution of high conviction ideas with a focus on future platforms and optionality • Optimise value and performance while the portfolio is being repositioned – Extract value from remaining internal options and position for end- games where
Slide 5: We are well placed to commit when we see value
For personal use only We are well placed to commit when we see value Divestments of mature assets has created unprecedented financial flexibility • Our existing portfolio is forecast to deliver above-average total returns over the next five years Confidence enables “no- – Assuming no changes to the
Slide 6: The low-rate environment dominates returns analysis
For personal use only The low-rate environment dominates returns analysis • Market is redefining required rates of return for mid-risk and growth infrastructure • “Lower for longer” expectations continue to drive up Declining core returns valuations, reinforcing the importance of proprietary encoura
Slide 7: Significant value in our proprietary platforms
For personal use only Significant value in our proprietary platforms Clear path to deploy capital on an accelerated basis • IFT is in a very strong position to invest significant new capital into our key development platforms of renewables and retirement living – A combination of proprietary develop
Slide 8: Several emerging future platforms for Infratil
For personal use only Several emerging future platforms for Infratil Portfolio will be enhanced by creating future platforms capable of independent scale • “Swim with the tide” and focus on new models to • Research and relationships required to develop deliver essential services in the future emergi
Slide 9: We are also seeing value in listed markets
For personal use only We are also seeing value in listed markets A pragmatic approach towards listed market opportunities • Public markets are increasingly relevant under current conditions – Distortions are evident between private and listed markets relative valuations – Large corporates focused on
Slide 10: A clear set of criteria to manage capital allocation decisions
For personal use only A clear set of criteria to manage capital allocation decisions Each asset has a role in the overall optimisation of the portfolio • The total portfolio needs to be able to operate within targeted return, credit and liquidity parameters under realistic potential downside scenari
Slide 11: IFT Portfolio strategy on a page
For personal use only IFT Portfolio strategy on a page High return development platforms supported by a cash-generating core Core portfolio CORE CASH-GENERATING PORTFOLIO Rotate out of generates cash to • TPW Core businesses with support IFT-level • WIAL declining outlooks debt and • NZ Bus, Perth E
Slide 12: Infratil FY17 guidance and near term outlook
For personal use only Infratil FY17 guidance and near term outlook • Steady growth in earnings and dividends as we reposition the portfolio for the future 2017 2016 NZ $M • EBITDAF trends reflect current Guidance* Outlook* momentum and changes in the portfolio EBITDAF (continuing ops) $485-$525 $495
Slide 13: Infratil investment programme is clear
For personal use only Infratil investment programme is clear Targeting a balance of incremental high confidence moves and option development • Infratil is set to perform well under a number of scenarios – Performance of existing assets – Quality of people and capability – Strength of origination pip
Slide 14: An Update on Morrison & Co Investment Views
For personal use only An Update on Morrison & Co Investment Views Paul Newfield Infratil Investor Day 2016
Slide 15: An update on Morrison & Co investment views
An update on Morrison & Co investment views For personal use only • What are our views on current macro conditions and the outlook for infrastructure? • What will drive future demand for essential services? • Where are we focusing our proprietary research? • What are the implications for investment
Slide 16: Multiple layers of risk & uncertainty in global markets
Multiple layers of risk & uncertainty in global markets 1 For personal use only Fragile 8 growth 2 Global China political risk risk 7 3 Global debt Ultra low burdens interest rates 6 4 Commodity Low CPI price volatility 5 & LPI Real asset inflation 3
Slide 17: Global monetary settings remain in uncharted territory
Global monetary settings remain in uncharted territory For personal use only US Federal reserve rate and forward curves as at 1 Jan each year 2007-2016, % 6 5 Actual fed rate 4 3 Forward curve at 2 1 Jan each year 1 0 Jan 2010 Jan 2015 Jan 2020 Jan 2025 Jan 2030 Jan 2035 4
Slide 18: Ever-increasing investor demand for infrastructure
Ever-increasing investor demand for infrastructure For personal use only Unlisted infrastructure fund dry powder Dec 2012- March 2016, US$bn • 63% of global institutions currently below their target allocation to infra, only 10% above +15% pa 125 • Chinese strategic investors globally active 110 109
Slide 19: Prospering in an uncertain and competitive market
Prospering in an uncertain and competitive market For personal use only Market Outlook Strategic Implications • “Even lower for even longer”? Maintain balance sheet flexibility • Continued capital flows into infra Execute on embedded options • Ongoing upward pressure on unlisted Focus on essen
Slide 20: What will drive demand for essential services in the future?
What will drive demand for essential services in the future? For personal use only Decarbonisation Aging Populations Tech-Enabled Infrastructure Infratil’s Core Development Platforms Emerging area of focus 7
Slide 21: Decarbonisation: A breakthrough year for global carbon action
Decarbonisation: A breakthrough year for global carbon action For personal use only • COP 21 should be a global game-changer - Long term climate action agreement with legal force - Emission reduction commitments from 187 countries - 130+ expected to sign 22 April 2016 • Renewables will be central to
Slide 22: Decarbonisation: Firmer policy settings will drive renewable investment
Decarbonisation: Firmer policy settings will drive renewable investment For personal use only Australia USA • Bipartisan agreement on the RET • PTC’s and ITC’s extended in late 2015 - New target for large-scale generation - Extension to 2019, providing investment - 33,000 GWh in 2020 certainty for r
Slide 23: Aging Populations: Our ingoing investment thesis for MET and Retire Australia
Aging Populations: Our ingoing investment thesis for MET and Retire Australia For personal use only Demographic Strong Increase rate of Expand care tail winds platform development offering Attractive Value entry point creation 10
Slide 24: Aging Populations: Building an essential eldercare services business
Aging Populations: Building an “essential eldercare services” business For personal use only 4 Drive scale across platform 3 Layer in Capture cost additional efficiencies of 2 services Establish/ larger business enhance care Enhance value 1 platform in core Bolster businesses of development Capture
Slide 25: Tech-Enabled Infrastructure: How will technology transform infrastructure?
Tech-Enabled Infrastructure: How will technology transform the infrastructure sector? For personal use only Autonomous vehicle video link 12
Slide 26: Tech-Enabled Infrastructure: How does technology show up in our portfolio?
Tech-Enabled Infrastructure: How does technology show up in our portfolio strategies? For personal use only Understanding threats and opportunities in traditional infra sectors • How could IoT and big data analytics impact energy markets? • What do autonomous vehicles mean for transport infrastructu
Slide 27: Conclusion: Three takeaways for Infratil investors
Conclusion: Three takeaways for Infratil investors For personal use only 1. In uncertain market conditions, the outlook for the infrastructure sector remains strong 2. As demand for infrastructure assets expands, the value of IFT’s embedded options grows 3. We are focused on essential services that
Slide 28: Important Information
Important Information The statements and opinions expressed in this presentation and any related discussion (the presentation) are based on the information available as at the date of the For personal use only presentation. Morrison & Co reserves the right, but will be under no obligation, to review
Slide 29: Infratil Investor Day 2016
For personal use only Infratil Investor Day 2016
Slide 30: RetireAustralia: PRESENT
RetireAustralia: PRESENT For personal use only
Slide 31: RetireAustralia: PRESENT
RetireAustralia: PRESENT For personal use only
Slide 32: RetireAustralia: PRESENT
RetireAustralia: PRESENT For personal use only
Slide 33: RetireAustralia: FUTURE
RetireAustralia: FUTURE For personal use only
Slide 34: RetireAustralia: FUTURE
RetireAustralia: FUTURE For personal use only
Slide 35: Retirement Industry: CARE
Retirement Industry: CARE For personal use only Phase 1 (2012-14) Initial Aged Care Reform Phase 2 (2014-15) Financing Reform Phase 3 (2015-16) Consumer Choice Phase 4 (2016-22) Further consumer choice, sustainability and review
Slide 36: Retirement Industry: CARE
Retirement Industry: CARE For personal use only Source: ACFA Source: ? 2015 report on the Funding and Financing of the Aged Care Industry, Property Council of Australia: National Overview of the Retirement Village Sector (2014). Grant Thornton.
Slide 37: Retirement Industry: CARE
Retirement Industry: CARE For personal use only Source: ACFA 2015 report, NCOA – Aged Care
Slide 38: Retirement Industry: CARE
Retirement Industry: CARE For personal use only Source: ?
Slide 39: Retirement Industry: CARE
Retirement Industry: CARE For personal use only Source: Source: ?RetireAustralia analysis
Slide 40: RetireAustralia: FUTURE
RetireAustralia: FUTURE For personal use only
Slide 41: RetireAustralia: FUTURE
RetireAustralia: FUTURE For personal use only
Slide 42: RetireAustralia: FUTURE
RetireAustralia: FUTURE For personal use only
Slide 43: RetireAustralia: FUTURE (2021)
RetireAustralia: FUTURE (2021) For personal use only
Slide 44: Infratil Investor Day April 2016
For personal use only CLICK TO EDIT Infratil Investor Day 13 April 2016
Slide 45: Disclaimer
For personal use only Disclaimer This presentation has been prepared by Trustpower Limited (Trustpower) in relation to a proposed demerger transaction (Demerger). Information: This presentation contains summary information about Trustpower and the currently intended activities of Trustpower Core and
Slide 46: Disclaimer
For personal use only Disclaimer Not an offer: This presentation is not a product disclosure statement or other offering document under New Zealand law or any other law (and will not be lodged with the Registrar of Financial Service Providers). This presentation is for information purposes only and
Slide 47: Agenda
For personal use only Agenda • Trustpower Demerger • Trustpower “Core” performance and strategy • Australian Market and NewCo opportunity
Slide 48: Proposal to demerge Trustpower's Australian and New Zealand wind business
For personal use only CLICK TO EDIT Proposal to demerge Trustpower's Australian and New Zealand wind business
Slide 49: Announcement highlights
For personal use only Announcement highlights • Trustpower's Board is considering a demerger of the company's wind generation assets and development options ‐ 'NewCo': will hold Trustpower's Australian and New Zealand wind assets and wind and solar development pipeline ‐ 'Trustpower Core': will hold
Slide 50: Rationale for demerger
For personal use only Rationale for demerger • Expectation for two independent and focused companies ‐ NewCo – attractive portfolio of Australasian wind assets with a significant development pipeline and proven operational and development capability ‐ Trustpower Core – a largely New Zealand electric
Slide 51: Next steps
For personal use only Next steps • Trustpower's Board has not formally determined to proceed • A scheme booklet containing more information in relation to the Demerger is expected to be released to Trustpower shareholders in June 2016 once regulator reviews have been completed • Any transaction will
Slide 52: Trustpower Core
For personal use only CLICK TO EDIT Trustpower Core “Great things happen when you get power and broadband together”
Slide 53: NZ market overview – uncertainty abounds!
For personal use only NZ market overview – uncertainty abounds! • Competition in the retail market remains intense, with continued high churn and an increasing number of new entrants • NZ hydro storage levels recovered from a low at the start of FY16 and have since oscillated around average levels •
Slide 54: King Country Energy acquisition
For personal use only King Country Energy acquisition • Trustpower holds 64.5% of KCE acquired at an offer price of $4.78 per share. • KCE owns and operates 5 hydro stations with a combined installed capacity of 54MW and generates around 190GWh/pa. ‐ The Mangahao power scheme located near Palmerston
Slide 55: Overview of Trustpower Core
For personal use only Overview of Trustpower Core Trustpower Core will be a growing, cash generative business with the ability to pay attractive dividends to shareholders Focussed New Zealand retail and generation Continuing strong momentum in multi‐product retail strategy Connections as at 31 Decem
Slide 56: Loyalty is key to growth
For personal use only Loyalty is key to growth
Slide 57: Multi-product churn benefits continue
For personal use only Multi‐product churn benefits continue • Markets highly competitive in energy and telco • 38% lower churn for multi‐ product customers • No current evidence of increased churn as acquired broadband customers transition from $49 to $79 product
Slide 58: Energy relative media spend
For personal use only Energy relative media spend Power Trustpower had the 4th highest ratecard media spend of the power companies ‐ Ratecard spend for Genesis has been over double that of Trustpower's ‐ Contact’s spend was over 120% of Trustpower's ‐ Meridian’s spend was 113% of Trustpower's ‐ Merc
Slide 59: Trustpower energy awareness
For personal use only Trustpower energy awareness – meets target in Auckland • Increasing awareness drives customer consideration • Leads to increased acquisition performance
Slide 60: Telco relative media spend
For personal use only Telco relative media spend Telco • Trustpower had the 4th highest media ratecard spend of the telco’s. • Vodafone’s ratecard spend was nearly 13 times that of Trustpower • Spark’s ratecard spend was just over 12 times that of Trustpower • Slingshot’s spend was 1.8 times that of
Slide 61: Trustpower telco awareness
For personal use only Trustpower telco awareness – Positive progress • Increased telco brand awareness • Leads to successful multi‐ product acquisition performance
Slide 62: Multi-product conversion gains momentum
For personal use only Multi‐product conversion gains momentum • 1/3 of customers now Multi‐ Product • Circa 80% of new customers taking both energy and telco services
Slide 63: Increasing awareness and consideration leads to new campaign
For personal use only Increasing awareness and consideration – leads to new campaign • By bringing together energy and telco Trustpower can offer customer better value ‐ $49 a month for unlimited broadband for a year
Slide 64: NewCo - The pursuit of growth in renewables
For personal use only CLICK TO EDIT NewCo - The pursuit of growth in renewables
Slide 65: Overview of NewCo
For personal use only Overview of NewCo* High quality portfolio of contracted wind assets – with generation capacity of circa 580MW – operating track record and high quality sites – diversification by asset and country Low volatility cashflows with high quality counterparties in Origin Energy and Tr
Slide 66: Future conviction on renewable energy development
For personal use only Future conviction on renewable energy development RET outlook Expected new build opportunity of c15,000GWh in Australia over the next 5 years (80‐90% likely to be wind) Near‐term development opportunity • Development of low‐carbon electricity generation is a critical component
Slide 67: Australasian renewable investment outlook
For personal use only Australasian renewable investment outlook Australia New Zealand • Bipartisan support for Renewable Energy • Wind investment has been possible in the Target (RET) since 2001, recently confirmed absence of specific incentive schemes. Wind at 33,000 GWh (2020) expected to be compe
Slide 68: Overview of NewCo – development pipeline
For personal use only Draft Overview of NewCo – development pipeline NewCo's Australian developments compare favourably to peers which indicates they should be developed within the current RET window Overview of key development projects 15 year wind development track record Trustpower has acquired
Slide 69: Strategic priorities
For personal use only Strategic priorities • Leverage existing assets and development pipeline to take advantage of available Australasian Investment opportunities • Maintain a flexible and varied set of ‘shovel ready’ opportunities (wind and grid connected solar) and use key relationships to deploy
Slide 70: Key drivers for successful execution of strategic agenda
For personal use only Key drivers for successful execution of strategic agenda • Establishing a management team that can harness Trustpower’s wind IP strengths and successfully execute NewCo’s Growth agenda, including a smooth transition from Trustpower Group • Appropriate capital structure to enabl
Slide 71: NewCo's competitive advantage
For personal use only NewCo’s competitive advantage In a unique position to leverage off the people, relationships, credibility and systems it has developed over many years. Key points of difference include: Development and Execution Expertise • Experienced personnel, spanning greenfield development
Slide 72: NewCo's competitive advantage
For personal use only NewCo’s competitive advantage Operations & Maintenance (O&M) Expertise • Over 15 years’ experience operating one of the world’s toughest onshore sites (Tararua in NZ) • Robust and flexible contracting with wind turbine manufacturers. First to market with production‐based O&M pa
Slide 73: Immediate focus of the NewCo Establishment Team
For personal use only Immediate focus of the NewCo Establishment Team • Organisation structure and capability review, positioning to meet growth aspirations • External recruitment to fill gaps and bolster bench strength for growth • NewCo Establishment plan to ensure smooth transition post demerger
Slide 74: Thank you
For personal use only Thank you
Slide 75: IFT Investor Day
For personal use only IFT INVESTOR DAY
Slide 76: 2017+ Growth Strategy
2017+ GROWTH STRATEGY For personal use only 5.8m passengers 6.5m passengers 5.4m passengers Faster pax growth Extend trans-Tasman Regional Network 5th Freedom Flight(s) • 2-4% passenger growth Terminal extensions New retail & transport • Capacity constraints in New Retail opportunities
Slide 77: Drivers of Growth
For personal use only DRIVERS OF GROWTH
Slide 78: International Passenger Growth
INTERNATIONAL PASSENGER GROWTH For personal use only 1,000 Singapore • FY16 = 16% Pax Growth Thousands 900 Jetstar • JQ + 60k seats MEL Fiji 800 RWC • JQ + 47k seats OOL Qantas Number of passengers (‘000) Aircraft upgauge • FJ + 25k seats NAN 700 Pacific • QF + 12k seats BNE 600 Blue Sept 11 / • SQ
Slide 79: Domestic Passenger Growth
DOMESTIC PASSENGER GROWTH of Passengers (M)use only 5.5 Jetstar • FY16 = 4.6% Pax Growth Millions NSN, DUD Pac Blue Air NZ 5.0 Withdrawal Jetstar AKL/ upgauge • NZ + 130k ZQN annual seats AKL Jetstar 4.5 personal Pacific Blue • JQ + 110k 4.0 annual seats NSN Origin Pacific • JQ + 56k 3.5 annual seat
Slide 80: Why Wellington
For personal use only ? Why Wellington
Slide 81: Change in Long Haul Traffic
CHANGE IN LONG HAUL TRAFFIC personal use only Wellington Long Haul O&D Passengers by Region Long Haul traffic has 300 increased by 18 250 17 approximately 60% 68 over 5 years. O&D Passengers (000’s) 63 200 12 11 12 10 49 150 48 45 79 Growth trends 47 73 expected to continue. 62 100 51 56 51 2015 tra
Slide 82: Change in Long Haul Traffic
CHANGE IN LONG HAUL TRAFFIC personal use only WLG – International Long Haul Connect Points Significantly more 100% 2% 3% 3% 3% 2% 2% long haul traffic is going via Australia. 28% 31% % of Connecting Passengers 80% 35% 39% 47% 50% Connections via 60% Australia have increased 186% 40% since 2010. 70%
Slide 83: Change in International Traffic
CHANGE IN INTERNATIONAL TRAFFIC For personal use only 70% Wellington International capacity share Qantas group 60% growing with Emirates 50% network and connectivity into Asia. 40% Dual brand strategy 30% Qantas Group of Qantas and Jetstar StarNZ Air Alliance / Virgin working. 20% 10% 0% FY12 FY13 F
Slide 84: Singapore Airlines Wellington service
For personal use only • 4 days per week (SQ view to daily) from Sept 16 • 110,000 seats • Business class, fastest connection to SIN and onwards on global network • CBR 80 minute layover • Capital to Capital avoid the Intl/Dom Airport Horror • Est $95M spend to New Zealand per annum, a $44m contribut
Slide 85: Runway Extension
350 METRE RUNWAY EXTENSION For personal use only Seeking Resource Consent Potential start late 2017 Net benefit = $2.3B BCR = 2.3 NBIR = 7.6 ~ $300M Construction cost
Slide 86: Capital Investment
CAPITAL INVESTMENT For personal use only International Terminal Hotel Retail Centre $60m $50m $10m Misc. $30m Multi-Level Taxiway Car Park $20m Domestic $70m Terminal $70m Runway Extension $300m
Slide 87: Domestic Terminal Expansion
DOMESTIC TERMINAL For personal use only EXPANSION Complete Mid 2016 6000sqm extra floor space New Regional South Pier Apron development + push back propellers Single AVSEC security point Koru Lounge Airside New Regional Koru Lounge 400sqm 1st Stage of new Retail Expansion $70M
Slide 88: For personal use only
For personal use only
Slide 89: Main Terminal Retail
MAIN TERMINAL RETAIL For personal use only Terminal area opened up Optimised for retail, food and beverage Best of Wellington and the World New retail will drive up income per passenger with improved mix and high yield offerings $5M
Slide 90: Multi-Level Transport Hub
MULTI-LEVEL Transport revenue worth $22M per annum TRANSPORT HUB For personal use only Car parks from 2000 to 3500 needed by 2030. Stage 1 of 3, open November 2017 8 levels providing 1000 car parks Undercover bus stops & high vehicle access Reworks of ramps and circuit roads Multiple product offerin
Slide 91: Hotel
HOTEL For personal use only 4 Star, 134 beds Restaurant, bar, gym, and conference centre Since original business case: • Occupancy rate up 3% across NZ • Average daily rate up 8.6% • Wellington international visitor nights up • 40% to 4M in 2015 Strategic Decision • Servicing early & late flights •
Slide 92: Airport Hotel Integrated Sales Model
Airport Hotel Integrated Sales Model For personal use only Customer Cross-Sell/ Products Origination Up-Sell Parking Air Data Valet / Premium Parking Travellers Conference Warehouse Centre Hotel Rooms + Parking Status Quo Retail & Duty Hotel Room + Free Hotel Restaurant+ Parking Greater Wellington b
Slide 93: International Arrivals Expansion
INTERNATIONAL ARRIVALS For personal use only EXPANSION Design underway Consultation with airlines commencing Construction tender late 2016 $60M
Slide 94: Delivery Timeline
DELIVERY TIMELINE For personal use only 2015 2016 2017 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Terminal Extension Main Terminal Optimisation Multi Level Car Park Hotel International Terminal Runway