HICL Infrastructure PLC · LSE:HICL
HICL Infrastructure — FY2022 Earnings Presentation
43 slides from HICL Infrastructure's earnings presentation, May 25, 2022
Slide 1: Annual Results Presentation: Year to 31 March 2022
HICL Infrastructure PLC Annual Results Presentation: Year to 31 March 2022 25 May 2022 hicl.com |
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: Agenda
Agenda Section Page Highlights and Investment Proposition 4 Financial Performance 9 Portfolio Performance 17 Investment Activity and Market Outlook 23 Concluding Remarks 28 Appendices 30 hicl.com | 3
Slide 4: Highlights and Investment Proposition
Highlights and Investment Proposition hicl.com |
Slide 5: Results Overview
Results Overview Strong financial and operational performance ▲ Strong 10.8p uplift in NAV per share to 163.1p driven by HICL’s inflation correlation and InfraRed’s active management ▲ Accretive investment activity and actively recycled capital delivered shareholder value ▲ 20231 dividend guidance r
Slide 6: Performance Highlights
Performance Highlights Strong performance for year to 31 March 2022 163.1p 12.8% 0.32 NAV1 per share Total Shareholder Return2 Beta against FTSE All-Share3 Up 10.8p (7.1%) March 2021: 5.5% March 2021: 0.34 March 2021: 152.3p 9.0% since IPO 1.06% 8.25p 1.05x Ongoing charges Dividend per share Dividen
Slide 7: Compelling Investment Proposition
Compelling Investment Proposition Long-term, sustainable income from a diversified portfolio of investments in core infrastructure >100 assets Specialist infrastructure investment manager Diversification Largest asset 9%1 $12bn+ 25+ 20m+ people Sustainability Equity under Years of investment access
Slide 8: HICL's Vision
HICL’s Vision Enriching lives through infrastructure 56% of portfolio Developing strong social foundations 32% of portfolio connecting communities 12% of portfolio supporting sustainable modern economies By value using Directors’ Valuation of £3,311.0m as at 31 March 2022 less the expected proceeds
Slide 9: Financial Performance
Financial Performance hicl.com |
Slide 10: NAV Progression
NAV Progression Year ended 31 March 2022 180.0 p Value Enhancement ▲6.8 ▲0.2 ▼(1.9) ▼(8.2) Accretive Investment 170.0 p ▲4.1 160.0 p ▲9.8 150.0 p Value Preservation 166.2 173.0 171.3 163.1 163.1 140.0 p 152.3 130.0 p 120.0 p 31 March 2021 Performance 1 Change in discount Forex gain Expenses Dividend
Slide 11: Financial Performance
Financial Performance Year ended 31 March 2022 Income Statement FY2022 FY2021 Investment Basis1 £m £m Total income 405.8 188.7 Fund expenses & finance costs (37.4) (36.6) Tax 0.3 (0.2) Total return 368.7 151.9 Earnings per share 19.0p 7.9p Ongoing charges2 1.06% 1.07% Balance Sheet 31 March 2022 3
Slide 12: Portfolio Outperformance
Portfolio Outperformance Directors’ Valuation1 of £3,311.0m as at 31 March 2022 £3,400m ▲72.3 ▲7.4 ▼(1.3) 3,311.0 ▲59.8 £3,200m ▲269.8 ▲110.4 ▼(18.8) ▼(200.5) 3,011.9 £3,000m 2,903.0 £2,800m 9.6% 2.1% 2.9% 0.3% £2,600m 3,216.6 Income Statement Revenue 2,938.1 £2,400m 2,807.3 Portfolio return, ahead
Slide 13: Discount Rate Analysis
Discount Rate Analysis Weighted average discount rate of 6.6% at 31 March 20221 (31 March 2021: 6.8%) ▲ Weighted average discount rate unchanged since the September 2021 valuation ▲ No observable impact on asset pricing from higher risk-free rates 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Mar Sep Mar Sep Ma
Slide 14: Sensitivities
Sensitivities Key macroeconomic sensitivities in the valuation Discount Rate +/- 0.5% (8.1) 9.0 Inflation -/+ 0.5% (7.6) 8.5 Tax Rate +/- 5% (5.3) 5.4 2 GDP -/+ 0.5% (5.4) 5.3 Lifecycle +/- 5% (2.1) 2.1 Interest Rate -/+ 0.5% (0.8) 1.0 Foreign Exchange Rates3-/+ 5% (1.0) 1.0 -10p -8p -6p -4p -2p 0p
Slide 15: Inflation Sensitivity
Inflation Sensitivity Inflation-correlated returns for long-term investors ▲ Impact of a scenario where inflation is 3% above HICL’s forecast assumptions for the next one, three and five years NAV impact in p/share Annual cashflow impact 18.0 400,000 16.1 16.0 350,000 14.0 300,000 12.0 250,000 10.2
Slide 16: Cash Flow Profile
Cash Flow Profile Sustainable long-term cash flows and a stable portfolio valuation in the medium term 350,000 4,000 3,500 300,000 The valuation of the current 3,000 Annual project distributions (£'000's) 250,000 portfolio (RHS) at any time is a function of the present value of the expected future c
Slide 17: Portfolio Performance
Portfolio Performance hicl.com |
Slide 18: Diversified Portfolio
Diversified Portfolio Mix of sector exposure, ten largest assets account for c. 48% of the portfolio1 Accommodation Affinity Water 9% >100 Northwest Parkway Transport Education Assets in the 7% portfolio 10% A63 Motorway 32% 14% 7% 48% Top 10 assets Electricity, Gas represent less Southmead 12% & Wa
Slide 19: Portfolio Performance - PPP
Portfolio Performance - PPP PPP projects represent 66% of the portfolio, by value, at 31 March 2022 ▲ PPPs performed well due to availability-based revenues, which tend to be linked to inflation ▲ Continued to proactively manage asset condition, with key milestones achieved at Southmead Hospital and
Slide 20: Portfolio Performance - Demand
Portfolio Performance - Demand Demand-based assets represent 22% of the portfolio, by value, at 31 March 2022 ▲ Northwest Parkway (USA), A63 Motorway (France) and High Speed 1 (UK), continued to recover from the effects of Covid-19 ▲ Traffic on A63 Motorway returned to pre-pandemic levels ▲ Northwes
Slide 21: Portfolio Performance – Regulated
Portfolio Performance – Regulated Affinity Water and four OFTOs1 represent 12% of the portfolio, by value, at 31 March 2022 ▲ The OFTO investments continued to perform strongly, with availability over the year of 100% ▲ Re-entry into partnership with Diamond Transmission Corporation to bid for the H
Slide 22: Sustainable Thinking
Sustainable Thinking HICL has a role in society that extends beyond its shareholders InfraRed commits to Intention to report Enhanced Net Zero Asset in line with investment process Managers Initiative Article 8 of SFDR1 and exclusions list InfraRed maintains Updated sustainability Focus on driving s
Slide 23: Investment Activity and Market Outlook
Investment Activity and Market Outlook hicl.com |
Slide 24: HICL's Core Infrastructure Focus
HICL’s Core Infrastructure Focus ▲ Core infrastructure is a distinct market segment at the lower end of the risk spectrum. By its nature it is located in the heart of communities, underpins economic activity and/or important social function, and comprises long-life, capital intensive assets Cash Flo
Slide 25: Investment Activity
Investment Activity Market coverage filtered by focused acquisition strategy and investment discipline EVALUATION 32 New deals reviewed in the year DUE DILIGENCE 16 Transactions subject to detailed due diligence in the period TRANSACTIONS 8 Transactions completed for HICL and 11 live1 opportunities
Slide 26: Case study - ADTIM
Case study - ADTIM High quality fibre broadband asset in attractive market framework ▲ Controlling interest acquired1, representing c. 2% of Directors’ ADTIM: Key Facts valuation at 31 March 2022 ▲ Leverages InfraRed’s experience in digital infrastructure and 2 concession contracts in Auvergne-Rhône
Slide 27: Market and Outlook
Market and Outlook ▲ Healthy pipeline covering the breadth of HICL’s acquisition focus: ‒ Attractive pipeline of core infrastructure assets spanning UK, Europe, North America, Australia and New Zealand (ANZ) ‒ c. £510m1 of equity at exclusivity, preferred bidder, or shortlisted stage ‒ Two originati
Slide 28: Concluding Remarks
Concluding Remarks hicl.com |
Slide 29: Concluding Remarks
Concluding Remarks Delivering Real Value. ▲ Strong financial and operational result: ‒ 10.8p increase in NAV per share to 163.1p ‒ 12.8% total shareholder return ▲ Improved cash cover and announced an 8.25p per share dividend for 20241, the highest cash dividend in HICL’s peer group ▲ Well-developed
Slide 30: Appendix I: The Investment Manager
Appendix I The Investment Manager hicl.com |
Slide 31: Overview of InfraRed Capital Partners Ltd
Overview of InfraRed Capital Partners Ltd (“InfraRed”) InfraRed is the Investment Manager and Operator Strong, 25+ year track record of launching 19 infrastructure and real estate funds (including HICL and TRIG) Currently over US$12bn of equity under management1 London based, with offices in New Yor
Slide 32: InfraRed – Infrastructure Team Skills and Experience
InfraRed – Infrastructure Team Skills and Experience ▲ Proven track record in target markets of UK, Europe, North America, Latin America and Australia / New Zealand ▲ Focused teams including: − Origination and Execution Team responsible for sourcing, diligencing and acquiring new investment opportun
Slide 33: Appendix II: Company Information
Appendix II Company Information hicl.com |
Slide 34: Board of Directors I
Board of Directors I Non-executive Directors with a broad range of relevant experience and qualifications Ian Russell, CBE Frank Nelson Rita Akushie Mike Bane Chairman Senior Independent Director Director Director Ian, HICL’s Chairman, is resident in the Frank, a UK resident, is a qualified Rita Aku
Slide 35: Board of Directors II
Board of Directors II Non-executive Directors with a broad range of relevant experience and qualifications Frances Davies Susie Farnon Simon Holden Kenneth D. Reid Director Audit Committee Chair Risk Committee Chair Director Frances, a UK resident, has more than Sally-Ann (known as Susie), a Guernse
Slide 36: Investment Manager
Investment Manager Senior InfraRed team, experienced in making and managing infrastructure investments Edward Hunt Helen Price Head of Core Income Funds, InfraRed CFO, Core Income Funds, InfraRed Edward leads the InfraRed team that Helen is responsible for managing the financial manages HICL activit
Slide 37: Appendix III: The Investment Portfolio
Appendix III The Investment Portfolio hicl.com |
Slide 38: HICL's Top Assets I
HICL’s Top 10 Assets1 I Sector: Electricity, Gas & Water Affinity Water Location: UK % of portfolio: 9% (March 2021: 8%) Affinity Water Limited is the largest water-only HICL holding: 33.2% 1 supplier in the UK by revenue and population served covering an area of 4,515 square kilometres. Concession
Slide 39: HICL's Top Assets II
HICL’s Top 10 Assets II Sector: Accommodation Royal School of Military Location: UK Engineering % of portfolio: 4% (March 2021: 4%) The PPP project covers 32 new and 21 existing HICL holding: 100% 6 buildings, and five training areas on behalf of the UK Ministry of Defence. Concession length: 30 yea
Slide 40: Portfolio Diversification
Portfolio Diversification HICL’s Portfolio, as at 31 March 20221 MARKET SEGMENT GEOGRAPHIC LOCATION ▲ PPP Projects 66% ▲ UK 73% ▲ Demand-based Assets 22% ▲ Europe (exc UK) 18% ▲ Regulated Assets 12% ▲ North America 9% INVESTMENT STATUS SECTOR ▲ Fully operational 97% ▲ Accommodation 10% ▲ Constructio
Slide 41: Portfolio – Key Attributes
Portfolio – Key Attributes Evolution of the Group’s portfolio Geographically Diverse Portfolio Diverse Sector Spread 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2012 2013 2014 2015 2016 2017 2018 2019 2020 20
Slide 42: Key Valuation Assumptions
Key Valuation Assumptions Movement 31 March 2022 31 March 2021 Discount Rate Weighted Average 6.6% 6.8% UK (RPI2 & RPIx2) 6% to March 2023, 3.5% to March 2024, 2.75% to 2.75% to 2030, 2.0% thereafter 2030, 2% thereafter CPIH3 5.25% to March 2023, 2.75% to March 2024 2.0% Inflation1 2% thereafter (p.
Slide 43: Summary Cash Flow Statement
Summary Cash Flow Statement Figures presented on an Investment Basis1 FY2022 FY2021 Cash Flow £m £m Opening net cash 4.7 26.6 Net cash flow before capital movements 163.0 142.9 Investments (87.5) (162.5) Disposals 18.5 27.5 Equity raised (net of costs) - 118.8 Net cashflow from derivatives and debt