Challenger Limited · ASX:CGF
Challenger — Challenger Infrastructure Fund — FY2010 Earnings Presentation
28 slides from Challenger's earnings presentation, Aug 19, 2010
Slide 1: Challenger Infrastructure Fund Full Year Results Presentation
Challenger Infrastructure Fund Full Year Results Presentation – August 2010 Chief Executive – Emil Pahljina 19 August 2010
Slide 2: Important notice
Important notice Information contained in this publication is current as at 19 August 2010 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 Inves
Slide 3: CIF - FY10 Operating summary
CIF - FY10 Operating summary Solid EBITDA performance from both LBC and Inexus Resilient Proven earnings resilience in difficult markets operating Confirmation of final year distribution of 7cpu to be paid 30 August performance 2010 bringing FY10 distribution to 14cpu 2010, Guidance for 1H11
Slide 4: CIF - Financial performance
CIF - Financial performance $A millions – Continuingg Business1 FY10 FY09 %M Mvtt Statutory Results Proportionate EBITDA2 $156.5 $149.9 4% Inexus EBITDA3 (100%) $78 7 $78.7 $71 4 $71.4 10% LBC EBITDA (100%) $138.3 $139.7 (1)% NPAT attributable to security holders ($210.7) ($139.8) (51)% Operating ca
Slide 5: CIF - Net Asset Value of $2.19 per unit
CIF - Net Asset Value of $2 $2.19 19 per unit CIF NAV CIF NAV per unit adversely 2.50 0.23 2.50 0.01 0.08 0.07 0.06 2.19 2.00 impacted by Inexus valuation (23 cents) and foreign exchange $ 1.50 (8 cents) 1.00 Inexus equity valuation reduced by 0.50 23.8% reflecting: 0.00 More conservative view
Slide 6: CIF - Financial flexibility
CIF - Financial flexibility Post sale of 1H11 Southern Distribution Water & Guidance repayment of of 7 cpu Identified 300 RPS accretive growth capex over 3 years 8 19 Flexibility for 230 219 24 capital management 200 22 initiatives $m 80 100 93 0 Cash Balance Interest & Other On-market buyback Cash
Slide 7: CIF - De-leveraging and de-risking
CIF - De-leveraging De leveraging and de de-risking risking CIF has significantly reduced Debt Reduction leverage through selective asset sales at or above Net Asset Proportionate net debt / proportionaate EBITDA (multiple x 4 000 4,000 12 Value net debt (A$m) 3,000 9 Proportionate net debt to E
Slide 8: Inexus
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Slide 9: Inexus – Financial performance
Inexus – Financial performance Significant improvement in EBITDA margin driven by continued rollout of existing order book £ millions illi FY10 FY09 %M Mvt T Trend d Revenue £60.3 £57.1 6% K U d l i Underlying EBITDA £43 3 £43.3 £39 1 £39.1 11% K Less: Restructuring costs £0.5 £2.7 (81)% L Start-up
Slide 10: Inexus – Operating performance FY10
Inexus – Operating performance FY10 EBITDA 70 74% Summary 60 72% Solid performance underpinned by security TDA margin Underlying EBIITDA (£m) 50 70% of existing connections with revenue streams 40 68% independent of the economic cycle Underlying EBIT 30 66% Revenues increased £3.2m on pcp from r
Slide 11: Inexus - Ongoing capital management
Inexus - Ongoing capital management Inexus completed an extension of its loan facilities in December 2009 No near term refinancing requirement Management are currently assessing capital structure options ahead of August 2012 maturity date Preferred option will depend on the respective appeti
Slide 12: Inexus – UK housing market
Inexus – UK housing market Market Environment For F the h 12 months h to 31 M March h 2009 new housing starts in the UK reduced 47.5% on pcp Provisional data for housing starts Housing Starts (UK excl. excl Northern Ireland) suggests modest improvement for 2010 Housing starts (UK excl. Northern
Slide 13: Inexus – Sales
Inexus – Sales Utility Asset Equivalents (UAE) Conversion of FY2010 Sales to UAEs Inexus has adopted the concept of UAE to Utility FY10 Sales compare the different types of sales Gas 5,146 The UAE describes the average g expected p Electricity 5,336 income potential of each utility as a Water 2,
Slide 14: Inexus Strategic drivers
Inexus Strategic drivers Inexus- 1 Anticipated reduced demand for single gas and electricity 1. sales: Reduced activity in UK housing District Heating is expected to replace gas in new larger housing developments in the medium term 2. Emissions targets for new developments: Building regulation
Slide 15: Inexus – Strategic outlook
Inexus – Strategic outlook 1. Maximise shareholder value from existing connections and the rollout of the order book: Expense management Ongoing review of order book 2. Materially improve value proposition to developers: Investment in broadening gpproduct offering g to incorporate p fibre, wat
Slide 16: LBC
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Slide 17: LBC – Financial performance
LBC – Financial performance Underlying EBITDA was down 2% representing a solid performance, in a challenging macro economici environment i t $US millions FY10 FY09 % Mvt Trend Revenue $237.7 $244.1 (3%) L Underlying EBITDA $94.3 $96.4 (2%) L Add back: Provisions release and other costs $22.6 $4.8 La
Slide 18: LBC – Operating performance FY10
LBC – Operating performance FY10 EBITDA Summary 300 42% Solid performance in light of significant reduction in chemical trade in both Europe 250 41% (14%) and the US (16%) on pcp Unnderlying EBITDA marggin m) Underlying EBITDA ($m 200 Revenues are down 3% due to lower service 150 40% revenues an
Slide 19: LBC – Strategic drivers
LBC – Strategic drivers 1. Expect gradual recovery in trade for Gulf Coast US Chemical Trade in Imports Finished p &Petroleum Exports p (€ bn))1 ( Products certain chemicals1 700 600 2. Strong demand for storage of transport 500 fuels and base oils in recognised hubs Million Barrels 400 particularly
Slide 20: LBC - Strategic hubs
LBC - Strategic hubs Baton Rouge, On the Rotterdam, 50% Mississippi and part off Europe’s E ’ of the US Gulf Coast petrochemical market. Extensive activity, with an unutilised land bank unutilised land bank H t Houston, l largestt asset with significant unutilised land bank. #1 petrochemical Antwerp
Slide 21: LBC - Expansion track record
LBC - Expansion track record Since acquisition LBC completed over 20 expansion projects at total capital cost of US $184 $184.8m 8m which generated incremental revenue of US $44 0m1 $44.0m USD Total US Europe Additional capacity (m3) 583,000 359,000 224,000 Growth CAPEX $184.8m $92.8m $92.0m Increme
Slide 22: LBC - Strategic outlook
LBC - Strategic outlook 1 LBC will migrate to a more balanced product range 1. of chemicals, base oils and refined petroleum products consistent with market demand 2. LBC have identified 26 expansion projects, of which 14 have been prioritised 3. LBC are seeking g US$100 million of additional capita
Slide 23: Outlook
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Slide 24: CIF – Outlook
CIF – Outlook Continued strong performance in FY11 expected Maximise unit holder value from existing connections and Inexus management of the order book Maximise first mover advantage in multi utility strategy Financial Fi i l performance f for f FY11 is i expected t d to t be b in i line li
Slide 25: Additional information
Additional information
Slide 26: CIF Statutory results
CIF Statutory results $A millions FY10 FY09 % Mvt EBITDA before realised & unrealised items 203.1 254.3 (20)% Depreciation and amortisation (61 5) (61.5) (68 3) (68.3) 10% Financing costs (119.8) (145.9) 18% Realised and unrealised gains/(losses) (184.7) (117.1) (58)% Impairment change (60.4) (102.5
Slide 27: Inexus - Comparative capabilities
Inexus - Comparative capabilities District Gas Water Electricity Fibre Heating Inexus 9 9 9 9 9 IEG 9 9 Fulcrum 9 9 ESP 9 9 Cofely 9 Scottish and Southern Energy 9 9 9 9 BT 9 Virgin Media 9 EON 9 9 DALKIA 9 9 9 27
Slide 28: es A
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Challenger Infrastructure Fund — FY2010 Earnings Presentation on 6ix