HICL Infrastructure PLC · LSE:HICL
HICL Infrastructure — Investor Presentation (March 2016)
37 slides from HICL Infrastructure's investor presentation, March 2016
Slide 1: HICL Infrastructure Company Limited Introductory Presentation Spring 2016
HICL Infrastructure Company Limited Introductory Presentation – Overview of HICL, the Investment Adviser and Recent Performance Spring 2016 Delivering Real Value. hicl.com
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: This document is an advertisement and is not a prospectus. Any decision to purchase shares in HICL Infrastructure Company Limited (the "Comp
Slide 3: Table of Contents
Table of Contents Investment Adviser - Overview Portfolio Valuation 1. Overview of InfraRed Capital Partners Limited…………….……………… 5 1. Cashflow Profile………………………………………………………….…. 27 2. Team Skills and Experience..…………………………………………..…… 6 2. Analysis of Change in Directors’ Valuation…………………….………… 28 3. Ke
Slide 4: Investment Adviser – Overview
Investment Adviser – - Overview Overview AssetRoad A249 name, location
Slide 5: Overview of InfraRed Capital Partners Limited
Overview of InfraRed Capital Partners Limited InfraRed is the Investment Adviser and Operator ▲ InfraRed Capital Partners Limited is the investment adviser to HICL and is authorised and regulated by the Financial Conduct Authority ▲ Strong 15+ year track record raising and managing 15 value-add infr
Slide 6: InfraRed Capital Partners – Team Skills and Experience
InfraRed Capital Partners – Team Skills and Experience Depth and breadth of skills, proven track record, proactive value management ▲ Experienced infrastructure professionals with proven track record ▲ Well established and respected team • Additional resources added recently • Part of a wider infras
Slide 7: Infrastructure as an Asset Class
Infrastructure as an Asset Class Southmead Hospital
Slide 8: Infrastructure as an Investment Asset Class
Infrastructure as an Investment Asset Class Segmented by revenue risk Low Revenue risk High Risk class Availability Regulatory Demand based Market Investment risks Operating costs Regulatory risk Volume risk (high) Competitive risks are incremental Delivery (e.g. service Volume risk (low)
Slide 9: Typical Infrastructure Project Structure
Typical Infrastructure Project Structure Client Project agreement HICL Infrastructure Company Limited Project Construction Shareholder Financing Company Bonds/Loans Partner agreement agreement (“SPV”) Operational Partner Construction Operating MSA contract sub-contract sub-contract Maintenance Proje
Slide 10: Illustrative Investment Cashflow Profile – Social Infrastructure
Illustrative Investment Cashflow Profile over a Project’s Life Example: Social infrastructure return derived from an ‘availability’ revenue stream Typical Social Infrastructure Investment Cashflow Profile Bidding Construction Operation & Maintenance Phase Phase Phase Value Illustrative Chart Typical
Slide 11: Illustrative Investment Cashflow Profile – Toll Road
Illustrative Investment Cashflow Profile over a Project’s Life Example: Toll road return derived from a ‘demand’ revenue stream Typical Toll Road Investment Cashflow Profile Bidding Construction Ramp- Operation & Maintenance (Steady State) Phase Phase Up Value Illustrative Chart Typical timing for i
Slide 12: Valuation Methodology
Valuation Methodology Determining the net asset value of the portfolio and the Group (illustrative example) £100m Concession Contract Revenue + Deposit Interest Key Variables/Assumptions £80m Forecast £60m Long-term Inflation Rate Project Deposit Interest Rate £40m Inflows £20m • Whole-of-life conce
Slide 13: HICL – Overview
HICL – Overview Health & Safety Executive Merseyside Headquarters
Slide 14: Introduction to HICL
Introduction to HICL A leading UK listed infrastructure investment company Structure ▲ Closed-end investment company registered in Guernsey with a ten year trading history (IPO in March 2006) ▲ Premium listing on the London Stock Exchange ▲ Acquires and manages equity stakes in primarily operational
Slide 15: Market Performance – IPO to December 2015
Market Performance – IPO to 31 December 2015 Total shareholder return1 since launch in March 2006 of 9.6% p.a. (NAV + dividends basis) / 10.4% (share price + dividends basis) High dividend yield relative to the market and Gilts Low volatility relative to the market, utilities and Gilts Historical Vo
Slide 16: Governance
Governance Independent Board of Non-Executive Directors with InfraRed Capital Partners acting as Investment Adviser Independent board of non-executive Directors ▲ Approves and monitors adherence to strategy ▲ Fulfils Company’s AIFM responsibilities under the European Commission’s Alternative Investm
Slide 17: Board of Directors
Board of Directors Non-executive Directors with a broad range of relevant experience and qualifications Ian Russell (CBE), Chairman Frank Nelson, SID Sarah Evans, Director Susie Farnon, Director Ian, HICL’s Chairman, is Frank, a UK resident, is a Sarah, a Guernsey resident, is Sally-Ann (known as Su
Slide 18: Capital Raising Approach and History
Capital Raising Approach and History HICL’s innovative financing approach has several benefits for shareholders Approach and History Overview ▲ HICL has raised c.£1.61bn of equity from launch in March 2006 to 31 December 2015 - comprising £250m at IPO and £1.36bn through subsequent share issues1 ▲ A
Slide 19: Current Portfolio – Sector Breakdown
Current Portfolio – Sector Breakdown 102 Investments as at 31 December 2015, across five sectors Fire, Law Education & Order Health Accommod’n Transport Barking & Dagenham Allenby & Connaught Boldon School Bradford Schools 1 Addiewell Prison Barnet Hospital Birmingham Hospitals A249 Road Schools MOD
Slide 20: Current Portfolio – Geography Breakdown
Current Portfolio – Geography Breakdown 102 Investments as at 31 December 2015, across four geographies UK & Ireland Continental N. America Europe 89% 1% 6% Australia / NZ Key: Accommodation Transport 4% Education Health Fire, Law & Order Source: InfraRed Percentages are by value, based on the lates
Slide 21: Current Portfolio – Diversification
Current Portfolio – Diversification 102 investments as at 31 December 2015, diversified by size and sector Size Breakdown Sector Breakdown Pinderfields & Fire, Law & Pontefract Order Hospitals 7% Home Southmead Office Hospital Transport 12% Queen Alexandra Hospital Health Dutch High 41% Speed Rail L
Slide 22: Current Portfolio – Key Attributes
Current Portfolio – Key Attributes Evolution of the Group’s portfolio over the last 6.5 years (to 30 September 2015) Geographic split Good sector spread 100% 100% 90% 95% 80% 70% 90% 60% 50% 85% 40% 30% 80% 20% 10% 75% 0% FYE 2010 FYE 2011 FYE 2012 FYE 2013 FYE 2014 FYE 2015 HY 2016 FYE 2010 FYE 201
Slide 23: Asset, Portfolio and Contract Management
Asset, Portfolio and Contract Management An overview Approach and background ▲ Sound overall portfolio performance – a number of small operational matters being worked through as part of normal day- to-day business ▲ Investment Adviser has further bolstered its asset management resource ▲ Active and
Slide 24: Portfolio Overview - Contractor Counterparty Exposure
Portfolio Overview - Contractor Counterparty Exposure Diversified spread of quality supply chain providers Approach and background ▲ Counterparties continue to perform Carillion Balance 21% ▲ Diversity of contractors ensures no over-reliance 24% on any single entity ▲ Quarterly reviews by Investment
Slide 25: Principle Risks and Uncertainties
Principle Risks and Uncertainties An overview of the key current risks and uncertainties facing the Company1 Project–specific Issues ▲ Deductions for unavailability or poor performance arising from construction defects or operational issues ▲ Financial impact borne almost exclusively by supply chain
Slide 26: Portfolio Valuation
Portfolio Valuation M80 Motorway
Slide 27: Portfolio Overview - Cashflow Profile
Portfolio Overview - Cashflow Profile1 Cashflows and valuation from the portfolio of 102 investments as at 30 September 2015 Long-term income phase Capital repayment phase Annual Project distributions £350m £2,100m £300m £1,800m Portfolio value £250m £1,500m £200m £1,200m £150m £900m £100m £600m £50
Slide 28: Analysis of Change in Directors’ Valuation
Analysis of Change in Directors’ Valuation Movement in the six month period from FYE 31 March 2015 to 30 September 2015 £1,900m 22.0 (6.2) (68.3) 68.6 £1,800m 132.7 £1,700m (8.9)1 £1,600m 1,872.12 1,787.7 1,732.2 £1,500m £1,400m 3.8% 1.2% (0.3%) £1,300m 31 March Divestments Investments Cash Rebased
Slide 29: Key Valuation Assumptions and Sensitivities
Key Valuation Assumptions and Sensitivities Key assumptions as at 30 September 2015, based on the Investment Adviser’s determination and third party advice 30 September 31 March 2015 Sensitivity to key economic assumptions 2015 Discount Weighted 7.7% 7.9% Discount Rate Rate Average +/- 0.5% Inflatio
Slide 30: Discount Rate Analysis
Discount Rate Analysis Discount Rate as at 30 September 2015 vs prior periods Approach and background Appropriate long-dated Risk Total Discount Total Total government Premium Rate1 31 Mar 30 Sep ▲ Discount rates for projects range between bond yield 30 Sep 2015 2015 2014 7.3% and 10.4% (Mar 2015: 7
Slide 31: Performance and Market Update
Performance and Market Update Oldham Library
Slide 32: Financial Performance – Six Months to September 2015
Financial Performance – Six Months to 30 September 2015 Sound operating performance; distribution target achieved ▲ Overall operational performance sound, generating strong investment cashflows - total income, including gains from forex hedging, ahead of internal forecasts ▲ Second quarterly interim
Slide 33: Market Update
Market Update Demand ▲ Continued strong demand for infrastructure investments globally ▲ New and increased allocations being made by investors Supply – UK ▲ Reduced primary procurement impacting secondary deal flow ▲ Plans for new infrastructure investment signalled at Conservative Party’s Annual Co
Slide 34: Supply, Pipeline & Strategic Review
Supply, Pipeline & Strategic Review Sourcing ▲ Using network of industry relationships ▲ Competing in auction processes to see market pricing ▲ Increasing stakes in existing investments - good source of supply for the Group Pipeline ▲ Assessing a pipeline across sectors, geographies and stages of de
Slide 35: HICL Group Strategy
HICL Group Strategy Manage existing portfolio ▲ Active management: Manage the operational and financial performance of the portfolio to deliver the expected return ▲ Value enhancement: Engage with public sector clients to generate cost savings and improve the overall client experience, facilitate de
Slide 36: Performance Summary
Performance Summary Group Performance Annual Dividends since IPO ▲ Quality, well-diversified portfolio 8.0p Anticipated remaining interim 7.5p dividends for the current financial year1 Pence per Share ▲ Overall asset performance sound, generating strong investment cashflows 7.0p ▲ Value growth throu
Slide 37: Key Performance Indicators (“KPIs”)
Key Performance Indicators (“KPIs”) KPI 30 September 2015 30 September 2014 Target To provide a predictable and Dividends declared in the half year 3.73p per share 3.62p per share sustainable dividend. On target for aggregate dividend of 7.45p per share Total return in half year 4.5% 9.0% NAV growth
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