HICL Infrastructure PLC · LSE:HICL
HICL Infrastructure — Investor Presentation (October 2015)
29 slides from HICL Infrastructure's investor presentation, October 2015
Slide 1: HICL Infrastructure Company Ltd
HICL Infrastructure Company Ltd Overview of the Company, its Investment Adviser and performance Summer 2015
Slide 2: Important information
Important information 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
Slide 3: Overview of InfraRed Capital Partners Ltd
Overview of InfraRed Capital Partners Ltd InfraRed is the Investment Adviser and Operator InfraRed is the investment adviser to HICL and is authorised and regulated by the Financial Conduct Authority Strong, 15+ year track record in raising and managing 15 value-add infrastructure and real estate fu
Slide 4: InfraRed – Team Skills and Experience
InfraRed – Team Skills and Experience Experienced infrastructure professionals with Proactive value management proven track record Wide range of skills, experience and Well established and respected team knowledge of – Recent additions to portfolio management, asset – Assets in the portfolio managem
Slide 5: The Infrastructure Asset Class
The Infrastructure Asset Class 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 performance) Volume risk (low) Known pricing risk Example
Slide 6: 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 7: Investment Cash Flow Profile over a Project's Life
Investment Cash Flow Profile over a Project's Life Operational infrastructure projects benefit from long-term, predictable cash flows Typical Social Infrastructure Project Cash Flow Profile Bidding Construction Operation & Maintenance Phase Phase Phase 12 1.2 Illustrative chart Cash flows 10 Value 1
Slide 8: Valuation - Methodology
Valuation - Methodology Determining the net asset value of the portfolio and the Group (illustrative example) Key Variables/Assumptions £100m Concession Contract Revenue + Deposit Interest Long-term Inflation Rate £80m Forecast £60m Deposit Interest Rate Project £40m • Whole-of-life concession reven
Slide 9: Introduction to HICL
Introduction to HICL A leading UK listed infrastructure investment company Structure ▲ Closed-end investment company registered in Guernsey with over nine years of trading history (IPO in March 2006) ▲ Premium listing on the London Stock Exchange ▲ Acquires and manages equity stakes in primarily ope
Slide 10: Market Performance – IPO to March 2015
Market Performance – IPO to 31 March 2015 Total shareholder return1 in year to 31 March 2015 was 22.5% and 11.1% p.a. since launch in March 2006 High dividend yield relative to the market and Gilts Low volatility relative to the market, utilities and Gilts Historical Volatility Historic Yield Low co
Slide 11: Governance
Governance Independent board of seven non-executive Directors – Approves and monitors adherence to strategy – Acts as AIFM under the European Commission’s Alternative Investment Fund Managers Directive – Determines risk appetite through formal Risk Committee – Monitors compliance with, and implement
Slide 12: HICL Board
HICL Board The Board comprises seven independent, non-executive Directors Graham Picken, Chairman John Hallam, Director Sarah Evans, Director Susie Farnon, Director Graham, a UK resident, is an John, a Guernsey resident, is Sarah, a Guernsey resident, is a Sally-Ann (known as Susie), experienced ban
Slide 13: Capital Raising Approach and History
Capital Raising Approach and History HICL’s innovative financing approach has several benefits for shareholders ▲ HICL has raised c.£1.55bn of equity from launch in March 2006 to 31 July 2015 - £250m at IPO and £1.3bn through subsequent share issues ▲ Acquisitions are normally debt-funded (using a G
Slide 14: Current Portfolio
Current Portfolio Portfolio of 101 investments as at 31 July 2015 Fire, Law Education Health Accommod’n Transport & Order Barking & Dagenham Allenby & Connaught Boldon School Bradford Schools 1 Addiewell Prison Barnet Hospital Birmingham Hospitals A249 Road Schools MOD Accommodation Birmingham & Sol
Slide 15: Portfolio Overview - Diversification
Portfolio Overview - Diversification 101 investments diversified by geography as at 31 July 2015 UK & Ireland Continental Europe Canada 89% 6% 1% Key: Accommodation Transport Education Australia Health 4% Fire, Law & Order www.hicl.com 15
Slide 16: Portfolio Overview - Diversification
Portfolio Overview - Diversification 101 investments diversified by size and sector as at 31 July 2015 Size Breakdown Sector Breakdown Pinderfields & Pontefract Fire, Law & Order Hospitals 6% 6% Home Office Southmead 6% Hospital Transport 5% 12% Queen Alexandra Hospital Health 4% Dutch High 42% Spee
Slide 17: Portfolio Overview – Key Attributes
Portfolio Overview – Key Attributes Evolution of the Group’s portfolio – last 6 years to 31 July 20151 UK-focused portfolio Good sector spread 100% 1% 100% 5% 4% 7% 6% 3% 2% 2% 9% 8% 4% 90% 10% 9% 4% 18% 95% 80% 17% 16% 21% 6% 21% 8% 15% 70% 26% 10% 6% 22% 90% 60% 20% 24% 22% 12% 15% 50% 18% 12% 17%
Slide 18: Portfolio - Cashflow Profile
Portfolio - Cashflow Profile1 Long-term income phase Capital repayment phase £400m £2,000m £350m The valuation of the portfolio at any time is a function of £1,750m Annual Project distributions the present value of the expected future cash flows2,3 £300m £1,500m Portfolio value 2039 has a reduced di
Slide 19: Asset, Portfolio and Contract Management - Overview
Asset, Portfolio and Contract Management - Overview Portfolio performing well with no material issues – number of small operational matters being worked through At 31 July 2015, five projects were under construction, representing <2% by value: – RD901 road in France : financial close January 2014 wi
Slide 20: Portfolio Overview - Contractor Counterparty Exposure
Portfolio Overview - Contractor Counterparty Exposure1 Diversified spread of quality supply chain providers Counterparties continue to perform Carillion Other 17% Contractors, Diversity of contractors ensures no over-reliance 24% on any single entity Quarterly reviews by Investment Adviser Vinci Eng
Slide 21: Financial Review - Analysis of Change in Directors’ Valuation (2014-15)
Financial Review - Analysis of Change in Directors’ Valuation (2014-15) Return driven by portfolio performance and accretive acquisitions £1,800m £1,750m 56.1 (10.7) (17.7) £1,700m 72.2 £1,650m £1,600m £1,550m (124.0) 142.6 1,732.2 £1,500m 221.4 £1,450m (108.3) £1,400m 1,500.6 1,489.7 9.6% 4.8% 3.8%
Slide 22: Valuation – Key Assumptions and Sensitivities
Valuation – Key Assumptions and Sensitivities Key assumptions as at 31 March 2015 based on the Investment Adviser’s determination and third party advice 31 March 2015 31 March 2014 Sensitivity to key economic assumptions Discount Weighted Average 7.9% 8.2% Rate 1 Discount rate UK (RPI2 & RPIx2) 2.75
Slide 23: Valuation – Additional Sensitivities
Valuation – Additional Sensitivities Sensitivities as at 31 March 2015 Lifecycle (also called asset renewal or major maintenance) Sensitivity showing percentage change in Valuation obligation can either be with project company or subcontracted to FM contractor 1 Of 20 largest investments: A - Lifecy
Slide 24: Valuation - Discount Rate Analysis
Valuation - Discount Rate Analysis Directors’ Valuation as at 31 March 2015 Appropriate long- Risk Premium Total Discount Total Market valuation of assets increased in the period dated government Rate1 bond yield 31 Mar 2015 (‘Risk-Free’) 31 Mar 2014 Discount rates for projects range between 7.4% UK
Slide 25: Financial Performance – Year to March 2015
Financial Performance – Year to 31 March 2015 Good operating performance; distribution target achieved Fourth quarterly interim dividend of 1.87p per share taking total dividend for the year to 7.30p per share (ahead of 7.25p forecast) Cash receipts from investments ahead of projections Dividend cas
Slide 26: Market Update and Pipeline
Market Update and Pipeline Reputation and relationships remain integral to success in a competitive market Upward pricing pressure continuing and unlikely to abate in short term Investor interest in real assets continuing to increase Infrastructure investments particularly in demand and interest is
Slide 27: HICL Group Strategy
HICL Group Strategy Manage existing portfolio: Add value through active management Engage with public sector clients to generate cost savings Source and evaluate investment opportunities which are: Predominantly social and transportation infrastructure PFI/PPP/P3 concession contracts with public s
Slide 28: Performance Summary
Performance Summary Annual Dividends since IPO Group performance 7.5p Quality, well-diversified portfolio 7.0p Pence per Share Assets performing and distributing ahead of expectations in 6.5p year 6.0p Value growth through pro-active asset management, judicious acquisitions, and accretive equity iss
Slide 29: Company’s Key Performance Indicators (“KPIs”)
Company’s Key Performance Indicators (“KPIs”) KPI 31 March 2015 31 March 2014 Target 7.10p dividend per share 2014 achieved Dividends declared in year 7.3p per share 7.1p per share 7.25p dividend per share 2015 exceeded Total return in year 15.4% 11.9% 7% p.a. IRR as per latest guidance1 (NAV per sh
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