3i Infrastructure PLC · LSE:3IN
3i Infrastructure — H1 2013 Earnings Presentation
31 slides from 3i Infrastructure's earnings presentation, Nov 8, 2012
Slide 1: Half-yearly results 2012
Half–yearly results 2012 8 November 2012 Presentation of the results for the six months to 30 September 2012
Slide 2: Financial highlights for the six months
Financial highlights for the six months Steady NAV growth – 3.0% total 149.0 145.5 return on shareholders’ equity 139.0 128.8 Strong performance in European 110.6 119.0 portfolio partly offset by weaker 100.0 performance in India and losses from rupee exposure Growth in EBITDA of underlying op
Slide 3: Reconciliation of movements in NAV
Reconciliation of movements in NAV Total return: £30.9m (£m) 15.4 31.4 1,071.3 (5.9) (9.5) (0.5) 1,045.1 1,040.4 (26.2) Opening NAV Income Unrealised Net foreign Total costs Other NAV before Distribution to Closing NAV at 1 April 2012 including value growth exchange including movements distributions
Slide 4: Income and dividend cover
Income and dividend cover (£m) H1 income 31.4 Interim dividend and costs 26.2 9.5 Income Interim dividend Costs 4
Slide 5: Costs
Costs (£m) 9.4 9.5 1.4 1.4 0.7 0.8 1.1 1.0 Advisory fee broadly flat despite growth in portfolio value 1.5% of gross invested value 6.2 6.3 reduces to 1.25% for any portion of an asset held for more than five years This covers one third of portfolio value H1 2011 H1 2012 Advisory fees Opex Dea
Slide 6: Sensitivities
Sensitivities Inflation linkage Assets with revenues: Directly linked to UK inflation 23% Sensitivity +1% -1% Directly linked to 37% (for European assets only) point point Finnish inflation Partly linked to Change in inflation over underlying £18.3m £(18.1)m 20% assumption for next 2 years inflati
Slide 7: Weighted average discount rate
Weighted average discount rate 20.6% 13.8% 13.2% 12.6% 13.1% 12.6% 12.4% 12.5% 8.2% Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 No changes to the discount rates applied to assets in this period 7
Slide 8: Balance sheet
Balance sheet (£m) Investment basis Investment basis Cons. basis as at Sep 2012 as at Sep 2011 as at Sep 2012 Investment portfolio 885.8 715.8 1,172.8 Other net assets 15.6 3.8 4.9 Cash and cash equivalents 169.9 310.1 179.2 Borrowings - - (151.7) Net assets 1,071.3 1,029.7 1,205.2 Shareholders’ equ
Slide 9: Our portfolio
Our portfolio 15 assets £886m portfolio value £170m cash balances 77% of portfolio value is in core infrastructure 9
Slide 10: New investment: Dalmore
New investment Dalmore Characteristics First close at £130m Fund focused on UK secondary PFI £89.5m invested in a portfolio of 19 UK PFI assets (mainly hospitals and schools) acquired from Interserve plc £15m commitment announced on 12 October 2012 Terms (post period end) £10m drawn in Oct
Slide 11: New investment: Supreme Roads
New investment Supreme Roads Minority holding in the BOT road portfolio of Characteristics Supreme Infrastructure India Limited, a listed EPC company Assets include three BOT roads in the State of Maharashtra (total of 170kms), one of which is operational US$39.5m new investment for the Fund,
Slide 12: AWG
AWG Operational highlights for the period Good progress in implementation of regulatory settlement, with focus on efficiency programme EBITDA up 3.1% compared to the prior comparable six-month period Income down on prior period, due mainly to incremental capex on drought mitigation Heavy rai
Slide 13: Elenia (formerly LNI)
Elenia (formerly LNI) Operational highlights for the period Full rebranding completed Governance enhanced through appointment of new independent chairmen for both businesses Further appointments to executive teams, including new FD at Elenia Verkko Capex plans for Elenia Verkko updated Sma
Slide 14: Eversholt Rail Group
Eversholt Rail Group Operational highlights for the period Strong performance, with EBITDA up 4.1% compared to the prior comparable six-month period Strong cash flows, allowing £6.6m unscheduled shareholder loan repayment, in addition to regular interest payments Business currently focused on
Slide 15: Oystercatcher
Oystercatcher Operational highlights for the period All three terminals have performed in line with expectations EBITDA up 9.9% compared to the prior comparable six-month period Storage capacity fully let, with strong contract renewal rates and high throughput levels In Malta, new LPG pipeli
Slide 16: Social infrastructure investments
Social infrastructure investments Operational highlights for the period Elgin Octagon Alpha Schools All 16 projects Good operational and All schools performing performing in line with financial performance in line with expectations the investment case Received the top Remaining constructio
Slide 17: 3i India Infrastructure Fund
3i India Infrastructure Fund Operational highlights for the period Power Transportation Performance affected by: Krishnapatnam Port – availability and pricing of fuel, – still affected by iron ore export ban exacerbated by rupee weakness – resilient performance as as business – strain on State E
Slide 18: Driving value from the portfolio
Driving value from the portfolio Portfolio asset returns throughout holding period (since inception, £m) 16% Annualised asset IRR since inception Asset IRRs consistent with return objectives 18
Slide 19: Market backdrop
Market backdrop Attractive assets changing hands in Europe, but ─ relative price points often high ─ strong competition from investors keen to build exposure to infrastructure European infrastructure market continues to offer attractive opportunities Limited deal flow in India, due to slowing
Slide 20: Outlook
Outlook Investing at the appropriate price points is key to maintaining consistent returns Retain focus on processes where we: ─ have a competitive advantage ─ can engage at an early stage ─ leverage our relationships Networked Focused on Driving value Disciplined in our deliverable from existin
Slide 21: Summary for the period
Summary for the period Good underlying portfolio performance ─ EBITDA up 3.1% period on period across the portfolio ─ portfolio income of £31m Prudent investment stance in challenging markets ─ Dalmore and Supreme completed since May ─ disciplined on pricing Focused on new investment, and on b
Slide 22: Additional financial information
Additional financial information
Slide 23: Valuation summary
Valuation summary (£m) Value Invest- Divest- Value Forex Value Profit on Income Asset Mar ment in ment in move- trans- Sep disposal in TR in 2012 period period ment lation 2012 period period AWG 209.4 6.3 215.7 7.5 13.8 Elenia 201.0 7.6 (8.5) 200.1 (0.9) Eversholt 154.2 (6.6) 2.3 149.9 9.0 11.3 Oyst
Slide 24: Foreign exchange impact
Foreign exchange impact Impact of foreign exchange movements on returns (£m) Sterling Sterling Net /rupee /euro impact Translation of assets £/US$ (1.1) (1.1) Translation of assets £/€ (13.6) (13.6) Reported foreign exchange losses on investments (14.7) Asset valuation US$/rupee (3.8) (3.8) Movement
Slide 25: Total return for the six months to 30 September 2012
Total return for the six months to 30 September 2012 Investment basis Investment basis Consolidated basis (£m) 30 Sep 2012 30 Sep 2011 30 Sep 12 Realised profits over fair value on disposal of investments - 2.1 - Unrealised profits/(losses) on the revaluation of investments 11.6 (18.1) 15.0 Foreign
Slide 26: Asset diversification at 30 September 2012
Asset diversification at 30 September 2012 By geography By sector By maturity 1% 12% 11% 11% 52% 52% 36% 37% 88% UK and Ireland Social infrastructure Early stage Continental Europe Transportation Operational growth Asia Utilities Mature 26
Slide 27: Total shareholder return
Total shareholder return Total shareholder return (31 March 2007 – 30 September 2012) 61.0% 48.1% 20.3% 14.9% -19.6% -54.9% 3i Infrastructure FTSE 100 FTSE 250 FTSE 350 FTSE 350 FTSE 350 Gas, General Banks Water and Financials Multiutilities Source: Bloomberg 27 Calculated as share price performance
Slide 28: About 3i Infrastructure
3) Infrastructure plc & About 31 Infrastructure
Slide 29: Governance and fees
Governance and fees Board of Independent Chairman, five independent non-executive directors and one Directors 3i Group appointed non-executive director Committed to observe requirements of the UK Corporate Governance Code Responsibilities - acts as investment Committee / approves investment op
Slide 30: Senior members of the London Investment Advisory team
Senior members of the London Investment Advisory team Cressida Hogg Managing Partner 17 years at 3i, Managing Partner of the Infrastructure business line since 2009 Co-founded 3i’s Infrastructure business in 2005 with Michael Queen Manages the team and leads relationship with 3i Infrastructure
Slide 31: Sector focus
Sector focus Asset intensive businesses, providing essential services Transport Utilities Social infrastructure Airports Water Healthcare Ports Electricity and gas Education Toll roads distribution Defence Rail Midstream energy Government Waste processing accommodation Oil