3i Infrastructure PLC · LSE:3IN
3i Infrastructure — H1 2017 Earnings Presentation
43 slides from 3i Infrastructure's earnings presentation, Nov 3, 2016
Slide 1: Results for the six months to 30 September 2016
3i Infrastructure plc Results for the six months to 30 September 2016 3 November 2016
Slide 2: Important information
3i Infrastructure plc Important information The sole purpose of this information-only presentation (“Presentation”) is to provide information on a The distribution of this Presentation in certain jurisdictions may be restricted by law. Persons into whose non-reliance basis about 3i Infrastructure pl
Slide 3: A good return in a productive first half of the year
3i Infrastructure plc A good return in a productive first half of the year marked by a successful capital raise and a strong level of new investment Richard Laing Chairman
Slide 4: Today's agenda
3i Infrastructure plc Today’s agenda Introduction Richard Laing Business review Ben Loomes Financial review James Dawes Closing remarks Phil White Q&A All 4
Slide 5: HY17 results: achieving all targets for the period
3i Infrastructure plc HY17 results: achieving all targets for the period 5% Total return on opening NAV Good portfolio performance driving NAV growth 165.7p NAV per share Strong level of new investment across target markets £287m Good income progression following new investment £35m £411m Total liqu
Slide 6: Strong and long-term track record
3i Infrastructure plc Strong and long-term track record Company’s performance Total shareholder return (%) since IPO in 2007 3iN FTSE 250 3iN FTSE 250 20% 240% • 12.3% annualised total 17% 201% shareholder return 200% 15% • 10.9% annual return based on 160% NAV growth and dividends paid 10% 120% 8%
Slide 7: The portfolio continues to perform well and is now larger and more diverse
3i Infrastructure plc The portfolio continues to perform well and is now larger and more diverse. 3iN is a differentiated proposition and we have the right team to deliver on that proposition Ben Loomes Managing Partner, Infrastructure 3i Investments plc
Slide 8: Key investment areas across the risk/return spectrum
3i Infrastructure plc Key investment areas across the risk/return spectrum Return Examples NMM AWG Hart v. Zuid WIG A12 Elenia Condorcet TCR Economic infrastructure Greenfield Projects Large Core economic Operational infrastructure PPP projects Risk Compression in implied returns for large Core econ
Slide 9: Continue to see a good flow of new investment opportunities
3i Infrastructure plc Continue to see a good flow of new investment opportunities Key characteristics: • Own asset base in perpetuity • Often provide essential services • Have a strong market position • Generate stable cash flows 9
Slide 10: Strong development over the last two years
3i Infrastructure plc Strong development over the last two years Growth in • Portfolio value grown from £1,068m at 30 September 2014 to portfolio value £1,593m at 30 September 2016 Diversification of • Number of assets grown from 20 to 27 over the last two years portfolio • Diversifying the portfoli
Slide 11: Larger and more diverse portfolio
3i Infrastructure plc Larger and more diverse portfolio Portfolio value: 30 September 2014 Portfolio value: 30 September 2016 AWG AWG Elenia Elenia 22% 16% 25% 20% 10% Oystercatcher £1.1bn £1.6bn 13% Oystercatcher India 6% India 3% 10% 23% 9% Projects 9% Projects 10% 3% Eversholt 5% 8% TCR XLT 8% Va
Slide 12: New investment: Wireless Infrastructure Group
3i Infrastructure plc New investment: Wireless Infrastructure Group 36% interest acquired for c.£75m, alongside existing investor Barings Alternative Investments (formerly Wood Creek Capital) and management Based in the UK; builds and operates communication towers in rural and urban areas Investment
Slide 13: New investment: TCR
3i Infrastructure plc New investment: TCR 50% interest acquired for c.€200m in consortium with Deutsche Asset Management Based in Belgium; TCR is Europe’s leading independent asset owner and lessor of airport ground support equipment (“GSE”) Investment highlights: • Provides infrastructure that is c
Slide 14: New investment: Valorem
3i Infrastructure plc New investment: Valorem 28.5% interest acquired for c.€69m1, alongside existing management team One of the largest independent onshore wind developers in France, having developed over 480MW of capacity over the last 10 years Investment highlights: • Strong political support in
Slide 15: New investment since the half year: Infinis
3i Infrastructure plc New investment since the half year: Infinis 100% interest acquired for c. £185m from Terra Firma Leading generator of electricity from landfill gas in the UK with total installed capacity of over 300 MW Investment highlights: • Over 120 sites geographically dispersed across the
Slide 16: Projects portfolio development
3i Infrastructure plc Projects portfolio development FY2014 FY2015 FY2016 FY2017YTD • Mersey Gateway • Ayrshire College (UK) • Condorcet Campus • Hart van Zuid (NL) Bridge (UK) – £4.6m (FR) – €5m – £13.1m • RIVM (NL) – €8m – €4.8m • A27/A1 (NL) • NMM (NL) • A12 (NL) • West of Duddon – €6.3m Sands OF
Slide 17: Clear strategic priorities
3i Infrastructure plc Clear strategic priorities • Delivering an attractive mix of income yield and capital Maintaining a growth for our shareholders balanced portfolio • Investing in developed markets, with a focus on the UK and Europe Managing the • Driving value from the Company’s portfolio throu
Slide 18: We have proven our flexible funding model
3i Infrastructure plc We have proven our flexible funding model during the period and we have been successful in building income James Dawes CFO, Infrastructure 3i Investments plc
Slide 19: Proving our flexible funding model
3i Infrastructure plc Proving our flexible funding model Funding Availability Cash • Cash balance of £136m at 30 September 2016 (8% of NAV) • Undrawn RCF of £275m (£300m facility extended to May 2019) RCF • RCF increased by £200m to £500m through accordion feature, RCF subsequently reduced back to £
Slide 20: Good NAV progression
3i Infrastructure plc Good NAV progression Half year return driven by good performance of the portfolio in income and capital return (£m) 1 2 3 Closing NAV of 165.7pps, reducing to 161.9pps after payment of interim dividend of 3.775pps 1 - Net of final dividend for the prior year 2 - Foreign exchang
Slide 21: Asset performance drives value growth
3i Infrastructure plc Asset performance drives value growth (£m) 16.9 58.1 (39.1) 28.7 Asset performance (0.5) 35.4 29.4 Planned value growth Planned value growth and Discount rate movement Macro-economic Loss on disposal Capital return Asset performance assumptions Value growth from asset performan
Slide 22: Disciplined cost management
3i Infrastructure plc Disciplined cost management Portfolio size (£m) Sep 15 Sep 16 Deal fees £1,113m £1,593m Operational costs 0.2 Finance costs Opex 3.1 11.1 2.2 Advisory fees 7.5 1.4 1.2 HY2016 HY2017 HY2016 HY2017 Ongoing focus on costs drives operational efficiency 22
Slide 23: Dividend almost covered
3i Infrastructure plc Dividend almost covered Interim dividend of 3.775pps, or £38.8m (£m) Interim dividend coverage shortfall covered by dividend reserves 23
Slide 24: Closing remarks
3i Infrastructure plc Closing remarks Phil White Managing Partner, Infrastructure 3i Investments plc
Slide 25: A differentiated investment proposition
3i Infrastructure plc A differentiated investment proposition Achieving all of our targets for the period Further diversifying the portfolio and building income A proven flexible funding model A strong team with a long term track record 25
Slide 26: Q&A
3i Infrastructure pic @ O&A
Slide 27: Appendix
3i Infrastructure plc Appendix
Slide 28: 3i's European Infrastructure senior team
3i’s European Infrastructure senior team 3i Infrastructure plc c.25 investment professionals based in London and Paris Ben Loomes, Managing Partner Phil White, Managing Partner Bernardo Sottomayor John Cavill Nigel Middleton Scott Moseley Stéphane Partner Partner Partner Partner Grandguillaume Partn
Slide 29: Attractive and differentiated investment proposition
3i Infrastructure plc Attractive and differentiated investment proposition Economic infrastructure businesses Greenfield Projects Businesses generally: Primary PPP Low-risk energy • own their asset base in perpetuity PPPs to build, commission Low-risk energy projects, • provide essential services an
Slide 30: Portfolio summary
3i Infrastructure plc Portfolio summary 30 September 2016 (£m) Directors’ Directors’ Underlying Allocated valuation Investment Divestment Foreign valuation Profit/ portfolio foreign Asset total 31 March in the in the Value exchange 30 September (loss) on income in exchange return in Portfolio assets
Slide 31: Portfolio breakdown by geography and maturity
3i Infrastructure plc Portfolio breakdown by geography and maturity As at 30 September 2016 Economic infrastructure Projects by type Portfolio by geography businesses by sector 3% 9% 5% 28% 36% 51% 35% 61% 72% Utilities UK and Ireland Operational projects Transport Communications Continental Europe
Slide 32: Weighted average discount rate
3i Infrastructure plc Weighted average discount rate Portfolio weighted average discount rate (%) Changes in the weighted average discount rate (WADR) driven by: • Reduction in the discount rate used to value mature UK Operational Projects reflecting the recent downwards trend in discount rates appl
Slide 33: Portfolio
3i Infrastructure plc Portfolio
Slide 34: Elenia
3i Infrastructure plc Elenia Operational highlights for the period • Good operational and financial performance • Elenia has continued the roll-out of its long-term investment plan which is designed to improve security of supply − Network investments were €59m in the first half of 2016 (€118m on a r
Slide 35: AWG
3i Infrastructure plc AWG Operational highlights for the period • Operational performance in line with expectations • Business focused on: − Cooperating with Ofwat to shape the future of the water industry − Implementing the cost efficiency and capital Cost £161.9m spending programmes for AMP6 − Imp
Slide 36: Oystercatcher
3i Infrastructure plc Oystercatcher Operational highlights for the period • Continued strong trading conditions with periods of contango (when the spot or cash price of a commodity is lower than the forward price) in key product markets • Strong trading conditions partially offset by reduction in de
Slide 37: ESVAGT
3i Infrastructure plc ESVAGT Operational highlights for the period • Acquired in September 2015, in a joint investment with AMP Capital • ESVAGT has performed in line with plan despite the low oil price environment • The business continues to make good progress in the wind segment and ERRV market Co
Slide 38: Cross London Trains
3i Infrastructure plc Cross London Trains Operational highlights for the period • Good progress made by Siemens with the manufacturing of the trains − 54 trains completed and delivered for testing, 31 of which were delivered for testing in the UK • Business focusing on the acceptance of the units fo
Slide 39: Projects
3i Infrastructure plc Projects Operational highlights for the period • All assets in the operational PPP portfolio performed well, delivering good levels of income • Hart van Zuid investment completed in April • Commitment to invest €6.5 million to acquire 60% interest in the A27/A1 motorway primary
Slide 40: Foreign exchange impact
3i Infrastructure plc Foreign exchange impact Six months to 30 September 2016 Impact of foreign exchange movements on portfolio value (£m) £/rupee £/€/SGD/DKK Net impact Translation of unhedged assets (£/rupee) 4.1 - 4.1 Translation of partially hedged assets (£/€/SGD/DKK) - 74.4 74.4 Reported forei
Slide 41: Sensitivities to total return
3i Infrastructure plc Sensitivities to total return Inflation linkage Assets with revenues: Directly linked to UK inflation 19% Sensitivity 28% (for European assets only) +1% point -1% point Directly linked to Finnish inflation Change in inflation over £41.8m £(41.6)m 1 underlying assumption for Par
Slide 42: Governance and fees
3i Infrastructure plc Governance and fees Board of Directors • Independent Chairman, five independent non-executive directors and one 3i Group appointed non-executive director • Committed to observe requirements of the UK Corporate Governance Code • Responsibilities include – acts as Investment Comm
Slide 43: 3i Infrastructure plc
3i Infrastructure plc