half year 2016 results presentation - john laing · pdf filefull year 2016 results...
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Full Year 2016Results Presentation7 March 2017
[New images that match annual report design for background]
2
Olivier BrousseChief Executive Officer
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www.laing.com
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14% increase in NAV to £1,017m
NAV of 277p per share (2015:242p)
Investment commitments of £182m
BE THE BEST MARKETING COMPANYFinal dividend of 6.3p per share(Total dividend for 2016 of 8.15p)
Highlights
Pipeline at £1.86 billion
Importance of active asset management
Realisations for dividend purposes of £127m
30% increase in external assets under management to £1.47bn
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Projects under construction – active management
New Royal Adelaide Hospital,
Australia
Manchester Waste VLCo,
UK
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Projects under construction – steady progress
Intercity Express
Programme, UK
Speyside Biomass,
UK
Hornsdale
Wind Farm, Aus
I-77 Managed Lanes,
US
6Growing and well diversified pipelineR
en
ew
ab
le E
nerg
yP
PP
£1,135m
Asia Pacific31%
Europe 32%
North America
37%
31 Dec 2015
Asia Pacific14%
Europe73%
North America
13%
£359m
31 Dec 2015
Asia Pacific35%
Europe 33%
North America
32%
£1,408m
31 Dec 2016
Asia Pacific31%
Europe47%
North America
22%
£451m
31 Dec 2016
Asia Pacific23%
Europe 42%
North America
35%£1,067m
31 Dec 2014
31 Dec 2014
Europe100%
£264m
7Shortlisted PPP projects at 31/12/16
North America:• Central 70 Road
• George Massey Bridge
• Gordie Howe International Bridge
• MBTA Fare Collection
Europe:• National Broadband, Rol
John Laing offices Shortlisted projects
Asia Pacific:• Grafton Prison NSW
• NZ Schools III
• Plus one bid not yet disclosable
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International spread of investment commitments
Project Region PPP (£m) RE (£m) Total (£m)
IEP Phase 1 (additional shareholding) UK 37.0 --- 37.0
Llynfi wind farm UK --- 24.9 24.9
A6 Parkway Europe 9.0 --- 9.0
Nordergründe offshore wind farm Europe --- 36.7 36.7
Sommette wind farm Europe --- 11.7 11.7
Horath wind farm Europe --- 14.3 14.3
Saint-Martin-L’Ars wind farm Europe --- 5.1 5.1
I-77 Managed Lanes (additional investment) US 1.1 - 1.1
Sterling wind farm US --- 15.7 15.7
Hornsdale wind farm (Phase 2) Asia Pacific --- 6.0 6.0
Kiata wind farm Asia Pacific --- 20.4 20.4
Total 47.1 134.8 181.9
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Realisations of assets ahead of guidance
ProjectHolding
sold
JLEN
£m
JLIF
£mOther
Total
£m
British Transport Police (BTP)
Oldham Housing
54.17%
95%--- 19.5
---19.5
Dungavel Wind Farm 100% 38.2 --- --- 38.2
New Albion Wind Farm 100% 11.8 --- --- 11.8
A55 Wales 100% --- 28.3 --- 28.3
IEP (Phase 1) 6% --- 42.4 --- 42.4
Shareholding in JLEN 2.2% --- --- 6.4 6.4
Total 50.0 90.2 6.4 146.6
• Realisation of A1 Poland investment completed in March 2017
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Growth in external assets under management (AuM)
£537m
£796m
£1,020m£1,136m
£1,472m
2012 2013 2014 2015 2016
£8.2m
£10.3m£12.0m
£15.8m
Fees:
AuM:
£5.7m
• Successful secondary issues by JLIF and JLEN in 2016
• 30% increase in external AuMto £1.47 billion
• 32% growth in external AuMrevenues
• Important contribution towards cost base from AuM fee income
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Patrick O’D BourkeGroup Finance Director
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www.laing.com
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Summary Balance Sheet – re-presented
Key line items31 December 2016
(£m)
31 December 2015
(£m)
Portfolio value 1,175.9 841.4
Cash collateral 23.7 123.9
Non-portfolio assets 0.3 0.5
Total investments 1,199.9 965.8
Other long term assets 3.7 5.6
Cash 53.1 5.5
Total Assets 1,256.7 976.9
Working capital and provisions (5.6) (22.1)
Cash borrowings (165.0) (19.0)
Pension deficit (IAS 19) (61.3) (38.9)
Other retirement benefit obligations (8.0) (7.3)
Total Liabilities (239.9) (87.3)
Net Assets 1,016.8 889.6
Asse
tsL
iab
ilities
13NAV growth of 14%
Net asset value movement – year ended 31 December 2016
889.6
1,016.8
214.4
(11.9)
(39.2)(9.9) (26.2)
200
300
400
500
600
700
800
900
1,000
1,100
1,200
31 December2015
Fair valuemovement on
portfolio
Cost of FXhedges
Pension deficit Other P&L items Dividends paid in2016
31 December2016
(£m
)
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Investment portfolio at 31 December 2016 Value
Weighted Average Discount
Rates
31 December
2016
31 December
2015
£696.3m 9.1% 9.7%
£469.6m 8.4% 8.9%
£10.0m - -
£1,175.9m 8.9% 9.5%
Primary
Investments(projects under construction)
Balanced investment portfolio
Secondary
Investments(projects inoperation)
11 PPP projects
10 Renewable
Energy projects
15 PPP projects
6 Renewable Energy
projects
Shareholding in JLEN
(at 31 December 2016
share price)
21
21
15
NZ dollar
Sterling
Euro
Australian dollar
US dollar
Diversified and balanced portfolio at 31 December 2016
Shadow Toll
JLEN
Availability
Volume (including RE investments)
By Revenue
JLEN
Transport - other
Transport -rolling stock
Environmental - wind
Social
Environmental -waste and biomass
By Sector By Currency
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Components
Year ended
31 December 2016
(£m)
Year ended
31 December 2015
(£m)
Unwinding of discounting 77.1 61.0
Reduction of construction risk premia 52.7 22.8
Foreign exchange movements 74.7 (9.2)
Macro-economic impacts (13.8) (9.4)
Change in power and gas price
forecasts(17.6) (10.7)
Change in operational benchmark
discount rates 27.5 19.5
Uplift on financial closes 31.0 27.1
Value enhancements and other
changes(17.2) 31.0
Fair value movement 214.4 132.1
Strong value creation
• Embedded value released as
assets move through
construction phase and
cashflows draw closer
• Positive impact from FX, partly
offset by macroeconomic
changes and lower energy
prices
• Other changes include reduced
valuations for New Royal
Adelaide Hospital and
Manchester Waste VL Co
investments.
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Pension deficit under IAS19
• IAS19 deficit on JLPF: £64.2 million at 31 December
2016 (£38.9 million at 31 December 2015)
– Decrease in IAS19 discount rate from 3.75% at 31
December 2015 to 2.80% at 31 December 2016
– Increase in RPI assumption from 3.0% at 31
December 2015 to 3.20% at 31 December 2016
– £18.1 million scheduled cash contribution
• Actuarial valuation of JLPF as at 31 March 2016
– Agreed actuarial deficit of £171m
– Average contributions of £26m per annum over
seven year repayment period
£million IAS19
(deficit)/
surplus
John Laing Pension Fund (64.2)
John Laing Pension Plan 2.9
Summary Balance Sheet (61.3)
18Summary Cash Flow – re-presented
1 include cash collateral balances and are net of cash borrowings
Key line items
Year ended
31 December 2016
(£m)
Year ended
31 December 2015
(£m)
Cash yield 36.8 44.3
Operating cash flow (10.9) (15.9)
Net FX impact (18.2) 2.8
Total operating cash flow 7.7 31.2
Cash investments in projects (301.5) (142.9)
Proceeds from realisations 146.6 85.9
Net investing cash flow (154.9) (57.0)
Finance charges (6.8) (13.4)
Cash contributions to JLPF (incl. PPF levy) (18.4) (47.5)
Capital raise (net of costs) - 123.0
Dividend payments (26.2) (5.9)
(51.4) 56.2
Cash (outflow)/inflow (198.6) 30.4
Opening cash1 (net) 110.4 80.0
Closing (net debt)/ cash1 (net) (88.2) 110.4
19Income Statement – re-presented
Re
ve
nu
eC
os
ts
Key line items
Year ended
31 December 2016
(£m)
Year ended
31 December 2015 *
(£m)
Movement in fair value – investment portfolio 214.4 132.1
Investment fees from projects 7.0 7.7
Investment Management Services (IMS) revenue 17.8 13.4
Project Management Services (PMS) revenue 14.9 17.0
Bid cost recoveries on financial close 7.5 3.4
Movement in fair value – other (3.2) (7.5)
Total Income 258.4 166.1
Third party costs (7.7) (6.6)
Staff costs (34.1) (32.5)
General overheads (13.2) (11.7)
Other and exceptional charges (0.7) (3.6)
EBIT 202.7 111.7
Finance charges (7.7) (6.6)
Pension and other charges (2.9) (4.2)
Profit before tax from continuing operations 192.1 100.9
Earnings per share (basic) 51.9p 27.6p
Oth
er
*pro forma
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Dividends up 7%
• Dividend policy
– Base dividend of £20m in 2015 growing with inflation
– Special dividends of 5%-10% of realisations, subject to specific investment
requirements
• Final dividend of 6.3p for 2016
– Base dividend of 3.7p per share
– Special dividend of 2.6p per share calculated as 7.5% of realisations of
£127m
• Total dividend of 8.15p for 2016 (2015: 6.9p)
– 7% increase (after adjusting 2015 base dividend for timing of IPO)
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Outlook
Platform capable of handling growth while controlling risks and costs
Recognised as an expert international investor in greenfield infrastructure
Well positioned to take advantage of increased public investment in infrastructure in our three regions
Portfolio of investments will continue to grow and diversify across countries and asset classes.
Guidance for 2017:• c10% increase in investment
commitments versus 2016• Realisations at broadly similar level to
investment commitments
Strong focus on• Origination• Risk management• Projects under construction
Confident outlook
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Q & A
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Appendices
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By remaining construction period - Primary
120.5
75.4
275.2
225.2
0
50
100
150
200
250
300
3+ years 2-3 years 1-2 years 0-1 year
£m
illio
n
Total £696.3m
By value of each investment
10
442.7
59.7
362.1
301.4
050
100150200250300350400450500
Listed < £25m £25-£50m £50-£75m £75m-£125m
£m
illio
n
Total £1,175.9m
By project discount rate - Primary
125
305
249.2
17.10
50
100
150
200
250
300
350
7-8% 8-9% 9-11%Discount rate
11-13%
£m
illio
n
Total £696.3m
By project discount rate – Secondary *
50.4
130.2 135.4 113.4
21.90
20
40
60
80
100
120
140
160
6-7% 7-8% 8-9% 9-11%Discount rate
11-13%
£m
illio
n
Total £451.3m*
*excluding assets not valued on a DCF basis valued at £28.3m
Portfolio at 31 December 2016
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8.4% 8.3%7.8%
7.3%
7.9% 7.9%8.5% 8.7%
8.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
John LaingSecondaryInvestment
Portfolio
Balfour BeattyInvestments
Bilfinger BergerGlobal
Infrastructure
HICLInfrastructure
Company Limited
InternationalPublic
PartnershipsLimited
John LaingInfrastructure
Fund
Greencoat UKWind
The RenewablesInfrastructure
Group
John LaingEnvironmentalAssets Group
(JLG) (BBGI) (HICL) (INPP) (JLIF) (TRIG) (JLEN)
Listed PPP Infrastructure Funds Listed Environmental Funds
(BBY) (UKW)
___________________________
Publicly reported discount rates at 30/06/2016 for BBGI, INPP and JLIF. For Balfour Beatty’s UK portfolio at 31/12/15 and for JLG’s secondary portfolio at 31/12/2016, Greencoat and TRIG reported discount rates are at 30/06/16 and JLEN at 30/09/16.
Secondary discount rate benchmarks
26
Year ended
31 December 2016
Primary
Investment
£m
Secondary
Investment
£m
Asset
Management
£m
Central
£m
Total
£m
Total income 151.9 66.9 32.7 6.9 258.4
Third party costs (6.3) --- (1.4) --- (7.7)
Staff costs (9.6) --- (17.1) (7.4) (34.1)
General overheads (2.1) --- (5.0) (6.1) (13.2)
Intra-group reallocation1 (15.3) (7.6) 10.6 12.3 ---
Other and exceptional charges --- --- 0.1 (0.8) (0.7)
Operating profit 118.6 59.3 19.9 4.9 202.7
Finance charges (5.5) (2.2) --- --- (7.7)
Pension and other charges --- --- --- (2.9) (2.9)
Profit before tax 113.1 57.1 19.9 2.0 192.1
• Asset Management: includes revenue of £7.9 million and costs of c£6.0 million attributable to UK
activities of PMS at 30 November 2016
Positive contribution from each division
1 internal fees/charges and reallocation of certain central costs
27Financial resources available31 December 2016
(£m)
31 December 2015
(£m)
Committed facilities 450.0 350.0
Letters of credit issued under corporate banking facilities (112.6) (154.2)
Letters of credit issued under additional surety facilities (50.0) ---
Other guarantees / commitments (6.5) (1.1)
Short term borrowings (165.0) (19.0)
Utilisation of facilities (334.1) (174.3)
Headroom on committed facilities 115.9 175.7
Cash and bank deposits 53.1 5.5
Unavailable cash (0.9) (1.1)
Net available financial resources 168.1 180.1
Total letters of credit issued 162.6 154.2
Cash collateral 23.7 123.9
Future cash investment into projects 186.3 278.1