Annual Results - 31 December 2013 March 2014
Disclaimer This document has been prepared by John Laing Infrastructure Fund Limited ("JLIF or the Company ) and is the sole responsibility of JLIF. The information in this document is accurate as at the date of this document and its contents are therefore subject to updating and revision. All data is sourced by the Company unless identified as otherwise. Nothing in this document or in any accompanying management discussion of this document constitutes, nor is it intended to constitute: (i) an invitation or inducement to engage in any investment activity, whether in the United Kingdom or in any other jurisdiction; (ii) any recommendation or advice in respect of the shares ("Shares") in JLIF; or (iii) any offer for the sale, purchase or subscription of any Shares. The information in this document is being supplied to you by the Company solely for your information and may not be reproduced or redistributed in whole or in part to any other person. This document has not been approved by a person authorised under the Financial Services & Markets Act 2000 ( FSMA ) for the purposes of section 21 FSMA. The recipients of this presentation should not engage in any behaviour in relation to qualifying investments or related investments (as defined in the Financial Services and Markets Act 2000 ("FSMA") and the Code of Market Conduct made pursuant to FSMA) which would or might amount to market abuse for the purposes of FSMA. Although the Company has attempted to ensure the contents of this document are accurate in all material respects, no reliance may be placed for any purpose whatsoever on the completeness, accuracy or fairness of the information contained in this document, nor is any responsibility accepted for any errors, misstatements in, or omissions from, this document or any direct or consequential loss howsoever arising from any use of, or reliance on, this document or otherwise in connection with it. No representation or warranty, express or implied, is made or given by or on behalf of the Company or its directors or its investment adviser, John Laing Capital Management Limited, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document and no responsibility or liability is accepted for any such information or opinions. Nothing in this paragraph shall exclude, however, liability for any representation or warranty made fraudulently. The information communicated in this document contains certain statements that are or may be forward looking. These statements typically contain words such as "expects" and "anticipates" and words of similar import. By their nature forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. JLIF and its advisors and representatives expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in their expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Where reference has been made to past performance, it is worth noting that past performance is not a guide to future performance and the value of any investment or the income derived from it may go down as well as up and you may not get back the full amount originally invested. Some assets within JLIF may be denominated in a foreign currency and will be exposed to movements in the rates of exchange. The fund will also be exposed to changes in the rates of interest, these movements may have an adverse effect on the value of the investment or the income derived from it. The Company will not undertake any obligation to release publically any revisions to these forward looking statements to reflect events, circumstances and unanticipated events occurring after the date of this document except as required by law or by regulatory authority. By accepting this document, you agree to be bound by the provisions and limitations set out herein or imposed herein and to keep permanently confidential, not distribute, publish or reproduce, in whole or part, or disclose, the information contained in this document or made available in connection with further enquiries to the extent such information is not made publically available (otherwise through a breach by you of this provision). 2
Vancouver General Hospital Summary North Swindon Schools
John Laing Infrastructure Fund Full Year Results Summary 12 months to December 2013 Another year of strong performance Dividend in respect of H2 2013 increased by 4.0% to 3.25p ahead of inflation Significant growth in portfolio value of 48.1% to 795.8m (Dec 2012 537.4m) including new investments Strong underlying growth of 7.24% - 0.86% ahead of expectations NAV per share 106.8p increase of 1.0% since Dec 2012 NAV increased by 275.7m to 818.1m (+50.8%) buoyed by new acquisitions New investments of 264.6m, comprising 15 new assets and 5 additional stakes Largest portfolio acquisition outside the first offer agreement to date Largest raising of new capital to date Inflation beating dividend growth, both portfolio performance and asset yield above forecast 4
Fund Characteristics Portfolio 52 operational assets Buoyant secondary market for third party asset purchases Access to buy future John Laing assets as they mature Size Current market cap of 896.6m as at 20 th March 2014 Dividends Net Asset Value ( NAV ) Dividend raised by 4.0% to 3.25p (semi-annual) Current dividend yield c.5.5% NAV at 31 Dec 2013 of 818.1m NAV per share 106.8p (at 31 December 2013) Discount Rate 8.18% weighted average (at 31 December 2013) Management contract New Investment fee Ongoing charges (AIC methodology) John Laing Capital Management Ltd, FCA authorised and regulated Base fee of 1.1% (up to 0.5bn), 1.0% for 0.5-1.0bn, 0.9% for > 1.0bn No acquisition fee on assets acquired from John Laing 0.75% of other new investments Fallen to 1.16% 1 for the year 2013 (2012 1.23%) Liquidity and Spread Average daily volume of 1,302,820 shares over 2013 Average bid/offer spread on the London Stock Exchange over the same period is 0.24% Raw Equity Beta 0.036 (for the 12 months to 31 December 2013) Note: As at 31 December 2013 unless otherwise stated 1 If included one-off acquisition fees 1.35% Substantial listed fund of c 900m, invested in stable operating low risk projects providing a strong yield 5
Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 JLIF vs. FTSE All Share Total Return JLIF share price total return vs. FTSE All Share total return (rebased) 150 140 TSR of 13.5% in 2013, 32.7% since launch* 130 120 110 100 90 JLIF Share Price FTSE All Share 80 29/11/10 31/12/11 30/06/12 31/12/12 30/06/13 30/09/2013 31/12/13 Dividends Share Price* 100.0p 108.5p 106.7p 107.9p 117.4p 112.0p 115.2p NAV per share including cumulative dividends paid * Source: DataStream # excludes the 3.25p dividend declared on 24 March 2014 98.2p 108.1p 111.3p 115.2p 119.4p 120.4p 122.6p 15.75pps paid since IPO# 6
JLIF vs. FTSE Government Securities All Stocks JLIF share price total return vs. FTSE Government Securities All Stocks total return (rebased) 120 115 110 105 100 95 90 85 80 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 JLIF Share Price FTSE Govt Securities - All Stocks Source: Bloomberg, DataStream 7
Key Events - 2013 30% stake in Peterborough Hospital 27m Portfolio of three assets from John Laing for 103m, and additional stakes in Peterborough Schools (19%), Lambeth Street Lighting (15%) and Redcar & Cleveland Street Lighting (15%) 11 asset IIC portfolio for 123m Additional 9% in E18 road project 3m Feb 2013 Mar 2013 Jul 2013 5% stake in LUL Connect (CityLink) project taking total shareholding to 33.5% Oct 2013 Additional 15% equity stakes in Enfield and Barnet lighting projects Feb 2014 Jan 2013 Declared increased semi-annual dividend of 3.125pps (+4.2%) Secured three year revolving credit facility of 150m, replacing existing 75m facility Apr 2013 Raised gross proceeds of 35.0m via tap issue to refinance existing debt drawn Aug 2013 Dec 2013 Raised 242m of new primary equity to repay debt and acquire portfolio of 103m from John Laing. Issue was NAV accretive and oversubscribed Jan 2014 Obtained shareholder approval to broaden investment policy and amend John Laing pipeline agreement to include rail assets and remove waste assets Note: Acquisition values stated above have been rounded to the nearest million 8
Kromhout Barracks Portfolio North Swindon Schools
Investment Portfolio December 2013 Health (5 new assets, 14 in total) Education (5 new assets, 12 in total) Justice & Emergency Services (5 assets) Transport (5 assets) Regeneration & Social Housing (1 new asset, 7 in total) Government Buildings (2 assets) Street Lighting (4 new assets, 7 in total) Kingston Hospital 60% Glasgow Schools 20% Avon & Somerset Courts 40% E18 Road Camden Social Housing 50% 50% MoD Main Building 26% Manchester Street Lighting 50% Newham Hospital 50% Edinburgh Schools 20% Cleveland Police Stations & HQ 50% M40 Motorway (UK) 50% Bentilee Hub Community Centre 100% Kromhout Barracks PPP Project 40% Walsall Street Lighting 100% Forth Valley Royal Hospital 100% North Swindon Schools 100% North East Fire and Rescue 100% LUL Connect (CityLink) Brockley Social Housing 33.5% PPP 100% Wakefield Street Lighting 50% Queen Elizabeth Hospital, Greenwich 27.5% Highland School, Enfield 100% Metropolitan Specialist Police Training Centre 27.1% M6/M74 Motorway (Scotland) 11% Canning Town Social Housing PPP 100% Barnet Street Lighting 100% * Abbotsford Regional Hospital and Cancer Centre 100% Leeds Combined Secondary Schools 100% Greater Manchester Police Stations 27.1% Sirhowy Way 100% Islington Social Housing I 45% Redcar & Cleveland Street Lighting 100% Vancouver General Hospital 100% South Lanarkshire Schools 15% Islington Social Housing II 45% Lambeth Street Lighting 100% Roseberry Park Hospital 100% Pembury Hospital 37.5% Newcastle Hospital 15% Enfield Schools 100% Bexley Schools 100% Bristol BSF 37.5% Miles Platting Housing Enfield Street Lighting 33% 100% * Peterborough Hospital Peterborough Schools 30% 100% Realise Health LIFT Newham Schools 60% 100% Northampton Mental Health Barnsley BSF 100% 40% Kelowna & Vernon Hospitals 50% North Staffordshire Hospital 75% Key: Newly Acquired Increased Stake * Additional 15% stake acquired after 31 December 2013 10
Leeds Combined Secondary Schools United Kingdom Comprises five secondary schools and one primary school, all of which were newly constructed The schools together provide 52,137sqm of quality teaching space for up to 5,000 pupils Two of the schools have received Commendations at the Leeds Architecture awards The schools are part of Making the Grade - a Business Partnership model that sees local businesses provide support such as interview training and mentoring Concession end 2033 Largest project in the IIC portfolio performing well with upside potential 11
Peterborough Hospital United Kingdom One of five additional health projects acquired in 2013 Refurbishment and construction, financing and operations and maintenance of three healthcare facilities 30% stake acquired from Brookfield Infrastructure in April 2013 Full services commencement in September 2011 Strong cash generating project Long remaining concession through to mid 2042 Construction value 335m Excellent example of partnering with the vendor to complete a health transaction at a time when the UK health sector was going through significant change 12
Street Lighting Initial stakes in four street lighting assets acquired as part of the IIC portfolio in August 2013 Barnet, Enfield, Lambeth and Redcar & Cleveland Additional stakes acquired in all four projects from co-shareholders taking shareholding to 100% in each Together the projects have replaced over 56,000 lighting columns and maintain a total of over 105,000 lighting points JLIF now has a portfolio of seven street lighting projects, three purchased from John Laing Developing portfolio acquired from John Laing and other vendors, and efficient acquisition of accretive stakes 13
Avon & Somerset Courts Full Year Results M40 Motorway
Portfolio Valuation Portfolio valuation increased by 258.4m to 795.8m at 31 December 2013 (+ 48.1%) - including investments of 264.6m Strong distributions from the underlying projects of 53.6m - 3.7m (7.4%) ahead of forecast Negative exchange rate movement of 6.1m primarily due to Canadian $ depreciating against Sterling Underlying growth of 7.24% - 0.86% ahead of expected growth of 6.38% Assets acquired in H2 held at acquisition value, as in prior years Significant growth in portfolio value due to substantial acquisitions in late 2013 Good growth in value of existing assets 15
Portfolio Valuation 2013 Movement 'm 850 800 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 537.4m Portfolio valuation December 2012 264.6m Acquisitions & Investments ( 53.6m) ( 0.2m) ( 6.1m) 53.7m Distributions Growth/ (decline) due to changes in discount rates Growth/ (decline) due to exchange rates 742.1m Rebased opening value at December 2012 795.8m Growth on Portfolio valuation rebased valuation December 2013 16
Portfolio Value Underlying Growth % Unwinding of discount rate (weighted for timing of acquisitions and distributions) 6.4% Value enhancements achieved 0.7% Macro economic assumptions 0.1% Underlying growth achieved 7.2% Additional growth due to: (i) identification of cost and efficiency savings across the portfolio (ii) delivering additional value embedded in acquired assets (iii) efficient cash and cost management across the portfolio (iv) reduced UK corporation tax rates to 21%, partly offset by more conservative UK deposit rate assumptions and increased Canadian tax rate to 26% Strong track record of delivering enhanced value on existing assets 17
Balance Sheet Summary Balance Sheet ( m) Dec 2013 ( m) Valuation of Portfolio 795.8 Cash 24.3 Net Debtors/Creditors (2.1) Net Assets 818.1 NAV per share (p) 31/12/13 NAV per share (p) 31/12/12 Number of shares outstanding 766.3m 106.8 105.7 18
Cash Flow Summary m Cash at 31 December 2012 8.3 Capital raised 277.3 Acquisition of projects (264.6) Distributions from projects 53.6 Operating and administrative expenses (9.7) Acquisition costs (3.7) Finance costs (4.1) Issue costs (4.6) Dividends paid to shareholders (28.2) Cash at 31 December 2013 24.3 Ongoing charges ratio (AIC methodology) of 1.16% for 12 months to 31 December 2013 19
North Swindon Schools Portfolio Analysis Kromhout Barracks
Geographic Breakdown as at 31 December 2013 North America 10% Continental Europe 5% UK 85% Source: John Laing Capital Management Limited N.B. Percentages rounded to whole numbers and will therefore have some small rounding errors 21
Sector Breakdown as at 31 December 2013 Regeneration & Social Housing 9% Street Lighting 3% Education 17% Transport 17% Justice & Emergency Services 3% Health (excl. Canada) 31% Government Buildings 9% Health (Canada only) 11% Source: John Laing Capital Management Limited N.B. Percentages rounded to whole numbers and will therefore have some small rounding errors 22
Top 10 Assets by value as at 31 December 2013 LUL Connect (CityLink) 8% North Staffordshire Hospital 8% Other 46% Forth Valley Royal Hospital 7% Abbotsford Regional Hospital and Cancer Centre 7% Ministry of Defence Main Building 6% Tunbridge Wells Hospital 3% Barnsley BSF 3% Peterborough Hospital 3% M40 Motorway 5% Leeds Combined Secondary Schools 4% Source: John Laing Capital Management Limited N.B. Percentages rounded to whole numbers and will therefore have some small rounding errors 23
Portfolio Analysis as at 31 December 2013 Remaining Concession Length Investment Status Payment Basis Greater than 30 years 8% Less than 10 years 11% Operational 100% Demand-based* 0% 20 to 30 years 43% 10 to 20 years 38% Weighted average life 20.2 years (2012 19.6 years) In construction 0% Availability-based 100% Source: John Laing Capital Management Limited * The shadow toll mechanisms for the investments in the M40 and M6/M74 motorway projects are not regarded as carrying demand risk due to their relative insensitivity to traffic movement NB. Percentages rounded to whole numbers and will therefore have some small rounding errors 24
Portfolio Cash Yield Illustrative cash flows from projects over remaining life 100m 90m 80m 70m 60m 50m 40m 30m 20m 10m m 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Current Portfolio IPO This illustration represents a target only and not a profit forecast. There can be no assurance that this target will be met. Source: John Laing Capital Management Limited 25
Portfolio Sensitivity to Inflation Increased Portfolio Value Impact 2013 Portfolio Value Impact 2012 Increase by 1% Increases by 4.10% ( 34.0m) Increases by 3.82% ( 21.3m) Decrease by 1% Decreases by 3.99% ( 30.5m) Decreases by 3.33% ( 17.3m) Portfolio partially protected against higher inflation approximate factor 0.5 Good level of inflation protection marginally increasing 26
2013 Full Year Results Conclusion Portfolio value growth ahead of expectations Strong cash flow with distributions ahead of target Dividend increase of 4.0% Continued NAV growth Solid Balance Sheet 27
Enfield Schools Outlook Newcastle Hospital
Outlook - JLIF Active secondary market for operational projects both in UK and overseas JLIF will continue to carefully select acquisition targets, ensuring that they are suitable for JLIF and are appropriately priced Strategic and long-term outlook to capitalise on evolving changes taking place in the global infrastructure market following shareholder approval to broaden the investment policy Through two First Offer Agreements with John Laing, JLIF has opportunities to purchase additional assets that fit the Fund s investment criteria John Laing contracted pipeline expanded to c. 400 million over the next six years of assets that meet JLIF requirements, in UK, Australia and USA. Revolving credit facility of 150 million allows JLIF the flexibility to capitalise on opportunities Debt facility currently undrawn JLIF will continue to seek quality assets appropriately priced in a buoyant global market Access to John Laing pipeline expanded 29
Outlook for the Infrastructure Market Existing portfolio Contracted operations and income UK evidence of Government covenant support for hospital projects Visible pipeline 3 years Pipeline of projects in UK and abroad already under construction Tertiary and later sales Expanded pipeline resulting from recent broadening of investment policy Longer term growth Active markets in Australia, Canada and Continental Europe, and increasingly so in USA UK Government explicitly support infrastructure development to generate growth PF2 announced Important global procurement method by which governments deliver improvements to infrastructure The fourth National Infrastructure Plan shows that the government is delivering on infrastructure, with a long term strategy to make sure the UK tackles decades of underinvestment... Commercial Secretary to the Treasury Lord Deighton, December 2013 30
Competitive Advantages Portfolio Aim to be fully seeded Selected on low risk characteristics Team Experience in asset and project management In depth knowledge of the assets Dedicated to JLIF Performance based remuneration linked to Total Shareholder Return Structure Low base fee and management costs Capped asset origination fee Very selective on acquisitions Value enhancement Extensive experience First Offer Agreements for existing John Laing pipeline Strategically positioned to capitalise on evolving global infrastructure market 31
Conclusion Strong performance in the year Total Shareholder Return of 13.5% in 2013 Inflation beating dividend increase of 4.0% to 3.25 pence per share Portfolio growth ahead of expectations Asset yield above forecast Significant acquisitions raising net asset value by over 50% Largest portfolio acquisition outside the first offer agreement to date Largest raising of new capital to date Strong, more secure pipeline Strong growth in dividend, good asset performance and favourable outlook 32
Q&A 33
Glasgow Schools Appendices Additional Information Kromhout Barracks
Fund Structure Guernsey domiciled Infrastructure fund with Premium Listing on the London Stock Exchange member of FTSE 250 Low risk characteristics investing in a diversified portfolio of mature PFI/PPP assets Assets have contracted revenues up to 30 years with government-backed revenue streams Gearing of Fund: Board: Up to a maximum 25% of Total Assets Debt facility in place of 150m matures Feb 2016 Margin of 2.3% over LIBOR; currently undrawn Fully independent board Chairman Paul Lester, CBE Management contract: John Laing Capital Management Ltd, FCA authorised and regulated Base fee 1.1% (up to 500m), 1.0% for 500m- 1.0bn, and 0.9% for over 1.0bn No performance fee No acquisition fee for assets from John Laing 35
JLIF vs. FTSE 100 volatility and JLIF Equity Beta 35.0% 30.0% 25.0% JLIF vs. FTSE 100 performance Raw Equity Beta: 0.036 JLIF volatility (30d) FTSE 100 Volatility 20.0% 15.0% 10.0% 5.0% 0.0% Source: Bloomberg, Note: FTSE 100 volatility as represented by the FTSE 100 Volatility Index based on implied volatility of FTSE 100 options, a measure of expected variations in the FTSE 100; JLIF volatility based on 30 day historical volatility, annualised by 260 trading days. Raw Equity Beta based on weekly price performance over time period as calculated by Bloomberg. Raw Equity Beta is an estimate of JLIF s correlated volatility in relation to the volatility of the FTSE 100. Corresponding JLIF Adjusted Equity Beta over concurrent period was 0.355. Adjusted Equity Beta uses JLIF s Raw Beta, but assumes that the metric moves toward the market average of 1 over time. 36
Fund Objectives Return* Targeted dividend at least 6.0 pence per annum (dividend paid semi-annually) Target IRR of 7 to 8% Assets JLIF invests predominantly in equity and/or subordinated debt issued in respect of low risk infrastructure projects that are: Predominantly PPP projects (Up to 10% of Total Assets in non-ppp projects but with similar risk profile and characteristics as PPP projects) Predominantly operational (Up to 30% of Total Assets in construction) Predominantly availability-based (Up to 15% of Total Assets demand based) Inflation-linked Government-backed Upside potential Permission for up to 10% in infrastructure assets with substantially similar risk profile as above (currently unused) Markets Fiscally strong countries Committed to PPP Currently UK, Canada, the Netherlands and Finland * These are targets only and not profit forecasts. There can be no assurances that these targets are met or that the Company will make any distributions at all. 37
Value Chain Gearing The John Laing Model John Laing The Fund 38
Vancouver General Hospital What is PPP? North Swindon Schools
Return Infrastructure Assets Indicative Risk / Return Profile Demand based and Regulated Infrastructure In Construction Operational Availability Infrastructure Risk Free Rate Risk 40
Structure of PPP Contracts Example Public Authority Procure Facility and Pay annual fee Source Fund Assets Invest Equity (10%) and receive coupons, dividends and principal Project Agreement 20 25 year concession Lend Senior Debt (90%) and receive interest and principal Investor Shareholders Agreement Special Purpose Co Finance Agreements Senior Lender Design & Build Agreement Facility Management Agreement Builder Operator Fixed price Fixed price with regular benchmarking 41
Value PPP Value Generator Example Portfolio assets Years 1 3-6 1-2 15-20 2-3 Preferred Bidder Construction Ramp Up Yield Maturity 42
Value Enhancement Opportunities Strong Track Record of Delivering Enhanced Value Value Creation 43