International Public Partnerships Ltd · LSE:INPP
International Public Partnerships — H1 2010 Earnings Presentation
45 slides from International Public Partnerships's earnings presentation, Aug 26, 2010
Slide 1: Half Year Results Presentation
Half Year Results Presentation 26 August 2010
Slide 2: Agenda
Agenda 1. INPP Results Highlights 2. Asset Management 3. Outlook 4. Offshore Transmission 5. Other Forthcoming Opportunities 6. Summary 7. Appendix Results Briefing: 9:30am, Thursday 26 August 2010 Financial Dynamics - Holborn Gate, London WC2A 1PB Conference Call: Participant Telephone Number: +44
Slide 3: Key Highlights
Key Highlights 1. Continued strong investment performance 2. Additional share capital raised in January 2010 now fully allocated to new investments 3. Exceptional pipeline of further opportunities for 2010/2011 4. High income and low volatility vs. market 3
Slide 4: About International Public Partnerships (INPP)
About International Public Partnerships (INPP) • The Company has 53 investments in the social and transport infrastructure sectors and is 100% invested in OECD countries • 99% of revenue is government-backed and >70% is index-linked (RPI in the UK) • The weighted average remaining contract life of i
Slide 5: About Amber Fund Management Limited
About Amber Fund Management Limited • Part of the Amber Infrastructure Group • 54 staff based in the UK, Europe, Australia and North America • Originated and executed over £8 billion of investment in public infrastructure in the last 10 years • Exclusively focussed on the infrastructure sector • Spe
Slide 6: INPP Results Highlights
INPP Results Highlights INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 7: 2010 Interim Results
2010 Interim Results • Net Asset Value (NAV) of £516.5m Key Metrics – Increase of 0.8 pence per share since Net Asset Value (NAV) £516.5m 31 December 2009 to 112.9p per share NAV per Share 112.9p 2010 Target Annual Distribution1 (up 3%) 5.70p 1H 2010 Distribution 2.85p • First half distribution incr
Slide 8: Events Post 30 June
Events Post 30 June • Continued solid performance in the existing portfolio – Directors have confirmed distribution guidance of 5.70 pence per share for FY 2010 – 1H 2010 dividend of 2.85 pence to be paid on 15 October, ex-dividend 1 September. Scrip dividend option available – As illustrated, net p
Slide 9: Investment Performance
Investment Performance • Outperformance of FTSE 250 and AllShare by 2.5% and 10.4% in 1H 2010 • Strong yield relative to market • Total Shareholder Return from IPO to 30 June 2010 of 35.8% compared to negative 0.5% for FTSE 250 9
Slide 10: Operational Cashflow
Operational Cashflow • A higher revenue income is forecast for FY 2010 compared to FY 2009 • This is expected to result in an increased overall investment cashflow position for the full year Forecast FY 2009 1H 2010 FY 2010 £m £m vs. FY 2009 Investment cashflow1 37.3 15.7 Increase add interest reven
Slide 11: Income Statement
Income Statement • Reporting loss due to non cash items including depreciation, impairment charge for marked-to-market assets, volatility in CPI and the impact on index linked bond financed projects, and adverse foreign exchange impacts from a strengthening of the £ vs. € IFRS Basis Six month period
Slide 12: Net Asset Value (NAV)
Net Asset Value (NAV) • NAV increased by 0.8p per share in1H 2010: Continued solid asset performance and declining risk free rates outweighed negative impacts from adverse foreign exchange movements (£ vs. €) and the impairment booked on a small asset , RiverCity Motorway, which represents less than
Slide 13: Analysis of Movement in NAV
Analysis of Movement in NAV Analysis of change in Net Asset Valuation (£m) Net Assets at 31 Dec 2009 420.2 Capital Raising (January 2010) 89.3 Change in Risk Free Rate 17.2 Change in Project Risk Premium 1.2 Change in FX Curve (7.8) Investments 0.6 Half year distribution (12.6) Portfolio Return1 8.4
Slide 14: Macro-Economic Impacts on NAV
Macro-Economic Impacts on NAV Long Term 30 Jun 31 Dec 30 Jun Movement Movement Risk-free 2009 2009 2010 (Jun 09 – (Dec 09 – Rate Jun 10) Jun 10) Changes UK 4.40% 4.47% 4.11% -29 b.p. -36 b.p. Australia 5.72% 5.79% 5.20% -52 b.p -59 b.p. Canada 4.01% 4.19% 3.61% -40 b.p. -58 b.p. France 4.35% 4.20% 3
Slide 15: Asset Management
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 16: Asset Management Review
Asset Management Review • Construction completion of: – Dudley Brierley Hill LIFT in April 2010 – on schedule – Alberta Schools in July 2010 – 1 month early • Other portfolio initiatives: – £300k insurance savings (approximately 30% of total cost) – Lease agreements for Phase 1 retail outlets in pla
Slide 17: Variation Requests
Variation Requests • INPP is regularly asked to undertake additional works on existing projects. Each of these opportunities represents additional income to INPP. During the period work was underway on the following programs: – Norfolk Police: Additional building due to open in Q3 2010 – Strathclyde
Slide 18: INPP Construction Portfolio
INPP Construction Portfolio 24% of INPP‟s portfolio is under construction. All projects on target or ahead of schedule: Asset Location Expected Status % of INPP Completion Date Pforzheim Schools Germany September 2010 On schedule 0.3 Orange Hospital Australia July 2011 On schedule 3 .4 South East Re
Slide 19: Managing the Construction Portfolio – Opportunities for Capital Growth
Managing the Construction Portfolio – Opportunities for Capital Growth • As projects reach construction completion and the risks associated with their cash flows diminish, the project risk premium and therefore overall discount rate applied to those cash flows will decrease • The project risk premiu
Slide 20: Outlook
Outlook INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 21: Impact of UK Government Spending Review
Impact of UK Government Spending Review “One way of getting the economy moving is large scale infrastructure spending” Business Secretary Vince Cable, July 2010 Sector Government Action Next Initiative INPP Impact Overview June Budget reiterated the Infrastructure spending to be protected from furth
Slide 22: Impact of UK Government Spending Review, continued
Impact of UK Government Spending Review, continued Sector Government Action Next Initiative INPP Impact Transport Sale of existing road and rail Business Secretary Vince Cable is expected to progress the Government‟s Positive – INPP recognised as a key infrastructure remains under plans to sell exis
Slide 23: Full Investment Achieved
Full Investment Achieved • In January 2010 INPP raised £89m of new equity capital, of which £58m was used to repay the outstanding corporate debt facility • The following specific investment opportunities where INPP has exclusivity will ensure full utilisation of the balance: Project Location Expect
Slide 24: Offshore Transmission
Offshore Transmission INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 25: Offshore Transmission
Offshore Transmission • A major new investment opportunity for INPP • In March 2007 the European Commission set a binding target to increase the renewable component of total energy consumption to 20% in Europe by 2020 • Within this the UK is bound to increase its contribution of renewable energy to
Slide 26: Nature of the Offshore Transmission Asset
Nature of the Offshore Transmission Asset Onshore TO Offshore Transmission Owner (OFTO) Generator Connection to onshore network Onshore Substation Offshore Platform 132 kV Cable 33 kV Inter Array Cables BID TIMELINE 26
Slide 27: Substations – Offshore and Onshore
Substations – Offshore and Onshore 27
Slide 28: High Voltage Subsea Cables
High Voltage Subsea Cables 28
Slide 29: Establishment of the Transmission Regime
Establishment of the Transmission Regime • A new regulatory regime has been established by the UK Government to separate the development of the new wind farms from the ownership of the transmission lines that connect them to the onshore grid. The latter activity is now a licensed activity regulated
Slide 30: Phase 1 Transmission Assets
Phase 1 Transmission Assets Project Preferred Bidder 2 Amber/INPP Barrow INPP and partners awarded projects: - Barrow - Robin Rigg Robin Rigg INPP and partners - Gunfleet Sands Gunfleet Sands I & II INPP and partners 6 Amber/INPP short- Sheringham Shoal Macquarie listed projects: - Ormonde Walney 1
Slide 31: Attractions for INPP
Attractions for INPP • This asset class is a very good fit for INPP: – No generation risk – Payment is based on the cable remaining available for use – Payment is not affected if there is no wind – INPP is not in the electricity generation business – Risk profile is very consistent with PFI/PPP risk
Slide 32: Evolution of the Sector
Evolution of the Sector 2009 2010 2011 2020 35 Final Consultation Cumulative UK 30 complete Offshore Wind Go-Active Capacity (GW) 25 INPP expects to bid schemes in the next First Transitional rounds with the same Tender Process team 20 Circa £1.1bn £1,1bn 15 Go-Live INPP awarded 3 out of 7 Second Tr
Slide 33: Other Forthcoming Opportunities
Other Forthcoming Opportunities
Slide 34: Exclusive Opportunities
Exclusive Opportunities • INPP currently benefits from a number of additional exclusive investment opportunities that will be available for investment in 2010. The value of these exceeds £45m: Project Location Expected Concession Indexation Investment Date Length Liverpool Library Liverpool, UK Fina
Slide 35: Pipeline Opportunities
Pipeline Opportunities • In addition to those opportunities that are exclusive to INPP, the Company benefits from a significant pipeline of additional opportunities that are at varying stages of development. These include: Project Location Description and Expected Concession Indexation Investment Da
Slide 36: Pipeline Opportunities, continued
Pipeline Opportunities, continued Project Location Description and Expected Concession Indexation Investment Date Length Melbourne Oncology Project Australia Amber/INPP is a member of a joint venture that is 1 of 2 bidders to 25 years CPI provide a new A$1 billion oncology centre for the State of Vi
Slide 37: Aborted Transactions
Aborted Transactions • INPP considers and discards more opportunities than it progresses. By way of example, INPP has considered and not progressed three major portfolio transactions in 2010 which have then gone on to be sold to other buyers at higher prices: Project Location Vendor Notes Contractor
Slide 38: Summary
Summary INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 39: Summary
Summary • Growing distribution profile, with distributions expected to continue to be funded by operating cashflow from underlying projects. Further increases expected in future years • Solid capital growth potential • Additional share capital raised in January 2010 now fully allocated to new invest
Slide 40: INPP Attributes
INPP Attributes INPP Peers 1. High revenue visibility 2. Strong cash flow generation 3. Long term rights to operate 4. International diversification 5. Majority ownership interests 6. Capital growth potential from construction portfolio 7. Ability to self originate investment oppor
Slide 41: Appendix: Portfolio Overview
Appendix: Portfolio Overview
Slide 42: INPP Portfolio
NHS LIFT Investments Project Location Alexandra Avenue Primary Care UK Mt Vernon UK INPP Portfolio Beckenham Hospital Garland Road Health Centre UK UK Ridge Hill and Stourbridge Shirehampton and Whitchurch UK UK Gem Centre, Health Centre UK Sudbury Health Centre UK Monks Park Health Centre UK Church
Slide 43: Diversified Portfolio
Diversified Portfolio 53 projects across several PPP/PFI sectors1 Geographic and sector diversity: 48% of assets located offshore, up from 10% at IPO. Solid diversification by sector Contractual certainty of revenue streams: 99% of cashflows via availability-based mechanisms providing revenue certai
Slide 44: Contacts
Contacts INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 45: Contact Details
Contact Details Amber Investment Management Financial Dynamics (PR & Communications) Managing Director: Director: Ed Gascoigne-Pees Giles Frost Telephone: +44 (0)20 7269 7132 Telephone: +44 (0)20 7939 0550 Email: Ed.Gascoigne-Pees@fd.com Email: Giles.Frost@amberinfrastructure.com Vice President: Ope
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