International Public Partnerships Ltd · LSE:INPP
International Public Partnerships — FY2010 Earnings Presentation
54 slides from International Public Partnerships's earnings presentation, Mar 31, 2011
Slide 1: 2010 Annual Review
2010 Annual Review 31 March 2011
Slide 2: Agenda
Agenda 1. Results Highlights 2. Sensitivity Analysis 3. Asset Management 4. Outlook Appendix • INPP Portfolio • Top 10 Investments Results Briefing: 9:30am, Thursday 31 March 2011 Financial Dynamics - Holborn Gate, London WC2A 1PB Conference Call: Participant Telephone Number: +44 (0)20 7138 0822 Co
Slide 3: Key Highlights
Key Highlights 1. Continued strong investment performance reflected in robust NAV growth, despite macro- economic volatility 2. Dividend increased for fourth consecutive year and continues to be covered by operating cash flow (2010: 1.2x covered) 3. Solid capital growth potential from construction p
Slide 4: Results Highlights
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 5: 2010 Annual Review
2010 Annual Review • Net Asset Value (NAV) of £541.9m or 113.1 pence per share, an increase of 0.2 pence per share since 30 June 2010 at 2.5% inflation assumption (2.75% inflation assumption: 114.4 pence per share) • Profit before tax of £15.9m • Dividend of 5.70 pence per share as per target and 1.
Slide 6: Operational Cashflow
Operational Cashflow • Net surplus cashflow up 15.8% for 2010 to £6.6m • 2010 FY dividend cover of 1.2x FY 2009 FY 2010 £m £m Investment cashflow1 37.3 43.0 add interest revenue 0.3 0.3 less corp. facility and interest expense (1.6) (1.0) less dividend to shareholders for FY 2010 (20.8) (27.0) less
Slide 7: Income Statement
Income Statement FY 2009 FY 2010 IFRS Basis £m £m Income 738.9 642.0 Cost of sales (585.3) (466.9) Finance costs (95.0) (121.9) Other costs (47.2) (37.3) Profit before tax 11.4 15.9 Tax (3.0) (1.1) Profit after tax 8.4 14.8 7
Slide 8: Events Post Balance Date
Events Post Balance Date • Directors have confirmed dividend guidance of 5.85 pence per share for FY 2011. Expected to be entirely covered by operating cashflow, as per previous periods • Terms agreed in principle for £100m corporate debt facility renewal with RBS and NAB. Term to be extended for a
Slide 9: Continued Strong Investment Performance
Continued Strong Investment Performance Total Shareholder Return from IPO to 31 December 2010 of 40.7% compared to 24.4% for FTSE 250 • Out performance of FTSE AllShare and FTSE 250 by 20.6% and 7.4% since IPO • Strong yield relative to market 9
Slide 10: Nine Acquisitions Announced Today
Nine Acquisitions Announced Today • INPP has today announced the acquisition of four new projects – Liverpool Central Library PFI – Three UK LIFT projects: South Bristol Community Hospital, Goscote Palliative Care Centre, Harrow Neighbourhood Resource Centres • In addition, INPP has agreed to acquir
Slide 11: Liverpool Central Library PFI
Liverpool Central Library PFI • Provision of a new Central Library and Archive Facility for the City of Liverpool – One of the flagship legacy projects for the Liverpool City Council in 2008 as part of the Liverpool European Capital of Culture programme – Includes refurbishment of historic fabric an
Slide 12: UK Offshore Transmission - Projects Awarded to INPP
UK Offshore Transmission - Projects Awarded to INPP • Offshore transmission is an important new sector for INPP and its consortium, Transmission Capital Partners • Robin Rigg – First UK OFTO to reach financial close in March 2011 – £12.4m equity value – 84% geared – 19 year debt facility matched to
Slide 13: UK Offshore Transmission - Key Asset Features
UK Offshore Transmission - Key Asset Features 1. Full availability revenue stream • No demand risk or exposure (either revenue or penalties) to wind farm performance or credit • Minimum downside risk: Performance deductions capped at 10% in any year 2. Long term revenue • 20 year initial guaranteed
Slide 14: Net Asset Value
Net Asset Value • INPP reports a Net Asset Value (NAV) every six months using discounted cashflow (DCF) methodology – Major determinants of the discount rate used in the DCF valuation include the risk free rate and additional risk premium – Risk premium will reduce over the life of an asset as it ma
Slide 15: Net Asset Value Assumptions
Net Asset Value Assumptions INPP continues to report a ‘base case’ NAV which incorporates: Included in INPP NAV Excluded in INPP NAV Contracted revenue streams only x No additional revenue from future variations or third party revenue Existing debt structures x No additional revenue from future
Slide 16: Analysis of Movement in NAV – Six Months to 31 December 2010
Analysis of Movement in NAV – Six Months to 31 December 2010 Analysis of change in Net Asset Valuation (£m) Net Assets at 30 June 2010 516.5 Capital Raising 22.4 Change in Risk Free Rate (11.0) Change in Project Risk Premium (4.7) Change in FX Curve1 16.0 Investments 2.6 Half year dividend (13.4) Po
Slide 17: Macro-Economic Impacts on NAV
Macro-Economic Impacts on NAV Long Term 31 Dec 30 Jun 31 Dec Movement Movement Risk-free 2009 2010 2010 (Dec 09 – (Jun 10 – Rate Dec 10) Dec 10) Changes UK 4.47% 4.11% 4.13% -34 b.p. +2 b.p. Australia 5.79% 5.20% 5.58% -21 b.p +38 b.p. Canada 4.19% 3.61% 3.49% -70 b.p. -12 b.p. France 4.20% 3.59% 3.
Slide 18: Sensitivity Analysis
Sensitivity Analysis INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 19: Interest Rate Analysis
Interest Rate Analysis • Interest Rates – A major determinant of the discount rate used to calculate NAV is the long-term risk free rate and therefore movements in interest rates will impact valuation. INPP (and peers) use nominal risk free rates for this purpose Sensitivity Implied Change Implied N
Slide 20: Inflation Analysis
Inflation Analysis • Inflation – Movements in inflation result in changes to revenue due to the inflation linkage inherent in most of INPP’s concessions. More than 70% of total revenue is inflation linked, however operating costs also grow in line with inflation Sensitivity Implied Change Implied NA
Slide 21: Construction Portfolio Analysis – Opportunities for Capital Growth
Construction Portfolio Analysis – Opportunities for Capital Growth • 28% of INPP’s portfolio at 31 December 2010 was under construction. This offers opportunity for significant growth in NAV and will offset any impact from increases in interest rates in future periods – As these projects reach const
Slide 22: Foreign Exchange Analysis – Solid Hedging in Place
Foreign Exchange Analysis – Solid Hedging in Place • 63% of the project distributions received in 2010 were generated by UK assets due to the early- stage nature of most of INPP’s non-UK projects • 3-year hedging policy designed to support a high degree of certainty regarding forecast dividends – FX
Slide 23: Asset Management
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 24: 2010 Asset Management Review
2010 Asset Management Review • Performance standards across the portfolio were maintained at high standards – Very low availability deductions in 2010: All passed through to counterparties • Construction completed at the following sites in 2010, all on schedule: – Dudley Brierley Hill LIFT (UK) – Pf
Slide 25: INPP Construction Portfolio – Opportunities for Capital Growth
INPP Construction Portfolio – Opportunities for Capital Growth 28% of INPP’s portfolio is under construction with 70% of the construction programme due to be completed within 18 months: Asset Location Expected Completion Status % of INPP Date Orange Hospital Australia July 2011 On schedule 3 .8% Sou
Slide 26: Managing the Mature Portfolio – Opportunities for Dividend Growth
Managing the Mature Portfolio – Opportunities for Dividend Growth • 72% of INPP’s portfolio is operational, providing solid cashflow coverage of the dividend (2010: 1.2x) • INPP’s dividend is forecast to be covered by operational cashflow until at least 2032 (assumes 2.5% annual growth in dividends)
Slide 27: Outlook
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 28: Outlook
Outlook 1. Fewer conventional UK PFI and PPP accommodation projects – Projects proceeding only where there is a proven need 2. UK government focussing on new projects in the transport and utility-related sectors – INPP well placed in both these sectors 3. UK government will be reliant on private sec
Slide 29: Secondary Market Opportunities
Secondary Market Opportunities Significant pipeline of mature projects available for purchase as original owners of assets look to take advantage of improved market conditions to recycle equity in 2011 In 2010 Amber reviewed seven secondary market portfolios on behalf of INPP • Four were not progres
Slide 30: INPP Cash Analysis
INPP Cash Analysis £m Cash Balance Capital raising will be Cash as at 31 Dec 2010 68 considered following Issue of New Equity – January 2011 2 the substantial use of Robin Rigg OFTO – March 2011 (12) INPP’s cash reserves and debt Liverpool Library & NHS LIFT projects – March 2011 (11) facility into
Slide 31: NAV Update Since December 2010
NAV Update Since 31 December 2010 Since 31 December 2010: • Further increases in long-term risk-free rates – Weighted average rate up 18b.p. from 4.49% at 31 December to 4.67% at 29 March • Potential for NAV uplift from portfolio derisking as construction assets near completion – Should significantl
Slide 32: Summary
Summary • Robust financial position: £33m cash and £100m undrawn corporate debt facility for future opportunities • Growing dividend profile, with dividends expected to continue to be funded by operating cashflow: Target dividend for 2011 up 3% to 5.85 pence per share • Solid capital growth potentia
Slide 33: Appendix
Appendix INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 34: INPP Portfolio
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 35: Key Facts
Key Facts • Long-term investor in 60 social and transport infrastructure projects • 100% invested in OECD countries • > 99% of revenue is fixed or index-linked (e.g. RPI in the UK) • Weighted average contract life of 24 years • 72% operational (= income); 28% under construction (= capital growth) •
Slide 36: INPP Portfolio
NHS LIFT Investments Project Location Alexandra Avenue Primary Care UK Mt Vernon UK Nightingale Lane UK INPP Portfolio Beckenham Hospital Garland Road Health Centre UK UK Ridge Hill and Stourbridge Shirehampton and Whitchurch UK UK Newby Place Gascote Palliative Care Centre UK UK Gem Centre Health C
Slide 37: Diversified Portfolio
Diversified Portfolio 60 projects across several PPP/PFI sectors1 Geographic and sector diversity: 52% 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 38: Conservative Gearing
Conservative Gearing No current corporate level gearing – Terms agreed in principle with RBS and NAB for £100m corporate debt facility renewal – Term to be extended for a further three years to May 2014 – In addition, £33m of cash available for new opportunities Long term asset-level debt in place –
Slide 39: Top 10 Investments
Top 10 Investments INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 40: Diabolo Rail Belgium
Diabolo Rail Belgium Project description New rail tunnel project connecting Belgium international airport Zaventem with rail track between Brussels and Antwerp. Consists of two single track drilled tunnels of 1070 metres and extension of the existing train station Where Brussels, Belgium Project awa
Slide 41: The Royal Children's Hospital Project Australia
The Royal Children’s Hospital Project Australia Project description Construction of a children’s hospital on site adjacent to the existing hospital, refurbishment of selected existing hospital buildings, erection of temporary accommodation structures, transitional services and, upon completion, demo
Slide 42: The Royal Children's Hospital Project Australia
The Royal Children’s Hospital Project Australia Location view Construction status view (Mid 2010) Main entrance to the Facility 42
Slide 43: Hereford and Worcester Courts UK
Hereford and Worcester Courts UK Project description Three new build courthouses at Hereford, Worcester and Kidderminster, and one refurbished courthouse in Redditch Where Hereford, Kidderminster, Worcester and Redditch, UK Project awarded February 2000 Holding 100% % of INPP’s portfolio 8% Concessi
Slide 44: BeNEX GmbH Germany
BeNEX GmbH Germany Description BeNEX invests in companies holding rail and bus operating concessions in Germany. BeNEX is a joint venture between INPP and Hamburger Hochbahn AG (HHA), a subsidiary of the Federal State and City of Hamburg. Concessions currently include 6 rail and 4 bus subsidiaries w
Slide 45: BeNEX GmbH Germany
BeNEX GmbH Germany NAL PUBLIC PARTNERSHIPS
Slide 46: Strathclyde Police Training College UK
Strathclyde Police Training College UK Project description Police training college which extends to 18,000m2. The facility includes a 224 capacity lecture theatre, student accommodation, firearms range and a replica bank, stadium and house for public order training Where East Kilbride, UK Project aw
Slide 47: Alberta Schools Canada
Alberta Schools Canada Project description 9 new schools in Edmonton and 9 new schools in Calgary, with space for more than 12,000 students Where Edmonton and Calgary, Canada Project awarded September 2008 Holding 75% % of INPP’s portfolio 6% Concession end date September 2040 Construction completio
Slide 48: Northampton Schools UK
Northampton Schools UK Project description New build, remodelling and refurbishment of 42 schools including primary, secondary and special education needs (SEN) schools, 12 of which are new build Where Northampton, UK Project awarded December 2005 Holding 100% % of INPP’s portfolio 6% Concession end
Slide 49: London Borough Tower Hamlets Grouped Schools PFI Project UK
London Borough Tower Hamlets Grouped Schools PFI Project UK Project description Design, build, finance and operation of 27 schools (22 primary, 5 secondary). The scheme comprises 2 new build primary schools with the remaining facilities receiving extensions, alterations, remodelling and refurbishmen
Slide 50: Angel Trains UK
Angel Trains UK Description One of three rolling stock leasing companies (ROSCOs) formed from the part privatisation of British Rail – now the UK’s leading train leasing company, with an asset base comprising 4.400 vehicles (37% of the UK’s total rolling stock). Angel owns a mix of passenger and fre
Slide 51: Orange Hospital Project Australia
Orange Hospital Project Australia Project description A$200m hospital project located in regional NSW. Consists of the design, construction and operation of a new regional acute hospital comprising: - 175 overnight beds - 156 mental health beds - range of ambulatory and outpatient facilities. The Pr
Slide 52: Contacts
Contacts INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 53: Contact Details
Contact Details Amber Investment Management Financial Dynamics (PR & Communications) Director: Managing Director: Giles Frost Ed Gascoigne-Pees Telephone: +44 (0)20 7939 0550 Telephone: +44 (0)20 7269 7132 Email: Giles.Frost@amberinfrastructure.com Email: Ed.Gascoigne-Pees@fd.com Operations and Inve
Slide 54: Important Information
Important Information • The information in this document has been prepared by Amber Fund Management Limited and International Public Partnerships Limited solely for use at an information presentation about International Public Partnerships Limited (“INPP"). This document and its contents are confide
International Public Partnerships — FY2010 Earnings Presentation on 6ix