International Public Partnerships Ltd · LSE:INPP
International Public Partnerships — H1 2011 Earnings Presentation
50 slides from International Public Partnerships's earnings presentation, Aug 30, 2011
Slide 1: 2011 Interim Result Presentation
2011 Interim Result Presentation 30 August 2011
Slide 2: Agenda
Agenda 1. Results 2. Post 30 June events 3. Valuation 4. Asset Management 5. Opportunities and Outlook 6. Summary Appendix • New assets in the period • Valuation sensitivity analysis • Top 10 investments About the Investment Advisor Contacts Results Briefing: Conference Call: 9:30am, Tuesday 30 Augu
Slide 3: Highlights
Highlights 1. Continued good investment performance despite macro-economic volatility 2. Dividend increased for fourth consecutive year and continues to be fully covered by operating cash flow 3. Continued capital growth potential from construction portfolio with forecast NAV growth of 15% to 2015 f
Slide 4: Results
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 5: 2011 Interim Results
2011 Interim Results • Net Asset Value (NAV) of £550.0m or 113.6 pence per share – an increase of 0.5 pence per share since 31 December 2010 at 2.5% inflation assumption (2.75% inflation assumption: 114.9 pence per share) • Profit before tax of £11.4m (30 June 2010: £(2.4)m) • Dividend of 2.925 penc
Slide 6: Operational Cashflow
Operational Cashflow • Net surplus cashflow up to £5.9m for 1H 2011 • Cover on cash dividend paid in 1H 2011 of 1.6x 1H 2011 1H 2010 £m £m Investment cashflow1 21.7 15.7 add interest revenue 0.3 0.3 less corp. facility and interest expense (1.5) (0.5) less cash dividend paid to shareholders in perio
Slide 7: Income Statement
Income Statement • Profit of £11.4m driven by: – New revenue streams from investments and assets commencing operation – Currency movements - notably further depreciation of GBP against AUD 1H 2011 1H 2010 IFRS Basis £m £m Income 239.3 318.3 Cost of sales (141.5) (236.7) Finance costs (72.7) (62.6) O
Slide 8: 2011 Interim Results – operational highlights
2011 Interim Results – operational highlights • £39.8m of capital deployed to 13 new projects during 1H2011 – £11.1m invested for 26.6% equity stake in A$1b Gold Coast Rapid Transport – Good progress on offshore transmission - Reached financial close on Robin Rigg (£12.4m investment). - Post 30 June
Slide 9: Investment Performance
Investment Performance Total Shareholder Return from IPO to 23 August 2011 of 43.3% compared to -0.7% for FTSE AllShare • INPP share price outperformed FTSE 250 and FTSE AllShare by 13.5% and 12.8% since beginning of 20111 • Continued strong yield relative to market1 1. As at 23 August 2011 9
Slide 10: Post 30 June Events
Post 30 June Events | , ieee TONAL PUBLIC PARTNERSHIPS
Slide 11: Post Balance Date Events
Post Balance Date Events • Directors have confirmed dividend guidance1 of 5.85 pence per share for FY 2011. Expected to be entirely covered by operating cashflow, as per previous periods • Completed additional £68.7m of investment – now 109 assets in portfolio – £58.4m acquisition of Building School
Slide 12: Building Schools for the Future Investments (BSFI) acquisition
Building Schools for the Future Investments (BSFI) acquisition • £58.4m acquisition of 100% of BSFI from the Department for Education and Partnerships UK – Funded partly through available cash and partly through corporate debt facility • BSFI has 10%-20% interest in all BSF projects to date which ut
Slide 13: UK Offshore Transmission - Update
UK Offshore Transmission - Update • Good progress made on offshore transmission for INPP and its consortium, Transmission Capital Partners • Robin Rigg and Gunfleet Sands first UK OFTOs to reach financial close – c. £23m equity committed across both projects • Preferred bidder on Barrow – Expected t
Slide 14: Political Environment
Political Environment • Increased scrutiny of the value the UK Government achieves from PPP/PFI projects • INPP well placed to engage in the savings required by HM Treasury in July cost savings guidance: – Long standing practice to maintain dialogue with public sector client to examine the services
Slide 15: Valuation at 30 June
Valuation at 30 June © ieee TONAL PUBLIC PARTNERSHIPS
Slide 16: Net Asset Value
Net Asset Value • In 1H 2011 NAV increased by 0.5 pence per share to 113.6 pence – Further GBP depreciation (positive impact) and some portfolio derisking (positive impact) partially offset by increase in risk free rates in some countries (negative impact) • Discount rate down 1 basis point (0.01%)
Slide 17: 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 18: Analysis of Movement in NAV – Six Months to 30 June 2011
Analysis of Movement in NAV – Six Months to 30 June 2011 Analysis of change in Net Asset Valuation (£m) Net Assets at 31 December 2010 541.9 Capital Raising 2.3 Change in Risk Free Rate (6.1) Change in Project Risk Premium 5.0 Change in FX Curve1 5.9 Investments 1.5 Half year dividend (13.7) Portfol
Slide 19: Asset Management
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 20: 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 21: Asset Management Review
Asset Management Review • Operational and compliance performance standards across the portfolio maintained at high levels • Very low availability deductions in 1H 2011: all passed through to counterparties • Working with commissioning authorities to identify and implement operational savings followi
Slide 22: INPP Construction Portfolio – Opportunities for Capital Growth
INPP Construction Portfolio – Opportunities for Capital Growth • 27% of INPP’s portfolio is under construction with 63% of the construction programme due to be completed within 18 months: – Associated construction premia expected to unwind as projects near completion with associated uplift to NAV As
Slide 23: Portfolio Diversification at 30 June 2011
Portfolio Diversification at 30 June 2011 60 projects across several PPP/PFI sectors Geographic and sector diversity: 52% of assets located outside UK, up from 10% at IPO. Solid diversification by sector in OECD countries Contractual certainty of revenue streams: 100% of cashflows via availability-b
Slide 24: Conservative Gearing
Conservative Gearing Currently utilising corporate level gearing – £100m corporate debt facility renewal, as at 30 August approximately £60m drawn – Considering fundraising options Long term asset-level debt in place – Fixed term, fixed rate – Weighted average concession length remaining of 23 years
Slide 25: Opportunities
Opportunities INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 26: Pipeline of Primary Opportunities
Pipeline of Primary Opportunities • Significant number of investment opportunities • Approximately £450m pipeline of new projects under development over next 2 years including: Project Country Status Description and Expected Concession Indexation Investment Date Length Building Schools for UK Frame
Slide 27: Pipeline of Primary Opportunities (continued)
Pipeline of Primary Opportunities (continued) Project Country Status Description and Expected Concession Indexation Investment Date Length Offshore UK Short INPP and partners are shortlisted for this project. Offered 20 years RPI Transmission: Gwynt Listed post construction completion. Financial clo
Slide 28: Secondary Market Opportunities
Secondary Market Opportunities • In 1H 2011, Amber reviewed six secondary market portfolios on behalf of INPP – Successfully acquired Building Schools for the Future interest following period end – Bids submitted for three other portfolios but unsuccessful in each case due to price – INPP maintains
Slide 29: New Business Outlook
New Business Outlook 1. Fewer conventional large UK PFI and PPP accommodation projects – Projects proceeding only where there is a proven need 2. UK government focussing on new projects in the education, transport and utility-related sectors – INPP well placed in these sectors 3. Despite PFI controv
Slide 30: Summary
Summary ieee TONAL PUBLIC PARTNERSHIPS
Slide 31: Summary
Summary • Robust financial position • Growing dividend profile, with dividends expected to continue to be funded by operating cashflow • Solid capital growth potential • Continued inflation protection: >70% of gross revenues have inflation linkage • Exciting pipeline of investment opportunities unde
Slide 32: Appendices
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 33: Appendix 1 - New Assets in Period
Appendix 1 - New Assets in Period
Slide 34: Gold Coast Rapid Transport
Gold Coast Rapid Transport • INPP’s eighth Australian investment • £11.1m invested for 26.6% equity position into £1bn Gold Coast Rapid Transport • 13km of above ground light rail between Gold Coast University Hospital and Broadbeach comprising: – 16 stations, viaduct and bridge structures, 14 rail
Slide 35: UK Offshore Transmission - Robin Rigg
UK Offshore Transmission - Robin Rigg • Transmission cable connection to the offshore wind farm at Robin Rigg – located 12km off the coast of Cumbria – generation capacity of approximately 180MW • £12.4m investment in 100% of the equity and subordinated debt • Key features of the project include: –
Slide 36: Liverpool Library and NHS LIFT projects
Liverpool Library and NHS LIFT projects Liverpool Library • 80.1% interest in Liverpool Central Library PFI • A flagship legacy project for the Liverpool City Council in 2008 • Meets the Company's key investment criteria including: – Construction scheduled for completion in December 2012 – Long-term
Slide 37: Additional interests acquired: Long Bay and Melbourne Showgrounds
Additional interests acquired: Long Bay and Melbourne Showgrounds Long Bay Forensic and Prison Hospital • Additional 50% interest acquired for £6.7m. Now 100% owned • Design, construction and operation of an 85 bed prison hospital and a 135 bed forensic hospital on grounds of Long Bay Correctional C
Slide 38: Appendix 2 - Valuation Sensitivity Analysis
Appendix 2 - Valuation Sensitivity Analysis
Slide 39: 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 – interest rate sensitivities thus n
Slide 40: Inflation Analysis
Inflation Analysis • Inflation – Movements in inflation result in changes to revenue due to the inflation linkage contained in most of INPP’s concessions. More than 70% of total revenue has inflation linkage, however operating costs also grow in line with inflation Inflation Implied Change Implied N
Slide 41: Construction Portfolio Analysis – Opportunities for Capital Growth
Construction Portfolio Analysis – Opportunities for Capital Growth • 27% of INPP’s portfolio at 30 June 2011 is under construction. This offers opportunity for growth in NAV and can offset any impact from increases in interest rates in future periods – As these projects reach construction completion
Slide 42: Foreign Exchange Analysis – Hedging in Place
Foreign Exchange Analysis – Hedging in Place • 56% of the project distributions received in 1H2011 were generated by INPP’s non-UK projects reflecting the growing international portion of the portfolio • Hedging policy designed to support a high degree of certainty regarding forecast dividends – FX
Slide 43: Appendix 3 - Top 10 Investments
Appendix 3 - Top 10 Investments
Slide 44: Top 10 Investments as at 30 June 2011
Top 10 Investments as at 30 June 2011 • Top 10 investments comprise 63% of portfolio by value Project Description Location % INPP Portfolio INPP Holding Diablo Rail New rail tunnel project Belgium 13.7% 75% BeNEX GmbH Rail and bus operating concessions Germany 7.4% 49% Royal Children’s Hospital Proj
Slide 45: About the Investment Advisor
About the Investment Advisor
Slide 46: Amber Infrastructure Group – Principal Activities
Amber Infrastructure Group – Principal Activities Amber Infrastructure Group is now one of the largest independent specialist infrastructure fund advisors/managers in Europe Amber Infrastructure Group Amber Amber Fund Amber Asset Amber Amber GmbH Amber Care Transmission Infrastructure Management Man
Slide 47: About Amber Infrastructure
About Amber Infrastructure • Expertise in social and public infrastructure development, investment management, finance and asset management – Originated and executed over £9b of investment in public infrastructure in the last 10 years – Over 50 staff based in the UK, Europe, Australia and North Amer
Slide 48: Contacts
Contacts ieee TONAL PUBLIC PARTNERSHIPS
Slide 49: Contact Details
Contact Details Amber Fund Management Limited 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 Investor Relation
Slide 50: 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
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