International Public Partnerships Ltd · LSE:INPP
International Public Partnerships — FY2020 Earnings Presentation
41 slides from International Public Partnerships's earnings presentation, March 2021
Slide 1: 2020 Annual Results Presentation
2020 Annual Results Presentation MARCH 2021
Slide 2: Important Information
Important Information The information in this document has been prepared at the direction of International Public contract or commitment whatsoever. This document does not constitute a recommendation Partnerships Limited (“INPP”) solely for use at an information presentation about INPP. This regardi
Slide 3: Overview
INTERNATIONAL PUBLIC PARTNERSHIPS Overview
Slide 4: Our Approach
Our Approach Our aim is to deliver long-term benefits for all stakeholders by investing responsibly in public and social infrastructure CONSISTENT AND DIVERSIFIED RESPONSIBLE PREDICTABLE RETURNS PORTFOLIO INVESTMENT Strong, inflation-linked, resilient Investments are spread by both ‘Hands-on’ asset
Slide 5: FY 2020 Performance and Operational Overview
FY 2020 Performance and Operational Overview DIVIDEND ▪ Full year 2020 dividend target of 7.36p/share achieved and dividend target for 2021 of 7.55p/share reaffirmed GROWTH ▪ New dividend guidance of 7.74p/share for 2022, maintaining historic growth levels of 2.5%1 ▪ Strong overall portfolio perform
Slide 6: Portfolio Performance and Valuation
Portfolio Performance and Valuation
Slide 7: 2020 Financial Highlights
2020 Financial Highlights NET ASSET VALUE (‘NAV’) 1 DIVIDEND GROWTH 2 CASH DIVIDEND PROFIT BEFORE TAX COVER3 £2.4bn (Dec 2019: £2.4bn) or 2.5% 1.2x £60.8m 147.1p/share (Dec 2019: 150.6p/share) (2019: 2.6%) (2019: 1.3x) (2019: £137.8m) FIVE-YEAR CORRELATION PORTFOLIO INFLATION ANNUALISED TOTAL ONGOIN
Slide 8: Confidence in Long-Term Revenues
Confidence in Long-Term Revenues DIVIDEND GROWTH pence per share 7.74 FY 2020 FY 2021 FY 2022 Forecast Actual 7.55 DIVIDEND TARGET TARGET 7.18 7.36 7.00 DIVIDEND1 DIVIDEND1 6.82 6.65 6.30 6.45 6.15 5.85 6.00 5.25 5.40 5.55 5.70 7.36p 7.55p 7.74p per share per share per share 2010 2007 2008 2009 2011
Slide 9: Valuation Discount Rate Overview
Valuation Discount Rate Overview NAV1 WEIGHTED AVERAGE WEIGHTED AVERAGE RISK CAPITAL DISCOUNT RISK CAPITAL PORTFOLIO RATE RANGE3 DISCOUNT RATE 2 DISCOUNT RATE £2.4bn or 7.52% 6.97% 5.38% - 11.02% 147.1 p per share VARIANCE 31 DEC 31 DEC 2020 30 JUN 2020 31 DEC 2019 2020 to 31 DEC 2019 NAV1 PER SHARE
Slide 10: Net Asset Valuation
Net Asset Valuation £m 2,600 2,550 105.4 101.7 2,500 2,450 2,425.2 101.5 2,400 62.3 2,384.4 19.6 24.9 2,350 2,300 2,250 2,200 2,150 2,100 2,050 NAV at 31 Dec 2019 Change in Government Change in Investment Cash Distributed to INPP Change in Foreign Change in Macroeconomic NAV Return 1 NAV at 31 Dec 2
Slide 11: Investments at Fair Value
Investments at Fair Value £m 2,450 30.0 153.0 2,400 2,382.6 23.3 24.9 3.7 2,345.4 2,350 83.7 2,300 2,259.6 2,250 2,200 2,150 2,100 2,050 Investments at Fair Investments Investment Rebased Investments Portfolio Return1 Change in Discount Change in Foreign Change in Investments at Fair Value at 31 Dec
Slide 12: 2020 Portfolio Review
INTERNATIONAL PUBLIC PARTNERSHIPS 2020 Portfolio Review
Slide 13: Cadent: essential UK gas distribution business
Cadent is an essential UK gas distribution business with four geographic monopolies, serving c.50% of UK gas customers KEY POINTS No exposure to Owned by a highly Inflation-linked revenues Cadent is piloting the use commodity or demand experienced consortium Strong and experienced regulated by Ofgem
Slide 14: Diabolo: strategic rail link to Brussels Airport
Diabolo is a strategic rail transportation asset linking Brussels Airport with Belgium’s national rail network KEY POINTS Revenues dependent on 100%-owned with influence Historically, overall Long duration asset with Inflation-linked passenger numbers have over project operations, Board passenger nu
Slide 15: Tideway: 25km super-sewer under the Thames
Tideway is building a 25km ‘super-sewer’ under the River Thames to create a healthier environment for London KEY POINTS Bespoke regulatory Government support Climate-resilient asset Long-term investment arrangement with Inflation-linked revenue provides protection in a constructed with the with a 12
Slide 16: Other Asset Management Updates
Other Asset Management Updates BeNEX Angel Trains ▪ Revenues principally generated through the contractual ▪ Angel Trains generates the majority of its revenues from the leasing of rolling stock and through direct investments in TOCs contractual leasing of its rolling stock to TOCs and therefore its
Slide 17: Other Asset Management Updates
Other Asset Management Updates PPP projects PRIMARY SDGS ▪ During 2020, the Company made further investments totalling £11.4m into three operational UK SUPPORTED education projects which provide education facilities to over 23,000 pupils ▪ Notwithstanding the reduction in use of many public service
Slide 18: Committed to Responsible Investment
Committed to Responsible Investment The Company continues to demonstrate its leadership in responsible investment and made good progress against its three responsible investment policy objectives during the year 2020 progress Drive Sustainable Growth Integrate ESG Advance Environmental and Social Pr
Slide 19: Looking Forward
INTERNATIONAL PUBLIC PARTNERSHIPS Looking Forward
Slide 20: Pipeline Overview
Pipeline Overview COMMITTED PIPELINE KNOWN COMMITMENTS LOCATION INVESTMENT TENOR ESTIMATED INVESTMENT 1 ESTIMATED TIMING Digital Infrastructure UK Operational businesses £7.7m Of the £45m committed, c.£37.3m has been invested Offenbach Police Headquarters2 Germany c.30 years £8.4m Mid-2021 Diabolo B
Slide 21: Summary and Outlook
Summary and Outlook ▪ Investment portfolio will continue to be resilient RESILIENT ▪ We will continue to actively manage to mitigate risk and ensure two-year dividend guidance is met PORTFOLIO ▪ Strong inflation linkage provides protection to investors in the event of a higher inflation environment
Slide 22: Appendices
INTERNATIONAL PUBLIC PARTNERSHIPS Appendices
Slide 23: Responsible Investment
INTERNATIONAL PUBLIC PARTNERSHIPS Responsible Investment
Slide 24: Responsible Investment Impact
Responsible Investment Impact The Investment Adviser, on the behalf of the Company, has aligned its investment approach with the SDGs. For each investment sector, the Company has identified which SDGs its investments are positively impacting TRANSPORT SOCIAL INFRASTRUCTURE >151,000,000 Passenger jou
Slide 25: Investment Integration
Investment Integration In line with the Principles for Responsible Investment, INPP identifies and integrates ESG factors into all aspects of investment, development and management decision making and analysis ▪ INPP does this by identifying and managing the issues that are most relevant to our inve
Slide 26: Portfolio Overview and Valuation
Portfolio Overview and Valuation
Slide 27: INPP's Top Investments
INPP’s Top 10 Investments % INVESTMENT % INVESTMENT STATUS AT % HOLDING AT PRIMARY SDG NAME OF INVESTMENT LOCATION SECTOR FAIR VALUE AT FAIR VALUE AT 31 DEC 2020 31 DEC 20201 SUPPORTED 31 DEC 2020 31 DEC 2019 Gas UK Operational 7% Risk Capital 16.5% 17.1% Distribution UK Waste Water Under Constructi
Slide 28: Valuation Methodology
Valuation Methodology NAV CALCULATION 1 ADDITIONAL VALUE DRIVERS ▪ ‘Sum-of-the-parts’ aggregation of the present value of We believe additional value may exist additional to that each of the Company’s investments plus other balance captured in our valuation process. These items are not sheet items c
Slide 29: Portfolio Analysis
Portfolio Analysis 1 SENIOR DEBT CONSTRUCTION 11% LATER STAGE 9% INVESTOR3 32% MODE OF <50% 45% OWNERSHIP 50% 100% INVESTMENT ACQUISITION/ OWNERSHIP STAKE OWNERSHIP TYPE ASSET STATUS 68% 91% 5% 89% EARLY OPERATIONAL STAGE INVESTOR2 RISK CAPITAL 50% – 100% OWNERSHIP IRELAND ITALY OTHER CANADA 1%<1% M
Slide 30: Valuation Sensitivities and Discount Rate Trends
Valuation Sensitivities and Discount Rate Trends ESTIMATED IMPACT OF CHANGES IN KEY VARIABLES ON 31 DEC 2020 NAV OF 147.1p PER SHARE PORTFOLIO INFLATION LINKAGE1 Discount rates +/-1% -13.8 16.5 Inflation +/- 1% Foreign Exchange +/-10% -13.2 -3.9 3.9 16.0 0.78% p.a. (Dec 2019: 0.82% p.a.) Deposit rat
Slide 31: Projected Cash Flows Under a +100bps Inflation Scenario
Projected Cash Flows Under a +100bps Inflation Scenario Projected annual cash flows available for dividends (+100bps inflation) 1 (£m) 400 350 300 250 200 150 100 50 0 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 2046 20
Slide 32: Macroeconomic Assumptions
Macroeconomic Assumptions ASSUMPTION JURISDICTION 30 DEC 2020 31 DEC 2019 UK 2.75% RPI/2.00% CPIH 2.75% RPI / 2.00% CPIH Australia 2.50% 2.50% INFLATION RATES Europe 2.00% 2.00% Canada 2.00% 2.00% US1 N/A N/A UK 1.00% 2.00% Australia 2.00% 3.00% LONG-TERM Europe 0.50% 2.00% DEPOSIT RATES2 Canada 1.5
Slide 33: Diversified Portfolio and Partners
Diversified Portfolio and Partners PORTFOLIO BY INVESTMENT TYPE 1 INPP SERVICE PROVIDERS 1 OTHER - ANGEL TRAINS, UK BSF 3 INFRABEL NV VAN BENEX AND NDIF PUBLIEK RECHT PFI DEBT 8% 9% AGGREGATOR DEBT 1% 8% 8% 3% 8% UK 'CLASSIC' PFI DOWNER & OFTO DEBT 18% 7% SPOTLESS OPERATING UK NHS LIFT 8% BUSINESSES
Slide 34: Portfolio Information
Portfolio Information INVESTMENTS DURING THE YEAR TO 31 DEC 2020 PRIMARY SDG INVESTMENT LOCATION OPERATIONAL STATUS AMOUNT INVESTMENT DATE SUPPORTED BSF ESSEX PROJECT UK Operational £6.7m 26 May 2020 BSF BRADFORD AND LEWISHAM PROJECT UK Operational £3.6m 10 August 2020 BSF BLACKBURN AND DARWEN PROJE
Slide 35: Cash Generation and Operating Costs
Cash Generation and Operating Costs 31 DEC 2020 31 DEC 2019 SUMMARY CASH FLOW (£m) (£m) NOTES Opening cash balance 45.6 84.7 Decrease reflects some distributions being deferred due to uncertainty Cash from investments 153.0 159.6 caused by Covid-19 Corporate costs (for ongoing charges ratio) (28.3)
Slide 36: Gearing and Investment Life
Gearing and Investment Life TIDEWAY ASSET LEVEL DEBT CADENT 9% ▪ Asset level debt is non-recourse to the Company OFTOS 17% PPP & OFTOS 22% ▪ Generally fixed-term, fixed-rate debt ▪ Principal generally amortised over the life of the project ▪ Structure is intended to minimise risk 8% REGULATED INVEST
Slide 37: About Amber Infrastructure
INTERNATIONAL PUBLIC PARTNERSHIPS About Amber Infrastructure
Slide 38: Specialist fund manager
Specialist fund manager Amber manages or advises seven co-mingled funds and a managed account. Of these, seven are closed-ended unlisted structures AMBER FUND FOCUS HIGHLIGHTS PARTNERS SIZE 13-year track record; Long-term public £2.8bn FTSE 250-listed investment Listed investors infrastructure asset
Slide 39: Amber's extensive international track record and presence
Amber’s extensive international track record and presence Amber has offices and personnel in London, Munich, Brussels, Prague, Vienna, Warsaw, Edinburgh, Australia and the United States Darwin Prague Edinburgh Brussels Warsaw San Vienna Munich Sydney Francisco New York London Melbourne NORTH AMERICA
Slide 40: Contacts
INTERNATIONAL PUBLIC PARTNERSHIPS Contacts
Slide 41: Contact Details
Contact Details AMBER FUND MANAGEMENT FTI CONSULTING (PR & COMMUNICATIONS) Director, INPP: Giles Frost Senior Director: Ed Berry Telephone: +44 (0)20 7939 0550 Telephone: +44 (0)20 3727 1046 Email: Giles.Frost@amberinfrastructure.com Email: Edward.Berry@fticonsulting.com Investment Director: Chris M
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