International Public Partnerships Ltd · LSE:INPP
International Public Partnerships — H1 2009 Earnings Presentation
39 slides from International Public Partnerships's earnings presentation, Sep 1, 2009
Slide 1: 2009 Interim Results
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 2: Agenda
Agenda 1. Results Highlights 2. INPP Portfolio 3. Asset Management 4. Outlook Results Briefing 12:30pm – 2:00pm Tuesday 1 September 2009 Numis Securities The Stock Exchange Building, 10 Paternoster Square, London 22
Slide 3: Results Highlights
Results Highlights INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 4: 2009 Interim Review
2009 Interim Review • Outperformance of +13% and +31.3% relative to FTSE 250 and FTSE AllShare in 1H 2009 • 1H 2009 distribution of 2.775 pence per share as per target and covered entirely by operating cashflow – Ex-dividend: 9 September; To be paid: 9 October 2009 – Directors have provided guidance
Slide 5: Results Highlights
Results Highlights Key Metrics Profit Before Tax £10.0m Net Asset Value (NAV) £419.0m NAV per Share 111.8p 2009 First half Distribution 2.775p Forecast 2009 Full year Distribution 5.55p 55
Slide 6: Operational Cashflow
Operational Cashflow Six month period to 30 June 2009 £m Investment cashflow1 22.6 add interest revenue 0.2 less corp. facility expense (0.7) less distribution to shareholders for 1H 2009 (10.4) less transaction costs2 (0.7) less actual and forecast fees and expenses for 1H 2009 3 (5.1) Net surplus
Slide 7: Income Statement
Income Statement IFRS Basis Six month period to 30 June 2009 £m Income 309.3 Cost of sales (246.7) Finance costs (41.0) Other costs (11.6) Profit before tax 10.0 Tax 1.2 Profit after tax 11.3 77
Slide 8: Net Asset Value (NAV)
Net Asset Value (NAV) • NAV decreased by 3.4 pence per share mainly as a result of strong increases in risk free rates in all geographic areas • Average increase of 68 basis points over the period – U.K. risk free rate: 42 b.p. Australia risk-free rate: 163 b.p. – Canada risk-free rate: 42 b.p. Irel
Slide 9: Analysis of Movement in NAV
Analysis of Movement in NAV 1. During the period the weighted average risk free rate Analysis of increase in Net Asset Valuation (£m) increased by 68 b.p. to 4.67% and the weighted average project risk premium decreased by 2 b.p. Net Assets at 31 Dec 08 431.8 3.94% Change in Risk Free Rate 1 (26.2)
Slide 10: INPP Portfolio
INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 11: Key Facts
Key Facts • International Public Partnerships Limited (INPP) is an internationally focussed “pure play” listed investor in government backed public infrastructure projects • 100% of INPP assets are underpinned by concessions let by government bodies in “top tier” OECD nations • > 99% of revenue come
Slide 12: Performance
Performance • A shareholder of INPP from IPO to 25 th August 2009 has received a total return on investment of 21%1 • Since IPO to 25th August 2009, INPP has outperformed2: – the FTSE All Share index by 29% – the STOXX 600 price index by 33% – FTSE Global EPRA Development index by 41% – UK Investmen
Slide 13: Investment Goals
Investment Goals • A robust and attractive growing yield Distribution policy targeting growth at least in line with inflation (INPP inflation forecast: 2.5%) 2007 2008 2009 (expected) 3% 3% 5.55p Real increases targeted in 5.40p future years 5.25p Distributions paid entirely from operating cashflow
Slide 14: Strong Contracted Cashflow Profile
Strong Contracted Cashflow Profile Predictable nature of INPP’s cashflows across its portfolio of 50 public infrastructure projects allow aggregated long term illustrative cashflows to be created to assist development of distribution targets 14 14
Slide 15: Solid Distribution Coverage
Solid Distribution Coverage Note: This slide is not intended to provide any future profit forecast and distributions cannot be guaranteed. Projections are based on the current financial model and may vary in the future. 15 15
Slide 16: Diversified Portfolio
Diversified Portfolio Total of 50 projects across several PPP/PFI sectors 1 • Contractual certainty of revenue streams: 99% of cashflows via availability-based mechanisms providing revenue certainty for life of concession • Geographic diversity: 42% of assets located offshore, up from 10% at IPO • E
Slide 17: Robust Inflation Protection
Robust Inflation Protection • Movements in inflation result in changes to revenue due to the inflation linkage inherent in most of INPP’s concessions • 71% of total revenue is inflation linked, however operating costs also grow in line with inflation • Sensitivity analysis illustrates the modest cha
Slide 18: Limited Foreign Exchange Impact
Limited Foreign Exchange Impact • 82% of 2009 forecast distributions expected to be generated by UK assets due to early- stage nature of most of INPP’s non-UK projects • Hedging policy to be implemented progressively as non-GBP income increases to mitigate the risk that short-term movements in FX im
Slide 19: Conservative Gearing
Conservative Gearing Non-recourse Debt – Fixed term, fixed rate debt is employed at the underlying asset level and is non-recourse to INPP or any other asset – Each of the operating assets are comfortably meeting their debt service obligations: Weighted average portfolio DSCR = 1.47x Long-term Tenor
Slide 20: Asset Management
Asset Management INTERNATIONAL PUBLIC PARTNERSHIPS
Slide 21: Asset Management Overview
Asset Management Overview Asset management activities are focussed on: 1. Delivering the anticipated returns from Each investment is managed to a “base investments case” reflecting the anticipated returns to be received over its life 2. Enhancing returns over base case Returns on investments can be
Slide 22: Asset Management Review
Asset Management Review In 1H 2009 there were no net deductions across the portfolio Strong support shown by all public-sector partners for Amber appointment and continuation of existing asset management personnel Other highlights during the period: – £38m of additional works agreed for Tower Hamlet
Slide 23: Durham & Dublin Courts Openings – 2H 2009
Durham & Dublin Courts Openings – 2H 2009 Durham Courts Dublin Courts 23 23
Slide 24: Managing the Construction Portfolio
Managing the Construction Portfolio 31% of portfolio under construction. Current contractor exposure (by value): • All construction undertaken on a fixed-time, fixed-price basis • Counter-party risk managed via payment for work in arrears, parent-company guarantees, insurance bonding – All designed
Slide 25: Managing the Mature Portfolio
Managing the Mature Portfolio 69% of portfolio operational. Current operator exposure (by value): 25 25
Slide 26: Outlook
RNATIONAL PUBLIC PA NERSHIPS
Slide 27: Market Synopsis
Market Synopsis Attractive opportunities are currently available due to the combination of: • Significant and growing global demand Examples include: for new infrastructure • Rail (Rolling Stock Renewal, Crossrail, Electrification) • Schools (Building Schools for the Future programme) • Court and Po
Slide 28: Market Synopsis, continued
Market Synopsis, continued • 2007 and HY1 2008 saw significant activity In 2008 Carillion sold a portfolio of PFI in the “secondary market” relating to the projects valued on a discount rate of sale of existing investments in PFI and PPP “less than 5.5%” (source: Carillion plc). projects • Assets we
Slide 29: Sources of Opportunities
Sources of Opportunities • Exclusive development situations INPP has ‘first right of refusal’ over assets being developed by Amber • Sales of mature yielding assets Market conditions have led to a number of existing portfolios being offered for sale • Co-Investment opportunities INPP’s market positi
Slide 30: NAV Update
NAV Update • Since 30 June 2009 the weighted average risk free rate has decreased by 35 b.p. from 8.61% to 8.26%1 Sensitivity Valuation Implied Upside NAV Current NAV NA 111.8p 50 b.p. reduction in discount rate 5.6p 117.4p 50 b.p. increase in discount rate (5.1p) 106.7p 100 b.p. reduction in discou
Slide 31: Portfolio Derisking Will Continue to Enhance Value
Portfolio Derisking Will Continue to Enhance Value • As projects mature and the risks associated with their cash flows diminish, the project premium and therefore overall discount rate applied to those cash flows will decrease (known as derisking) • The project premium applied to assets ranges from
Slide 32: Summary
Summary • Solid cash position and growing distribution profile, with distributions expected to continue to be funded by operating cashflow • Robust inflation protection with >70% of revenues inflation-linked • Strong protection from movements in interest rates and current credit conditions given ter
Slide 33: Appendix
Appendix RNATIONAL PUBLIC PA NERSHIPS
Slide 34: Net Asset Value (NAV) Methodology
Net Asset Value (NAV) Methodology • 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 an additional risk premium – Risk premium will reduce over the life
Slide 35: INPP Portfolio
NHS LIFT Investments Project Location Mt Vernon UK Alexandra Avenue Primary Care UK Ridge Hill and Stourbridge UK INPP Portfolio Beckenham Hospital Garland Road Health Centre UK UK Shirehampton and Whitchurch Sudbury Health Centre UK UK Gem Centre, Health Centre UK Church Road Health Centre UK Monks
Slide 36: INPP Portfolio By Type
INPP Portfolio By Type 2009 SECTOR BREAKDOWN 3% 1% 1% | Transport 12% 25% HE education WS teaith ! Courts Police Authority 16% Govt Accom Health / Custodial Leisure 18%
Slide 37: Structure of a typical PFI/PPP Project
Structure of a typical PFI/PPP Project INPP - Equity Ownership Equity investment funds construction cost and in return receives predictable cashflow from project after fixed price debt service and amortisation Fixed price turnkey costs and O&M costs have been met. Construction Contract Building Cont
Slide 38: Cashflow of a typical PFI/PPP Project
Cashflow of a typical PFI/PPP Project 38 38
Slide 39: Contact Details
Contact Details Amber Investment Management Analyst Contact: James Arthur Telephone: +44 (0)20 7203 7300 Director: Email: James.Arthur@amberinfrastructure.com Giles Frost Telephone: +44 (0)20 7203 7300 Email: Giles.Frost@amberinfrastructure.com Head of Business Development: Hugh Blaney Telephone: +4
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