International Public Partnerships Ltd · LSE:INPP
International Public Partnerships — H1 2024 Earnings Presentation
43 slides from International Public Partnerships's earnings presentation, September 2024
Slide 1: H1 2024 Results Presentation
H1 2024 RESULTS PRESENTATION IMAGE September 2024 Moray East OFTO, UK
Slide 2: Important Information
IMPORTANT INFORMATION The information in this document has been prepared at the direction of International Public Partnerships Limited (“INPP” or the Potential investors should be aware that any investment in the Company is speculative, involves a high degree of risk, and could "Company") solely for
Slide 3: Overview
OVERVIEW IMAGE Tideway, UK Photo credit: Tideway
Slide 4: Our Approach
OUR APPROACH OUR PURPOSE IS TO INVEST RESPONSIBLY IN SOCIAL CONSISTENT AND PREDICTABLE RETURNS AND PUBLIC INFRASTRUCTURE THAT DELIVERS ▪ Resilient, inflation-linked cash flows LONG-TERM BENEFITS FOR ALL STAKEHOLDERS. ▪ Focus on growing predictable dividends INPP believes that the financial performan
Slide 5: Investment Case
INVESTMENT CASE PREDICTABLE, LONG-TERM, DIVERSIFIED PORTFOLIO OF LOW-RISK ACTIVE AND RESPONSIBLE INFLATION-LINKED CASH FLOWS INFRASTRUCTURE ASSETS INVESTMENT MANAGEMENT SECTOR BREAKDOWN5 9.3% Portfolio Optimisation PROJECTED NET RETURN1 ABILITY TO OUTPERFORM THROUGH REGULATED PPP PROJECTS OPERATING
Slide 6: H1 2024 Highlights
H1 2024 HIGHLIGHTS FINANCIAL HIGHLIGHTS POSITIVE ENVIRONMENTAL AND SOCIAL CHARACTERISTICS 149.5p 3.0% >610,000 >3.7m PATIENTS TREATED IN HOMES CAPABLE OF BEING NAV P/SHARE1 DIVIDEND GROWTH2 HEALTHCARE FACILITILIES POWERED BY RENEWABLE DEVELOPED AND ENERGY THROUGH OFTOS 31 December 2023: 152.6p/share
Slide 7: Financial Performance
FINANCIAL PERFORMANCE IMAGE BeNEX, Germany Photo credit: OGED
Slide 8: Continued Dividend Growth
CONTINUED DIVIDEND GROWTH 2024 TARGET DIVIDEND 2025 TARGET DIVIDEND DIVIDEND YIELD2 SUSTAINABLE FUTURE GROWTH1 GROWTH1 DIVIDEND GROWTH3 3.0% 2.5% 6.6% >20 years To 8.37 pence per share To 8.58 pence per share As at 30 June 2024 1. Future profit projection and dividends cannot be guaranteed. Projecti
Slide 9: Predictable, Long-Term Investment Receipts
PREDICTABLE, LONG-TERM INVESTMENT RECEIPTS PROJECTED INVESTMENT RECEIPTS AND NAV 1 Peaks in the projected cash flow profile are generally due to: ▪ Cash released towards the end of a PPP project (e.g. in 2036); and ▪ Value ascribed to assets which will be owned by the Company at the end of a fixed c
Slide 10: Valuation Discount Rate Overview
VALUATION DISCOUNT RATE OVERVIEW NAV 1 PER SHARE WEIGHTED AVERAGE DISCOUNT NAV SENSITIVITY TO -/+100BPS RATE 2 DISCOUNT RATE CHANGES 149.5p 8.7% 15.3p / (12.8p) 31 December 2023: 152.6p 31 December 2023: 8.4% 31 December 2023: 15.1p / (12.6p) Variance: (3.1p) Variance: 30bps Variance: 0.2p / (0.2)p
Slide 11: NAV Movements
NAV MOVEMENTS INVESTMENT RISK PREMIA FOREIGN EXCHANGE RATES MACROECONOMIC ASSUMPTIONS Changes to the investment risk premia GBP strengthened against five of the six currencies the Changes include small reductions in short-term inflation are designed to ensure the valuations Company was exposed to du
Slide 12: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY IMAGE Durham Regional Courthouse, Ontario, Canada Photo credit: WZMH Architects
Slide 13: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY The Board believes that the discount to NAV at which the Company’s shares are currently trading materially undervalues the Company. As such it will maintain a disciplined approach to capital allocation, guided by the following three principles, to ensure the Company is as
Slide 14: H1 2024 Portfolio Review
H1 2024 PORTFOLIO REVIEW IMAGE Dudgeon OFTO, UK Photo credit: Photo credit: Jan Arne Wold/Equinor
Slide 15: H1 2024 Updates - Regulated Investments
H1 2024 UPDATES - REGULATED INVESTMENTS1 ▪ Cadent continues to perform strongly and in line with expectations Cadent ▪ The next five-year price control period starts in 2026 and Ofgem’s final determination is due in late 2025 The UK’s largest gas ▪ Ofgem has signalled that it does not anticipate sig
Slide 16: H1 2024 Updates - PPP Projects
H1 2024 UPDATES - PPP PROJECTS1 ▪ As PPP assets approach the end of their concessions terms, there is an increasing focus on the process of transferring these assets to the public sector Hand-backs ▪ The Investment Adviser’s in-house asset management team proactively monitors asset Becoming an incre
Slide 17: H1 2024 Updates - Operating Businesses
H1 2024 UPDATES - OPERATING BUSINESSES1 ▪ Angel Trains continues to perform well with its trains on lease to TOCs across the UK Angel Trains as planned A rolling stock leasing ▪ The proposals by the new Labour Government are not expected to have a material company which owns more impact on Angel Tra
Slide 18: Responsible Investment Progress
RESPONSIBLE INVESTMENT PROGRESS The Company continues to demonstrate its leadership in responsible investment and made good progress against its ESG policy objectives DELIVERED IN H1 2024 PLANNED FOR H2 2024 ▪ The Company released the third edition of the ▪ Whilst INPP is not required to report in l
Slide 19: Looking Forward
LOOKING FORWARD IMAGE Olga Primary School, Tower Hamlets, UK Photo credit: Bob Wheeler Photography
Slide 20: Investment Commitments and Future Opportunities
INVESTMENT COMMITMENTS AND FUTURE OPPORTUNITIES The Company, through its Investment Adviser, maintains an attractive pipeline of future investments EXISTING INVESTMENT COMMITMENTS 4 (£m) 25 Investments made Investment commitments 20 INVESTMENT COMMITMENTS 15 10 5 c.£35m TOTAL OF INVESTMENT 0 COMMITM
Slide 21: H1 2024 Summary and Outlook
H1 2024 SUMMARY AND OUTLOOK RESILIENT PORTFOLIO WITH CONSISTENT RETURNS Strong High-level of Well diversified Strong liquidity performance inflation-linkage portfolio position Continued strong performance Maintained 0.7% inflation >140 investments spread CDF undrawn since the end despite volatile ma
Slide 22: Appendices
APPENDICES IMAGE Liverpool Library, UK Photo credit: Bob Wheeler Photography
Slide 23: Portfolio Overview and Valuation
PORTFOLIO OVERVIEW AND VALUATION IMAGE Angel Trains, UK Photo credit: Angel Trains
Slide 24: Valuation Methodology
VALUATION METHODOLOGY NAV CALCULATION1 ADDITIONAL VALUE DRIVERS ▪ Sum-of-the-parts’ aggregation of the present value of each of the We believe additional value may exist relative to that captured in our valuation Company’s investments plus other balance sheet items process. These items are not captu
Slide 25: Historic NAV Performance
HISTORIC NAV PERFORMANCE INPP NAV – 1 TO 5 YEARS 30 Jun 20 30 Jun 21 30 Jun 22 30 Jun 23 30 Jun 24 NAV1 PER SHARE 149.2p 145.1p 157.3p 155.2p 149.5p NAV SINCE INCEPTION 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 NAV Per Share Share Price - Dec 19 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec
Slide 26: Top 10 Investments
TOP 10 INVESTMENTS % INVESTMENT % INVESTMENT STATUS AT % HOLDING AT FAIR VALUE AT FAIR VALUE AT PRIMARY SDG NAME OF INVESTMENT LOCATION SECTOR 30 JUN 2024 30 JUN 20241 30 JUN 2024 31 DEC 2023 SUPPORTED Gas UK Operational 7% Risk Capital 16.0% 16.2% Distribution UK Waste Water Under Construction 18%
Slide 27: Investments at Fair Value
INVESTMENTS AT FAIR VALUE INVESTMENTS INVESTMENTS AT FAIR VALUE PORTFOLIO RETURN1 FOREIGN EXCHANGE RATES An increase of £85.3m The rebased investments at fair value The Portfolio Return captures broadly During the period, Sterling strengthened owing to new investments is presented to allow an assess
Slide 28: Portfolio Analysis as at 30 June 2024
PORTFOLIO ANALYSIS AS AT 30 JUNE 2024 1. The majority of projects and businesses benefit from availability-based or regulated revenues. ‘Other’ includes Family Housing for Service Personnel (‘FHSP’) (4%), Health (4%), Judicial (2%) and Digital (2%) among other assets. 2. Risk Capital includes both i
Slide 29: Revenue Type and Service Providers
REVENUE TYPE AND SERVICE PROVIDERS PORTFOLIO BY REVENUE TYPE1 INPP SERVICE PROVIDERS1 DIGITAL INFRASTRUCTURE OPERATING BUSINESSES2 INFRABEL OTHER ROLLING STOCK4 DOWNER & 2% SPOTLESS 8% 8% 10% 6% HUNT MILITARY COMMUNITIES PPPs WITH REVENUE RISK 4% 12% BOUYGUES MECHANISMS3 REGULATED 3% INVESTMENTS MIT
Slide 30: PPP Hand-Back - Overview
PPP HAND-BACK - OVERVIEW HAND-BACK IS COMING INTO SHARPER FOCUS ACROSS THE INDUSTRY INPP HAND-BACK DATES SPREAD OVER NEXT 25 YEARS AS SCHEMES START TO BE HANDED-BACK TO THE PUBLIC SECTOR INPP PPP hand-back dates1 ▪ Authority rights 10% ▪ Survey the property to assess condition relative to hand-back
Slide 31: Valuation Sensitivities and Discount Rate Trends
VALUATION SENSITIVITIES AND DISCOUNT RATE TRENDS ESTIMATED IMPACT OF CHANGES IN KEY VARIABLES TO 30 JUNE 2024 BASED ON PORTFOLIO INFLATION- NAV OF 149.5 PENCE PER SHARE LINKAGE1 0.7%p.a. (31 December 2023: 0.7% p.a.) HISTORICAL WEIGHTED AVERAGE RISK CAPITAL DISCOUNT RATE 10% 8% 6% 4% 2% 0% Dec-10 Ju
Slide 32: High Levels of Protection to Increasing Base Rates
HIGH LEVELS OF PROTECTION TO INCREASING BASE RATES ASSET LEVEL DEBT HEDGED FOR THE FULL TERM (PPPS & OFTOS; 60%) ▪ Asset level debt is non-recourse to the Company ▪ Generally fixed-term, fixed-rate debt ▪ Weighted average asset leverage of c.68%1 ▪ Principal generally amortises to nil over the conce
Slide 33: Macroeconomic Assumptions
MACROECONOMIC ASSUMPTIONS 30 JUNE 2024 31 DECEMBER 2023 Inflation rates UK RPI: 3.60% until Dec 2024, RPI: 4.50% until Dec 2024, 3.00% until Dec 2025, 3.00% until Dec 2025, 2.75 thereafter1 2.75 thereafter1 CPIH: 2.50% until Dec 2024, CPIH: 3.25% until Dec 2024, 2.25% until Dec 2025, 2.25% until Dec
Slide 34: 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) 500 400 300 200 100 0 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 205
Slide 35: ESG Reporting Framework
ESG REPORTING FRAMEWORK INPP SEEKS TO PROVIDE ESG KPIS AND DISCLOSURES, WHICH HAVE BEEN DESIGNED TO SUPPORT INVESTOR REPORTING REQUIREMENTS AND TO HIGHLIGHT THE POSITIVE IMPACT OF THE FUND’S APPROACH TO ESG DISCLOSURE FRAMEWORK KPIs AND DISCLOSURES REPORTING CATEGORY POSITIVE Sector-specific disclos
Slide 36: Portfolio Information
PORTFOLIO INFORMATION INVESTMENTS MADE DURING THE SIX MONTHS TO 30 JUNE 2024 Investment activity during the six months to 30 June 2024 which totalled £85.3 million, included the acquisition of Moray East OFTO and funding into long-standing investment commitments to Flinders University Health and Med
Slide 37: Portfolio Information Continued
PORTFOLIO INFORMATION CONTINUED PROJECTS UNDER CONSTRUCTION AS AT 30 JUNE 2024 During the period, construction works completed on the Flinders University Health and Research Building (‘HMRB’) and in June 2024, Flinders University’s Vice-Chancellor Professor Colin Stirling was joined by Prime Ministe
Slide 38: Cash Generation and Operating Costs
CASH GENERATION AND OPERATING COSTS Six months to Six months to Year to SUMMARY OF CASH FLOWS 30 June 2024 30 June 2023 31 December 2023 £(m) £(m) £(m) Opening cash balance 128.6 92.8 92.8 Increase reflects the continued growth and inflation- Cash from investments 213.6 108.6 307.1 linkage of the po
Slide 39: About Amber Infrastructure
ABOUT AMBER INFRASTRUCTURE IMAGE Tideway, UK Photo credit: Tideway
Slide 40: Amber's Managed or Advised Funds
AMBER’S MANAGED OR ADVISED FUNDS AMBER MANAGES OR ADVISES NINE FUNDS AND OTHER MANAGED ACCOUNTS FUND SIZE OVERVIEW GEOGRAPHY SECTORS VINTAGE INVESTMENTS FTSE 250-listed investment Company investing Public/social infrastructure and £2.8bn1 OECD 2006 >140 in long-term public infrastructure assets low
Slide 41: Amber's Extensive International Track Record and Presence
AMBER’S EXTENSIVE INTERNATIONAL TRACK RECORD AND PRESENCE AMBER HAS OFFICES AND PERSONNEL ACROSS EUROPE, NORTH AMERICA, AUSTRALIA AND NEW ZEALAND EUROPE Federal German Ministry of Education & Research Headquarters Dublin Courts (Ireland) | Diabolo Rail Link (Belgium) | BeNEX Rail UNITED KINGDOM (Ger
Slide 42: Contacts
CONTACTS IMAGE Shirley Boys' and Avonside Girls' Schools, New Zealand
Slide 43: Contact Details
CONTACT DETAILS AMBER FUND MANAGEMENT (INVESTMENT ADVISER) FTI CONSULTING (PR & COMMUNICATIONS) Senior Investment Director: Chris Morgan Mitch Barltrop, Jenny Boyd Telephone: +44 (0)20 7939 0550 Telephone: (0) 7807 296 032 / (0) 7971 005 577 Email: Chris.Morgan@amberinfrastructure.com INPP.SC@fticon
International Public Partnerships — H1 2024 Earnings Presentation on 6ix