International PPL - Full Year Results for the 12 months to 31 Dec 2022
30/03/2023 07:00
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RNS Number : 6951U International Public Partnerships 30 March 2023
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30 MARCH 2023
INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED
('INPP', 'the Company')
FULL YEAR RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022
A successful year characterised by strong portfolio performance against a
persistently volatile economic and geopolitical backdrop.
London - International Public Partnerships (LON: INPP), the FTSE 250-listed
infrastructure investment company, is pleased to announce its results for the
year ended 31 December 2022.
The Company enjoyed a successful year in 2022. It was characterised by
continued strong performance of its investments, and cash generation in line
with projections which has enabled the Company to continue its established
trend of dividend growth.
HIGHLIGHTS FOR THE YEAR TO 31 DECEMBER 2022
· The Company generated a total NAV return of c.12.5% i for the year to 31
December 2022.
· NAV per share increase of 7.3% to 159.1 pence per share (31 December 2021:
148.2 pence per share) driven by, among other factors, the positive impact of
the portfolio's inflation-linkage.
· As a result of the portfolio's strong performance over 2022, the Company has
delivered full-year dividend growth of c.2.5% to 7.74 pence per share (31
December 2021: 7.55 pence per share) supported by 2022 cash dividend cover of
1.3x ii .
· The cash flows generated by the Company's investment portfolio continue to be
underpinned by strong inflation-linkage.
· IFRS profit before tax increase of 153% to £326.8 million (31 December 2021:
£129.2 million), reflecting the unrealised fair value gain on the portfolio
in the year.
· The Company's investment activity remaining aligned to the Company's
value-focused approach to portfolio development. During the year, the Company
made investments or investment commitments totalling over £310 million across
the energy, wastewater, social infrastructure and transport sectors. The
Company continued to diversify its portfolio, and committed to acquire its
first investment in New Zealand.
· The Company continues to see attractive investment opportunities, with a
strong near-term pipeline of £230 million, including its existing investment
commitments, across the energy, transport and social infrastructure sectors.
In order to support this pipeline, the Company has, in principle, agreed an
increase in the committed size of its Corporate Debt Facility ('CDF') to £350
million and an extension of the maturity date to June 2025.
· During the year, the Company successfully raised additional equity totalling
£325 million, through a Placing, Open Offer, Offer for Subscription and
Intermediaries Offer of Ordinary Shares, the proceeds of which were fully
deployed to support recent investment activity.
· In line with its commitment to put responsible investment at the core of all
its activities, the Company maintains strong screening and due diligence
processes relating to ESG, and has strengthened the disclosures it provides to
shareholders and regulators. Improved data capabilities are reflected in the
second edition of INPP's Sustainability Report, published in conjunction with
the 2022 Annual results.
· The Company's shares also maintain a low correlation to the FTSE All Share
Index of 0.33 over the 12 months to 31 December 2022 (31 December 2021: 0.22),
demonstrating the resilience of the Company's activities.
Mike Gerrard, Chair of International Public Partnerships, said: "I am pleased
to report that INPP has continued to deliver strong operational and financial
performance, despite the current ongoing international economic and political
uncertainties. The resilience of INPP's portfolio of essential infrastructure
projects and businesses is largely attributable to the predictability of the
underlying investment cash flows, the high level of inflation correlation, and
the Company's active approach to asset management. The Board is confident in
the Company's ability to continue evolving its portfolio in line with its
investment objectives, focusing on sustainable and attractive investment
opportunities. INPP remains well-positioned for future growth and to continue
generating stable, inflation-linked returns that deliver long-term benefits
for all its stakeholders."
INVESTMENT ACTIVITY
There was significant investment activity during 2022, with new cash
investments and investment commitments totalling over £310 million across the
energy, wastewater, social infrastructure and transport sectors. Highlights
include:
East Anglia One Offshore Transmission project ('OFTO'), UK: The Company
reached financial close for the long-term ownership and ongoing operation of
the transmission link to the 714MW East Anglia One ('EA1') offshore wind farm.
EA1 is located 50km off the Suffolk coastline and provides the EA1 Wind Farm
access to transmit clean power to more than 600,000 UK homes by transmitting
electricity generated by 102 offshore wind turbines. The Company owns 100% of
the equity and subordinated debt. The investment is the Company's tenth OFTO
and will further increase the Company's contribution to a net zero carbon
economy.
Thames Tideway, UK: During the year, INPP increased its holding in Tideway to
approximately 18%, deploying £42 million of additional capital. Tideway will
help to create a healthier environment for London by cleaning up the city's
greatest natural asset (further information on Tideway is available in
'Operational Approach and Stewardship' below).
Family Housing for Service Personnel ('FHSP'), US: The Company completed a
follow-on investment of c.US$ 45 million (c.£37 million) in FHSP, one of the
longest-standing social infrastructure sectors in the US, in December 2022.
The investment represents two additional interest-bearing subordinated debt
instruments underpinned by security over seven operational P3 FHSP projects,
comprising c.21,800 housing units across the US. The additional investment
marks the continued growth of the Company's investment portfolio in the US,
with approximately 4% of the portfolio by investment fair value invested in
the US.
Other: Further investments totalling c.£7.5 million were made during the
year, including into several availability-based UK public-private partnership
('PPP') schemes, the Diabolo Rail Link ('Diabolo') and the National Digital
Infrastructure Fund ('NDIF').
INVESTMENT COMMITMENTS
Gold Coast Light Rail, Australia: During the year, the Company announced that
financial close had been reached on Stage 3 of the Gold Coast Light Rail
project, where it will make an additional investment of c.£7.0 million upon
construction completion in 2026. The project extends the existing Gold Coast
Light Rail network a further 6.7km south from Broadbeach to Burleigh Heads. It
will include eight new stations, five additional light rail trams, new bus and
light rail connections at Burleigh and Miami, and an upgrade of existing depot
and stabling facilities.
PPP portfolio, New Zealand: In December 2022, the Company agreed binding terms
to acquire five infrastructure investments in New Zealand for approximately
£113 million. The acquisition will mark the Company's first investment in New
Zealand and includes three school projects, a correctional facility and a
purpose-built student accommodation facility at the Auckland University of
Technology. These high-quality infrastructure investments are already
operational, delivering long-term stable cash flows linked to inflation. The
return profile is significantly based upon government backed revenue streams
generated through standard PPP contracts in another highly rated, stable, OECD
geography. Financial close is expected to be reached during 2023.
OPERATIONAL APPROACH AND STEWARDSHIP
Responsible investment is a core component of the Company's ability to deliver
essential public services, maintain relationships with its clients and local
communities, and preserve and grow the long-term value of each investment. The
references to SDGs below refer to the contribution of each mentioned asset to
defined UN Sustainable Development Goals.
Wastewater | SDGs 6, 8, 9 & 11: clean water and sanitation; decent work
and economic growth; industry innovation and infrastructure; sustainable
cities and communities
Tideway has continued to make good progress, and achieved a number of
milestones during 2022, including reaching the end of the primary tunnelling
phase in April 2022, and completing the majority of its secondary lining at
the end of the year. Overall construction works were c.85% complete at the end
of the year.
The amendments to Tideway's licence that were agreed with Ofwat to mitigate
the impact of both Covid-19 related cost overruns and the Financing Cost
Adjustment Mechanism came into effect in March 2022. The amendments provide
greater certainty for the business, and have already previously been reflected
within the forecast cash flows.
Gas distribution | SDGs 8, 9 & 11: Decent work and economic growth;
industry innovation and infrastructure; sustainable cities and communities
Cadent continues to support the UK Government in meeting its net zero target.
It has worked closely with the Department for Energy Security and Net Zero
('DESNZ') in supporting its Heat and Buildings Strategy and Hydrogen Strategy
with a view to ensuring hydrogen is an integral part of the future energy mix.
Cadent remains actively engaged with the UK Government and regulators to build
awareness of the opportunities offered by green gases in the journey towards
net zero. The business remains largely insulated from changes in gas prices
and the associated energy price caps but the Company continues to closely
monitor these and other developments within the sector.
Energy transmission | SDG 7 & 13: Affordable and clean energy; climate
action
The Company's OFTO investments are regulated by Ofgem, which has granted those
OFTOs a licence to transmit electricity generated by an offshore wind farm to
bring it into the onshore grid. The revenues generated are not linked to
electricity production or price; the OFTO is paid a pre-agreed
availability-based revenue stream for a fixed period of time. The Ofgem
consultation regarding the potential regulatory developments underpinning an
extension of the OFTO revenue stream is ongoing, and the Investment Adviser
remains actively engaged with all relevant industry stakeholders.
OUTLOOK
Together with its infrastructure sector peers and the broader listed
investment trust world, the Company's share price has not been immune to
market volatility, as financial markets continue to adjust to various
political and economic headwinds. The Board notes that this is one of only a
few occasions in the Company's 16-year history in which the Company's shares
have traded at a discount to NAV and, whilst we will continue to monitor the
share price and discount carefully, we remain confident in the robustness and
reliability of the Company's future cash flows.
The Board is therefore pleased to reaffirm its dividend guidance for 2023 of
7.93 pence per share and today has issued new guidance for 2024 of 8.13 pence
per share iii , which is consistent with the Company's historic c.2.5% average
annual dividend growth.
Persistent high levels of inflation remain a key issue across the economies
where the Company invests. The Company, and its investors, continue to be
reassured by the strong inflation-linked nature of the cash flows generated by
the Company's investment portfolio.
Infrastructure investment and performance remain high priorities for the
governments in countries INPP invests in, to help achieve economic growth,
improved productivity, decarbonisation targets and resilience to the effects
of climate change. As such, the Company remains confident in the role
infrastructure will play at the heart of governments' efforts to deliver
sustainable, fairer societies.
INPP is well-positioned to lead the response to these challenges, and
continues to see attractive investment opportunities across the markets where
it is most active, as well as in new priority geographies. The Company
continues to work with the Investment Adviser to ensure strong investment
stewardship and active risk mitigation.
OTHER INFORMATION
The 2022 Annual Report and financial statements for the year ended 31 December
2022 has today been published on the Company's website, along with a copy of
the results presentation, and can be accessed and downloaded at
https://www.internationalpublicpartnerships.com/investors/results-reports-presentations-and-circulars/.
In compliance with LR 9.6.1, a copy of the 2022 Annual Report has been
submitted to the National Storage Mechanism and will shortly be available for
inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. In
accordance with DTR 6.3.5(1A), the regulated information required under DTR
6.3.5 is available in unedited full text within the 2022 Annual Report as
uploaded and available on the National Storage Mechanism and on the Company's
website as noted above.
ENDS
NOTES TO EDITORS
Amber Infrastructure FTI Consulting
Erica Sibree / Amy Edwards Ed Berry / Mitch Barltrop / Jenny Boyd
+44 (0) 7557 676 499 / (0) 7827 238 355 +44 (0) 7703 330 199 / (0) 7807 296 032 / (0) 7971 005 577
About International Public Partnerships ('INPP'):
INPP is a listed infrastructure investment company that invests in global
public infrastructure projects and businesses, which meets societal and
environmental needs, both now, and into the future.
INPP is a responsible, long-term investor in 138 infrastructure projects and
businesses. The portfolio consists of utility and transmission, transport,
education, health, justice and digital infrastructure projects and businesses,
in the UK, Europe, Australia and North America. INPP seeks to provide its
shareholders with both a long-term yield and capital growth.
Amber Fund Management Limited ('AFML'), the Investment Adviser to INPP, is
part of the Amber Infrastructure Group ('Amber') which consists of
approximately 170 staff who are responsible for the management of, advice on
and origination of infrastructure investments.
Visit the INPP website at www.internationalpublicpartnerships.com
(http://www.internationalpublicpartnerships.com) for more information.
Important Information
This announcement contains information that is inside information for the
purposes of the UK version of the Market Abuse Regulation (EU) No. 596/2014
which is part of UK law by virtue of the European Union (Withdrawal) Act 2018
(as amended and supplemented from time to time).
This announcement does not constitute a prospectus relating to the Company and
does not constitute, or form part of, any offer or invitation to sell or
issue, or any solicitation of any offer to purchase or subscribe for, any
shares in the Company in any jurisdiction nor shall it, or any part of it, or
the fact of its distribution, form the basis of, or be relied on in connection
with or act as any inducement to enter into, any contract therefor. The
issuance programme, as described in Part VI of the Prospectus issued by the
Company on 8 April 2022, available on the website, is closed.
Forward-looking statements are subject to risks and uncertainties and
accordingly the Company's actual future financial results and operational
performance may differ materially from the results and performance expressed
in, or implied by, the statements. These forward-looking statements speak only
as at the date of this announcement. The Company, Amber and Numis Securities
Limited expressly disclaim any obligation or undertaking to update or revise
any forward-looking statements contained herein to reflect actual results or
any change in the assumptions, conditions or circumstances on which any such
statements are based unless required to do so by the Financial Services and
Markets Act 2000, the Prospectus Regulation Rules of the Financial Conduct
Authority or other applicable laws, regulations or rules.
i Reflects dividends paid in the year and increase in NAV on a per share
basis.
ii Cash dividend payments to investors are paid from net operating cash
flows before capital activity.
iii Future profit projection and dividends cannot be guaranteed. Projections
are based on current estimates and may vary in future.
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