Full year results for the year ended 31 December 2021
Full year results for the year ended 31 December 2021
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL OR TO US PERSONS. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION.
A successful year with strong operational and financial performance. Well-positioned for growth with continuing high levels of inflation linkage in its cashflows
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 2021.
Financial highlights
- Increase in NAV per share to 148.2 pence per share (31 December 2020: 147.1 pence per share).
- Full-year dividend growth of 2.6% to 7.55 pence per share (31 December 2020: 7.36 pence per share) supported by 2021 cash dividend cover of 1.1x[ii].
- Reaffirmed dividend guidance for 2022 of 7.74 pence per share, and issued new guidance for 2023 of 7.93 pence per share[iii] which is consistent with the Company’s historic c.2.5% average annual dividend growth.
- IFRS profit before tax of £129.2 million (31 December 2020: £60.8 million).
- The cash flows generated by the Company’s investment portfolio continue to be underpinned by strong inflation-linkage (a 1.0% increase in assumed inflation rates across all assets is projected to result in a 0.7% increase in portfolio returns)[iv].
- The Company’s shares also maintained a continued low correlation to the FTSE All Share Index of 0.22 over the 12 months to 31 December 2021 (31 December 2020: 0.53) demonstrating the resilience of the Company’s activities.
Operational highlights
- The Company delivered a further year of strong investment portfolio performance in 2021.
- Approximately £253 million of capital was deployed into new investments across transport, energy, social infrastructure and digital sectors, including the Company’s first investment in Denmark.
- The Company raised £135 million of capital for deployment into new investment opportunities, exceeding the Board’s £100 million target for the raise.
- The Company further enhanced its ESG reporting capability, with the publication of the Company’s inaugural sustainability report underpinning INPP as a leading choice for sustainability focused investors.
Portfolio overview
The year to 31 December 2021 was successful for the Company. It was characterised by strong portfolio performance with cash generation in line with projections which allowed the Company to continue its established trend of dividend growth.
The Company continued to source attractive new investments that are expected to enhance the Company’s overall portfolio cashflow as well as contribute to additional projected future inflation protection.
The Company through its Investment Adviser has the benefit of a pipeline of future investment opportunities with an estimated investment value in excess of £185 million. Other things being equal, and subject to the availability of capital, these opportunities are expected to be capable of being invested into by the Company in 2022.
Whilst overall the portfolio has performed well throughout the pandemic, it has continued to experience some impact to a small number of the Company’s investments. The performance of these assets has started to improve and is expected to continue to do so during the course of 2022.
Diabolo Rail Link experienced the greatest impact during the period, as Brussels airport continued to see reduced numbers of passengers using its services. However, independent forecasts predict a gradual recovery in passenger volumes during 2022 and thereafter.
Tideway has continued to make good progress with construction works 73% complete at 31 December 2021. Tideway continued discussions with Ofwat regarding additional measures to mitigate the impact on Tideway’s investors of both Covid-19 related costs and the Financing Cost Adjustment Mechanism. Subsequent to a provisional agreement with Tideway, Ofwat launched the requisite public consultation in December 2021. As the consultation was ongoing at the valuation date, the 31 December 2021 valuation of the Company’s investment in Tideway included a prudent assessment of the outcome of the consultation and the necessary licence modification process. The consultation closed post-period end in January 2022 and the license modifications came into effect in March 2022.
In addition, the appeal by Cadent to the Competition and Markets Authority (‘CMA’) of Ofgem’s final determination in respect of the five-year regulatory period beginning April 2021 closed during the period. The CMA published its final determination in October 2021 and the findings were modestly positive for the Company’s valuation of Cadent relative to the valuation published at 30 June 2021
Investments in the period
During 2021, the Company completed £252.7 million of new and follow-on investments across the education, judicial, energy transmission, transport, digital and health sectors. Highlights include:
Energy transmission, UK | SDGs 7 and 13: Affordable and clean energy, and climate action
The Company reached financial close on the Beatrice and Rampion Offshore Transmission projects (‘OFTOs’), the eighth and ninth OFTO investments in the portfolio. The investments increase the number of homes that the Company’s OFTO portfolio is capable of powering to approximately 2.1 million. INPP is also preferred bidder on East Anglia One OFTO and post-period end has been named preferred bidder on Moray East OFTO, with both investments due to complete in H2 2022. This will bring the total number of OFTO investments in the Company’s portfolio to 11, underpinning its contribution to the UK’s transition to a zero-carbon economy.
Transport, UK | SDG 11: Sustainable cities and communities
The Company completed an additional c.5% investment in Angel Trains, the UK’s largest rolling stock company serving the UK passenger rail sector with a diversified fleet of more than 4,000 vehicles (the majority of which are electric multiple units). The Company’s additional investment of c.£98 million makes Angel Trains the third largest investment holding in the portfolio, by value.
Judiciary, Germany | SDG 16: Peace, justice and strong institutions
The Company reached financial close on Offenbach Police Centre, a new police headquarters project in South-East Hesse in Offenbach, Germany. The Company invested £8.1 million for a 45% shareholding. The newly-built centre will provide office space, meeting areas, cells, forensic laboratories, a nursery and cafeteria for c.1,000 staff. The building has also been designed sustainability, with key features including c.890 solar power panels generating 302kWp, a combined head and power plant, and a low-energy heating and cooling system.
Townlands Community Hospital
PPP Portfolio, UK | SDGs 3 and 4: Good Health and Wellbeing, and Quality education
The Company acquired a small portfolio of UK PPP investments including initial interests in Townlands Community Hospital, Henley; Eltham Community Hospital and minority interests in Building Schools for Future (‘BSF’) projects sTaG 1 and 2. Investments in minority interests of a further five BSF schemes for the same portfolio is expected to be made by the Company during 2022; the first of these is expected to close in H1 2022.
Three Shires - Lincolnshire
BSF Projects and Private Finance Initiative (‘PFI’) schemes, UK | SDGs 3 and 4: Good Health and Wellbeing, and Quality education
Building on the Company’s existing portfolio of education investments in the UK, the Company acquired additional interests in Bradford and Lewisham BSF projects and interests in three healthcare PFI schemes. The BSF projects comprise 14 schools providing education facilities to over 17,000 pupils across the Bradford and Lewisham areas in the UK. The Three Shires schemes comprise the design, build, funding and partial operation of four small community healthcare facilities under the Three Shires banner located in East Lincolnshire, Leicester and Derbyshire.
PPP Portfolio, Denmark | SDGs 4, 9 & 16: Quality education; Industry, innovation and infrastructure; Peace, justice and strong institutions
The Company acquired an interest in a portfolio of four PPP projects that deliver availability-based, long-term, predictable cash flows. The projects are geographically spread across Denmark and deliver essential infrastructure to local communities, including a land registry court building, a hospital car park facility, and two schools accommodating 900 and 600 pupils respectively.
Flinders University Health and Medical Research Building (‘HMRB’), Australia | SDGs 3 and 4: Good Health and Wellbeing, and Quality education
The Company was awarded the project as part of a consortium which included Amber and Tetris Capital. The HMRB is the flagship development of the Flinders Village project, an integrated health and education precinct development on Flinders University’s Bedford Park campus. The HMRB will co-locate research, clinical and technological platforms to further Flinders University’s longstanding contributions to the health, education and medical sectors.
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I am pleased to report another period of resilient operational and financial performance by the Company, against the persistently complex backdrop of post-pandemic recovery, rising inflation and, increasingly, the global impact of the shocking war in Ukraine.
Mike Gerrard
Chair
- International Public Partnerships
Outlook
The Company has remained resilient throughout the pandemic, delivering robust performance amid turbulent macroeconomic conditions. Rising levels of inflation have emerged as a new key issue across the economies in which the Company invests. The Company takes comfort from the strong inflation-linked nature of the cash flows generated by the Company’s investment portfolio (a 1.0% increase in assumed inflation rates across all assets is projected to result in a 0.7% increase in portfolio returns)iv.
Climate change remains a significant long-term risk facing society. Given infrastructure investment’s long-term approach to public policy, capital allocation and economic growth, the Company is confident in the role infrastructure will play at the heart of governments’ efforts to deliver sustainable, fairer societies. With a strong foundation in long-term PPP and infrastructure businesses, and a proven capability to invest sustainability, INPP is well-placed to lead the response to these challenges.
While the Company’s chosen markets offer opportunities for further investment and growth, the impact of geopolitical unrest cannot be underestimated, as the events of the war in Ukraine unfold. The Company continues to actively monitor the situation, to ensure the portfolio of investments is protected from the direct and indirect impacts of the war, to the extent it can be. The Company’s Investment Adviser and employees continue to offer support via donations to humanitarian charities, and the Board and its Investment Adviser’s thoughts are with those affected in the region.
Mike Gerrard, Chair of International Public Partnerships, said: “I am pleased to report another period of resilient operational and financial performance by the Company, against the persistently complex backdrop of post-pandemic recovery, rising inflation and, increasingly, the global impact of the shocking war in Ukraine. INPP’s portfolio continues to meet our expectations and we are optimistic for the year ahead. The Board remains confident in the Company’s ability to play a central role in the development of infrastructure that meets the needs of local communities, institutions and the environment, while simultaneously generating highly visible, inflation-linked cash flows to underpin the Company’s investment case.”
A copy of the results presentation can be downloaded here.
Notes to editors
Erica Sibree/Amy Edwards
Ed Berry/Mitch Barltrop
+44 (0)20 7939 0558/0587
+44 (0)7703 330 199 / +44 (0)7807 296 032
Amber Fund Management Limited
FTI Consulting
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 over 140 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 Infrastructure Group ('Amber') is the Investment Adviser to INPP and consists of approximately 150 staff who are responsible for the management of, advice on and origination of infrastructure investments.
Important Information
This announcement contains information that is inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014.
This announcement is an advertisement. It 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.
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 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 Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.
[i] For the full year ended 31 December 2021 unless otherwise stated.
[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.
[iv] Calculated by running a ‘plus 1.0%’ inflation sensitivity for each investment and solving each investment’s discount rate to return the original valuation. The inflation-linked return is the increase in the portfolio weighted average discount rate.