International Public Partnerships Limited (INPP) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the International Public Partnerships 2020 Full Year Results Call. My name is Haley, and I will be the operator for your call this morning. [Operator Instructions] And I will now hand you over to Erica Sibree. Please go ahead.

Thanks very much, Haley. Welcome to the International Public Partnerships results presentation for the year ended December 31, 2020. Thanks so much for joining us today. Unfortunately, we find ourselves again hosting this event remotely, and we certainly look forward to seeing you all in person sometime hopefully in the not-too-distant future. We also hope that you and your families are all safe and well at the moment. Joining me today to present the introduction to the results is Giles Frost, who, I'm sure you all know, is the Director of INPP and also Chair of Amber, which is the Investment Adviser to the company. Following Giles' opening remarks, Chris Morgan, who's the investor -- Investments Director responsible for INPP at Amber, he'll take you through the results in more detail. And at the conclusion of Chris' remarks, we'll open up the phones to questions. And so please follow the operator's prompt at that time. While Giles and Chris will respond to the majority of questions, other of my colleagues and I will also be available to respond if you'd like. And to that end, with us today are, on the call, Michael Gregory, who is the Chief Operating Officer and Head of Asset Management at Amber; Dan Watson, who I'm sure a couple of you have met already and you know is the Head of our sustainable -- Sustainability and ESG at Amber; and Muhammad Anwer, Finance Director with responsibility for INPP at Amber. Many of you will have already seen the result materials that were published this morning. But if for some reason you haven't received this yet, the presentation being used today can be found on the company's website, which, as a reminder, is internationalpublicpartnerships.com. And you'll find the materials under the Investors tab. The presentation is just 1 or 2 items in that queue. So as you'll hear from the team today, the performance of the company has been resilient notwithstanding the challenges presented to us all as of the past 12 months. But to take you through the details of all this, I'll hand you over to Giles. Thanks very much, Giles.

Thank you, Erica, and good morning, everybody, and welcome to the 2020 results presentation. I mean, obviously, everyone is very aware of the background in terms of the impact of pandemic on the portfolio. But overall, and I think 2020 was a very successful year for INPP. Performance was resilient. Our cash flows held up, but we obviously have a wealth of assets to talk to you about. But fundamentally, the portfolio is in very good shape, our revenues are strong and our dividend flow to our investors is as expected. And today, we're announcing not only our programmed dividend increase for 2021 but giving guidance for 2022, which implies a 2.5% future growth in the dividend, which is in line with our previous targets and our previous performance. So just to go through a few sort of headline issues now, and then Chris is going to go through some of the detail. But looking at Slide 4, our portfolio is really supported by these 3 pillars, and these 3 pillars are unchanged year-on-year. They are, I think, responsible for the predictability and confidence that we have in the underlying performance in the portfolio. So our assets comprise assets where we believe there is a very strong likelihood of consistent and predictable returns. We've always had a significant focus on inflation-linked assets in the portfolio, and that continues. And obviously, our primary focus is on the maintenance of yield and dividend to investors, and we derive that through those government-backed or government-regulated cash flows. Diversification in our portfolio provides strength. That diversification is by sector and by geography. The low correlation to other asset classes is maintained. In 2020, we did see more volatility in the share price against other assets in the previous years, but that volatility was still far lower than more general equities. So I think volatility was around about 0.38, which is probably a little bit higher than in the previous year but still low. And therefore, I think that continues to support the argument that this sort of infrastructure assets does behave in a different way from general equities. And that, obviously, coupled with the yield characteristics, is a key reason for many shareholders to hold the investment. And our investments are responsible. We probably highlight our responsibility and our approach to good stakeholder management to a greater degree than we're used to. But that's a change of emphasis rather than a change of substance. So going back to the start of the company's existence back in 2006, we've always had a very strong focus on responsible investments. And behaving responsibly ultimately is the goodwill in the business which aids us win new opportunities with governments and be perceived as being a good steward of the assets that we operate and manage. More widely, the positive macro fundamentals that we all know about and I won't go through continue to support the investment case for INPP. The interest rate environment may be edging up, but it's clearly still low. Second, the market pricing for our assets in the market remains very strong, which argues, if anything, for future NAV growth, I think. And I think that the likelihood is that private capital will play a significant role in the projects which are directed or commissioned worldwide, particularly in the post-COVID environment. So turning on to Slide 5, just the headlines there in terms of the operational performance of the portfolio over the year. I've mentioned the dividend position. We're pleased, obviously, to maintain a strong dividend cover in 2020, notwithstanding the fact that we have had some operational issues, particularly in a couple of assets. Whilst we've navigated the COVID environment very well with virtually all of our assets performing very strongly, we have 2 assets, which have had some level of COVID impact. They are Thames Tideway, where the impact essentially is delayed construction because of social distancing; and Diabolo, the Belgian rail asset where a portion of our revenues -- majority of our revenues are linked directly or indirectly to passenger numbers, and, obviously, passenger numbers on that asset have been reduced. In both cases, we regard these as temporary blips. We continue to believe that the Thames Tideway Tunnel is an extremely strong long-term investment for the company. There are mitigants in place with both those assets in terms of compensation that is available to us in certain circumstances, and those are being pursued. Those [ writs ] are being pursued. But in the meantime, we have taken what we think is a conservative approach to our valuation on both of those assets. And really, the proportional measure have marked those assets down a little bit to reflect the risks we've seen in 2020. The third asset which is perhaps worth mentioning, and again Chris will talk about it in a bit more detail in a second, is Cadent, the gas distribution network. Cadent has gone through a regulatory view in the course of 2020. That review concluded in December. We have valued the assets on the basis of the final determination as put out by Ofgem in December, but it's worth mentioning that Cadent is effectively asking the Competition and Markets Authority to review that final determination. It's doing that alongside, I think, all the other gas and electricity distribution companies in the U.K., all of whom are unhappy with elements of that determination. And those who -- obviously, those who follow the regulated sector will know about some similar challenges made by some of the water companies recently, which did result in the Competition and Markets Authority adjusting upwards the returns that companies could make. So that process will probably conclude around about Q3 this year. Other highlights. I think it's worth mentioning that the Investment Adviser's management team have worked exceptionally hard in keeping the assets available. A number of assets have obviously been repurposed over the year to assist the COVID response, both in the U.K. and overseas. And so whilst this report obviously is principally on the financial aspect of the company's performance, it'd be wrong to not mention the significant work and time and effort and dedication that's been applied to managing those assets. And again, I think that as a result of those efforts, our relationships across the board with the -- our public sector clients have probably never been stronger, which is excellent. A further highlight in the sort of ESG space was the award of an A+ mark, which I don't think you can do better than A+ in the PRI assessment for 2020. And I think we will continue to look to align the portfolio with appropriate ESG standards going forward. And finally, in terms of an introduction, it wasn't the busiest year for acquisitions in 2020. I think, again, the pandemic limited the number of opportunities which -- brought to market. But we were very happy with the acquisitions in May, all of which were accretive to our returns, most of which were additional investments in assets we already had a level of investments in, so we knew those assets very well. I think looking forward to 2021, we hold currently, as you'll see later in this presentation, a very attractive pipeline of opportunities, including a number of preferred bidder positions, particularly in the offshore transmission space. And therefore, we continue to believe that with patience and dedication, that we can find -- continue to find attractive assets for our investors. So we're confident in that space. So I think with that introduction, which hopefully is both reassuring and optimistic, I'll pass on to Chris here to talk through a bit more of the detail of the results.

Thanks, Giles, and good morning, everyone. I'll start with a brief run-through of the key financial metrics that are set out on Slide 7. Starting with the NAV per share. We can see that reduced from 150.6p to 147.1p over the period. That reduction is a 2.3% reduction. And as Giles has already mentioned, that was principally driven by the cautious approach we've taken to the forecast cash flows notably in relation to the potential impact of COVID-19 on Tideway and Diabolo but also the RIIO-2 developments on Cadent. But I think it's also important to note that the closing NAV of 147.1p is post the 7.3p of dividends that were paid in the period. If you'd add those dividends back to the closing NAV, you'd see a positive total return of 3.8p for the year. Giles has already mentioned the resilience of the cash flows. But I think it's important just to restate that the fact that INPP received 88% of its forecast cash flows from the underlying investments demonstrates the resilience of the portfolio in what was an extremely challenging market. And whilst dividend cover was slightly lower than the 1.3x we had in 2019, the dividends were still well covered at 1.2x. Moving to the top right of the slide, the profit before tax was lower than in prior period. This was largely driven by a couple of factors. The first is the reduction in NAV over 2020. But the second is because the 2019 comparable figure includes the positive impact of the BeNEX transaction that occurred in 2019. In terms of the correlation to the FTSE All-Share, because of the underlying nature of the majority of the cash flows, which are availability based or regulated, we ordinarily expect a very low level of correlation to the wider market, and we have seen that come through in the correlation statistics over the past few years. Giles has already mentioned to the slight increase in correlation in the period because of the wider sell-off, and INPP wasn't immune to that sell-off back in April and May 2020. But over the longer term, we expect the correlation statistic to revert to the long-term average, which is in the region of 0.2. The portfolio continues to have very strong levels of inflation linkage with a 100 basis points increase in inflation forecast to provide an additional 78 basis points of return. That figure is -- I think it's the same as what we had at the half year, but it's slightly lower than what we had at the previous year-end, and there are 2 principal reasons for that. The first is that because of the change in the individual valuations, that changes the relative weightings of each investment and has a knock-on impact onto the overall portfolio inflation linkage. And the second factor is that because of the current lower levels of inflation, when you update those financial models with prevailing lower inflation, it drives a slight reduction in the overall inflation linkage. So I think while current inflation is lower than we currently forecast, and in fairness that does have a slight impact on the NAV return, and we'll talk about that a little bit later on, there is the potential for an uptick in inflation in the near term. And I think having a portfolio inflation linkage of 0.78 puts us in a good place for -- in case there is a higher inflationary environment. In terms of the annualized TSR since IPO, the 8.8%, that reflects the appreciation in the share price and the dividends paid to date and compares very favorably to the 4.7% that was generated by the FTSE All-Share Index over the same period. Finally, just in terms of the ongoing charges, this ratio does fluctuate slightly because whilst the costs haven't changed materially, the denominator used in that ratio calculation is the average NAV over the period, which can move depending on valuations and the timing of capital raises and investments. But the 1.18x is materially in line with our long-term average. Moving on to Slide 8, I'll talk a little bit about the long-term revenues. Whilst COVID has caused some short-term uncertainty on a small number of assets, on a portfolio basis we continue to have a very high level of confidence in the future cash flows and, again, mentioned a few times that, that's principally due to the nature of the underlying investments, with the majority generating regulated or availability-based revenues, having government-backed counterparties and with strong operating history. Now the high level of predictability allows us in turn to provide INPP investors with dividend guidance for the next 2 years. And you can see on the top right of the slide we're increasing it from 7.36p in respect to 2020 to 7.55p and 7.74p, and that continues the long-term trend of increasing the dividend each year by -- in the region of 2.5%. Now the chart at the bottom of the page presents the projected investment receipts from the existing portfolio and act as a reminder that it is a long-term investment proposition. So you can see the chart goes out until 2150. That's the end of the design life of the Thames Tideway Tunnel. And the overall weighted average investment life of the portfolio is in excess of 30 years. And of course, that chart depicts only the existing assets. And of course, in practice, we have been acquisitive, and we'd expect the cash flows to increase over time. And I'll talk a little bit more about the pipeline later in the presentation. Just moving on to Slide 9 and talk a little bit about the valuation methodology, which I'm sure you're all very familiar with. But ultimately, we determine a discount -- a risk-adjusted discount rate for each individual investment, and then we apply that discount rate to the forecast cash flows for that investment to determine the valuation. So whilst we don't disclose the individual discount rates, we do provide a few metrics which should give you a high level of understanding of the underlying discount rates that are used. 89% of INPP's portfolio by value is invested in the form of equity or subordinated debt or what we refer to as risk capital, while the remaining 11% is in the form of lower-risk senior debt investments, which, of course, attract a lower discount rate to reflect that lower risk. So we published 2 weighted average discount rates. The first, the weighted average risk capital discount rate, reflects only the discount rates that apply to that 89% of the portfolio being the subordinated debt and equity investments. And the portfolio weighted average rate reflects all of the investments within the portfolio, including those lower-risk senior debt investments. And you can see from the top right of the slide we also published the risk capital discount rate range. And from the table at the bottom of the chart -- of the slide, you can see the movement in all of those metrics over the period. Giles mentioned this earlier, but I think it's fair to say there has been a continued downward pressure on discount rates largely driven by reductions in government bond yields and increasing appreciation for the stable cash flows and the characteristics that infrastructure assets such as those owned by INPP provide. Now while the majority of the discount rates did trend down over the year to reflect the -- principally to reflect the prevailing market pricing that we've observed, clearly there is some additional risk on a small number of assets, and we sought to reflect that by increasing the discount rate there. And on a net basis, you can see the reduction in the weighted average discount rate moving down from 7.02% to 6.97% over the period. Just moving on to Slide 10, the net asset valuation waterfall chart. This shows the various components underpinning the change in NAV over the period. Now the second and the third bars on that chart relates to the discount rates, and they reflect the 2 component elements of the discount rates. The first is the government bond yields and the second is the investment risk premium. Now the impact of the government bond yield reductions over the period was to increase the NAV by GBP 105.4 million, but that impact was largely offset by changes to the risk premiums to reflect prevailing market pricing and also an increase on the discount rates with those assets where there is some element of additional uncertainty owing to COVID-19. As I mentioned on the previous slide, on a net basis, there was a reduction in the discount rates, and that provided GBP 3 million to GBP 4 million in terms of NAV growth. The GBP 101.5 million in dividends that were paid in the period, these were paid in line with forward guidance provided previously, and that figure is shown net of scrip uptake, which accounted for around GBP 15 million. During the period, sterling weakened against all 4 currencies the company is exposed to, with a GBP 20 million impact on the NAV post FX hedging. And just as a reminder, INPP is exposed to 4 currencies. It's the Australian dollar, the Canadian dollar, euro and the U.S. dollar. And in terms of hedging, we enter into short-term forward contracts. So we update these contracts every year, and what we do is we look out the next 4 years and we hedge 100% of year 1 non-GBP cash flows, 75% of year 2, 50% of year 3 and 25% of the year 4 non-GBP cash flows. In terms of the change in macroeconomic assumptions, the change there was largely to reflect lower interest rates because principally, the financing across the portfolio is on a fixed-rate basis. Or where you've got regulated assets, you see reimbursement for changes in the cost of debt via the regulatory mechanisms. And therefore, an assumption of lower interest rates is principally impacting on the cash deposits that are held by the PPPS principally as a requirement under the financing documents. Slide 32 provides a summary of the -- all the macroeconomic assumptions. But just so that you're aware, the reduction in deposit rates was around 100 basis points for U.K., Australia and Canada and 150 basis points for the European investments. I think the next point to make is, I suppose, in March 2021, we saw the announcement of the Spring Budget whereby the Chancellor confirmed that the corporation tax rate would increase from 19% to 25% with effect from April 2023. On Slide 30, I think 30 it is, we've noted the estimated impact of that as being in the region of GBP 30 million. I think that is possibly less than what you might have implied from our previously published sensitivity, but that's principally owing to a change in the regulatory framework on Cadent, which effectively results in change in tax rates being a pass-through in the period, whereas previously the change in the tax rate would have to go beyond a certain threshold until reimbursement was received. The final point on this slide is just in relation to the NAV return, which is GBP 62.3 million, was slightly lower than we would have expected, but that is principally driven by changes to the forecast cash flows to reflect the uncertainty caused by COVID-19 principally on Tideway and Diabolo. We then had the updates to the forecast Cadent cash flows to reflect RIIO-2 developments, which were largely put through in the first half of the year. And finally, we saw the prevailing lower level of inflation have had some negative effect in terms of overall returns. Just moving on to Slide 11, which is the investments at fair value waterfall chart. So I won't dwell for too long on this slide. It's very similar to the previous slide. But rather than focusing on the NAV over the period, it focuses on the change in the underlying investment at fair value. In terms of the investments that were made in the period, so the second bar in the chart, they totaled GBP 30 million, and we invested GBP 11 million into 3 operational U.K. education PPPs with availability-based cash flows. GBP 9.5 million was invested into NDIF. So NDIF is the National Digital Infrastructure Fund. This is the vehicle through which INPP has invested in digital infrastructure. And that GBP 9.5 million was used by NDIF to make further investments in 3 of its 4 existing assets. And then we invested GBP 9.1 million into Diabolo, and we'll talk a little bit more about that in a few slides' time. These investments were funded via reinvestment of surplus operating cash but also using the company's corporate debt facility, which, as a reminder, is a multi-currency facility that's provided by 4 banks, and we typically use it as short-term financing for acquisitions. That facility was scheduled to expire in July 2021. It was refinanced in March, only a few weeks ago, and now expires in March 2024. So it runs for 3 years. It has a GBP 250 million committed amount, plus a GBP 150 million accordion, giving us a potential facility size of GBP 400 million should we need it. In terms of investment distributions, the GBP 153 million shown on the chart there, that is largely reflective of the 88% of forecast cash flows we received within the period. And that 12% shortfall was largely attributable to the deferral and/or reduction in the distributions made by Tideway, Cadent, Angel Trains and Diabolo. I think the final point on this slide is essentially minor. But just to flag, the change in the foreign exchange rates there of GBP 23 million is slightly different to what you saw on the previous slide because this is pre FX hedges, whereas we have those FX forward contracts at a high level within the structure and therefore reflected in the NAV and not on the investments at fair value. Now over the next few slides, I just want to provide a little bit more specific detail on the 2020 performance of individual assets or groups of assets as well as provide an update on the progress that was made during the year on our responsible investment objectives. So just starting on Slide 13 with Cadent. And Giles has already mentioned this, but Cadent is a U.K. gas distribution business that owns and operates 4 of the regional gas distribution networks across the U.K. And it's currently INPP's largest investment, representing 16.5% of the portfolio. Cadent revenues are not dependent on price of gas or the volume of gas flowing through the networks. But instead, because of the monopolistic nature of the assets, it's revenues are regulated by Ofgem, the U.K. energy regulator, and these revenues are reviewed every 5 years. I think the main talking point is the final determination that was issued by Ofgem in December 2020. But before I go into that, just a quick note on the financial impact of COVID-19. And because of the point that I mentioned around the revenues being determined at the start of the regulatory period -- or being regulated and are determined at the start of the regulatory period, those revenues were largely unaffected by COVID. Of course, operationally, COVID did have an impact to certain works. For example, the emergency response and repair work as well as central maintenance works were prioritized over other works; and subsequent distancing requirements; of course, the delay to planned works which still need to be completed. This could result in a slight increase in costs, albeit, firstly, we've reflected an allowance for an increase in cost within our valuation; and secondly, the impact -- or the increase in cost is not expected to be material. So just going back to the regulatory review. This is something that Cadent and other energy network companies have been working with Ofgem on over the past few years, and it'll ultimately determine what returns will be available during the next regulatory period that starts in a couple of weeks' time and ends in March 2026. So it runs for 5 years. Ultimately, this review culminated with Ofgem issuing its final determination in December. But of course, there was a lot of work over the past few years whereby Cadent and shareholders engaged collaboratively with Ofgem and other stakeholders in order to obtain the best possible outcome for both consumers and investors. Now there have been a series of announcements over the course of that consultation which has provided increasingly more information on Ofgem stumps. And consistent with the approach we've adopted to date, we sought to reflect the latest announcement. So the key terms of Ofgem's final determination was issued within -- in December 2020 within our forecast cash flows that was used for our year-end valuation. And notwithstanding that, post the year-end, Cadent has confirmed our view that the final determination doesn't quite strike the right balance between bill reductions on the one hand and then centralization for the future investment that's needed on the other. And Cadent has decided to seek an independent review of the final determination by the Competition and Markets Authority as that approach is believed to be in the best interests of consumers. The findings from that review are due out in -- later on in 2021. Before we move on from Cadent, just a quick point on decarbonization. And for a few years now, Cadent as well as other gas distribution networks have been involved in trials to demonstrate the feasibility and safety of using hydrogen within the existing networks as a means to reduce the carbon intensity of the energy networks. And it was really encouraging that hydrogen was the second point on the U.K. government's 10-point plan that was published in November 2020, and that plan talks specifically about the use of hydrogen or hydrogen blends in lower-carbon cooking and heating in the future. So the first phase is Cadent's HyDeploy project, which is the trial that they've been running at Keele University completed in March 2021. And that project aimed to prove that blending up to 20% hydrogen with natural gas can be done safely and without the need for consumers to make any changes to their boilers or cooking appliances. And subject to HSE approval, the next phase of that trial will begin on a larger public gas network in the coming months. So ultimately, we believe that the work that Cadent are doing and the work that the other gas distribution networks are doing as well, coupled with the government support and the momentum behind the production and use of hydrogen, will mean that Cadent has a very key role to play in the transition to a low-carbon energy system in the U.K. Moving on to Slide 14 to talk a little bit about Diabolo. Diabolo is a rail asset that comprises a tunnel and a track that connects Brussels Airport to the rest of the Belgium rail network. Now Diabolo doesn't run train services itself nor does it collect fees from passengers. But the majority of its revenues, so in the region of 75% of its revenues, are linked to either the usership of the Diabolo rail link itself or the usership across the wider Belgian rail network. The remaining roughly 25% of the revenues are availability based. Now as we've flagged previously, COVID-19 and, of course, the associated government guidance resulted in a significant reduction in passenger numbers and, therefore, revenues in 2020. And following the reinstatement of a national lockdown in Belgium in October 2020, it became clearer and clearer that remedial action will be needed by the company in order to preserve the value of its investment. So we were well placed to act when the time came because we've been proactively engaging with lenders and the Belgian state railway since the onset of the pandemic. And of course, the stakeholders were sympathetic to the situation because the asset continues to operate very strongly and the reduced ridership is due to factors outside of our control. So in December 2020, INPP agreed to invest GBP 9.1 million into Diabolo and to commit a further GBP 12.6 million to reinforce the project's short-term liquidity position and ensure its debt covenants can continue to be met. So of course, precisely predicting how passenger numbers will evolve over the coming months is difficult. We sought advice from a specialist -- a technical adviser regarding the potential recovery in passenger numbers for the purpose of our year-end valuation. And the GBP 12.6 million commitment, which is contingent on the evolution of passenger numbers, was sized based on a significantly stressed case version of that passenger forecast that was used within the valuation. In terms of how we've seen passenger numbers evolve since the year-end, January and February were ahead of our expectations that we used within the valuation. We've seen a slight slowing in March. But ultimately, it remains far too early to confirm how much of the additional GBP 12.6 million commitment might be required. In terms of the overall returns from the project, there's a contractual mechanism which, in the event that both returns and passenger numbers drop below a certain threshold, we are able to request or force an adjustment in the passenger fee to restore revenues to the original financial close levels. Now that mechanism is not currently available because of the historical outperformance whereby our returns from the investment are currently in excess of that threshold. But it does provide important protection for the remaining 26 years of the concession. So finally, despite those short-term uncertainties, we continue to have a very positive view on the investment, and we're reassured by the previous high level of passenger use, which has historically been in excess of our forecasts; the contractual protections that we have in place; as well as the length of the concession, which has more than 26 years still to run. Just moving on to Tideway on Slide 15. And I'm sure you're all very familiar with Tideway, but this is the company building the 25-kilometer super sewer under the River Thames. This is in order to reduce the strain on the existing sewerage system, which was built about 150 years ago and designed for a much smaller population. And ultimately, when complete, this additional or new super sewer will clean up the river for the good of the city, it's wildlife and river users. Now as part of our interim results announcement, we talked about the limited construction activities that were undertaken in the period from mid-March 2020 to early May 2020 as a result of COVID-19 and the associated government guidance. But after implementing new working protocols and distancing measures, Tideway was able to get approximately 90% of its site workers back on site by the end of June 20, albeit, of course, they are -- they were then and they still are operating at low levels of productivity because of the distancing requirements that are in place. Now the time that's been lost is not assumed to be recovered, and the rate of progress is forecast to remain slower until distancing measures are no longer required. The complexity of having to pause activities and then restart it with lower levels of activity -- of productivity impacts all aspects of shipping across the program because, of course, a change in one activity at a certain site has a knock-on impact on the other activities at that site and indeed other sites across the program. In August 2020, last year, Tideway announced their estimation of the impact of COVID-19, and that was that they expect the project cost to increase from GBP 3.9 billion to GBP 4.1 billion and completion date to be delayed from June 2024 until March 2025. Now INPP is a 16% shareholder in Tideway, and the impact of cost increases is mitigated by existing cost sharing mechanisms between: firstly, the construction contractors and Tideway; and then secondly, between Tideway and ultimate bill payers. And Tideway is also in advanced discussions with Ofwat on potential regulatory mechanisms to further mitigate the impact of COVID-19 on the business. In terms of the year-end valuation for Tideway, we sought to reflect the latest cost and schedule information, which is the same as noted on that slide. So GBP 4.1 billion in costs and the completion date of March 2025. We've also included a prudent assessment of the additional mitigating factors that should be agreed with Ofwat as well as an assumption that distributions do not restart until later on in 2021. So despite the impact of COVID-19, by the end of the period, overall program works were in excess of 60% complete, which I think demonstrates very good progress in a challenging construction environment. Tideway remains an extremely attractive investment with a 120-year design life, inflation-linked revenues, a bespoke regulatory arrangement with a fixed WACC until 2030. And of course, it will ultimately have a significantly positive environmental impact on London. So just moving on to Slide 16, just a brief -- or update on BeNEX and Angel Trains. BeNEX represents 3% of the portfolio. It's a German rail business that both leases rolling stock to train operating companies and invests in train operating companies to operate rail franchises across Germany under contract with the relevant federal states. The financial impact of COVID on BeNEX was limited for a couple of reasons. The first is that actually, less than 20% of BeNEX's annual revenues are linked to passenger use. And the second key point is that actually, of the revenues that were lost as a result of the lower ridership because of COVID-19, BeNEX was compensated for the majority, so in excess of 90% of those lost revenues, by the German authorities. The final point on BeNEX reflects our commitment to drive sustainability performance across the portfolio, and we're currently engaging with a third-party adviser to undertake a strategic review, which will ultimately ensure that the relevant trends, so including climate change and demographic changes, et cetera, are reflected in BeNEX's long-term business plan. Angel is one of the U.K.'s largest rolling stock leasing companies. It has in excess of 4,000 vehicles on lease to various TOCs across the country. And whilst rail usership across the U.K. was significantly lower in 2020 compared to previous periods, because the lease rates within those lease agreements are not linked to ridership, Angel's revenues were largely unaffected by COVID-19. Now whilst Angel was largely financially unaffected, of course it did have an impact on the TOCs, the train operating companies, which continue to receive government support in order to continue running the train services because they would have otherwise been seriously struggling because of the lack of revenues as a result of the lower levels of ridership. I think it's also worth noting that those TOCs are underpinned by the government's Operator of Last Resort regime, which requires the government to step in to ensure continuity of rail services in the event that the existing operator is unable to do so. Despite the stability of Angel's revenues, the Board of Angel Trains prudently decided to avoid paying a dividend in 2020, retaining additional liquidity within the business given the wider uncertainty. But we do expect those deferred amounts to be paid during 2021. And then finally, progress continues with Angel's research and development project to convert an existing diesel unit to a hybrid unit using battery technology. It should ultimately help to provide a significant reduction in CO2 emissions for non-electrified parts of the railway and as part of Angel Train's wider decarbonization road map. Just moving on to Slide 17. In terms of the PPP projects here, and I suppose Diabolo will never come to this, but this is focused largely on the fully sort of availability-based PPPs. Now many of those facilities were required to close during the period owing public health guidelines, but the revenues were largely unaffected because of that availability-based nature of the cash flows. We've got very strong relationships with our public sector clients. And during the period, we've proactively engaged with them in order to provide additional support and, where possible, help them to adapt and repurpose assets that weren't open or fully occupied so that they could be used in a way that would help the wider communities. In terms of the OFTOs, these are the offshore transmission assets that connect offshore wind farms to National Grid. There's no exposure to the amount of electricity produced or the price of electricity that goes through the cables as the Ofgem -- or as the OFTOs, sorry, generate availability-based revenues that are inflation linked for the term of their license, which is typically in the region of 20 to 25 years. As a result of that, the OFTOs continued to perform very well over the period with INPP's 7 OFTO investments continuing to transmit a significant amount of renewable energy to the U.K. grid. And we'll talk about the pipeline in a second, but just to flag that INPP was awarded preferred bidder Status on its 10th OFTO investment or what will be its 10th OFTO investment once its eighth, ninth and 10th investments, all of which are at preferred bid status, reach financial close, and we hope to complete that within the next 12 months. In terms of digital infrastructure, as I mentioned earlier, INPP's investment in digital infrastructure is via NDIF, the National Digital Infrastructure Fund, and that investment represents around 2% of the portfolio. COVID had a limited impact on the 4 businesses in which NDIF has invested, with the main impact being a slight slowing of the fifth full deployment of the networks and a slowing of the door-to-door sales activities. More positively, NDIF made 2 partial realizations in the period, both of which provided a positive return on investment capital. And the proceeds from those realizations were retained by NDIF for further investments. And finally and more widely, owing to the changing working patterns, COVID has highlighted the importance of fast and reliable digital connectivity, and this is something that's being increasingly recognized by governments and investors. Now just moving on to Slide 18 to talk a little bit about our responsible investment approach. And this slide really just sets out the progress that we made during 2020 against our 3 responsible investment policy objectives as well as the additional steps that we're looking to take over the next couple of years. Now I already talked about the nature of investments that were made during 2020. And you can see from the slide the various Sustainable Development Goals that were supported by these investments. And I've also discussed the -- some of the initiatives that are underway across the portfolio to drive sustainability improvements. Now ESG considerations are already integrated into all phases of the investment life cycle, but I think the achievements over 2020 really demonstrate that. The Investment Adviser was awarded an A+ ranking, as Giles mentioned earlier, in its first year of reporting as a signatory to the UN-backed Principles for Responsible Investments. And the Investment Adviser was also awarded the Best Corporate Sustainability Strategy at the ESG Investing Awards. And finally, the company has resolved to align its disclosures with the recommendations set out by the Taskforce on Climate-related Financial Disclosures or TCFD. So looking at the bottom of the slide there and thinking about the next steps. An ESG Committee of the INPP Board has now been established. That's to enhance the governance of ESG factors across the portfolio. And INPP intends to publish its first stand-alone sustainability report later in 2021. Going forward in 2022, climate change disclosures will be enhanced to align with TCFD and other best practice or emerging regulations, and we'll also seek to use the comprehensive data that we intend on collecting and are in the process of collecting and -- in order to define sector-specific ESG targets. So just before we move on from that slide, I think overall the point is that we've made very good progress during 2020 against our 3 responsible investment policy objectives, and we've got a clear road map as to how we'll continue to make progress over the next couple of years. Now just skipping forward to Slide 20 to talk a little bit about the pipeline. If you look at the top table, you can see the near-term committed pipeline. This includes the remaining commitment to NDIF. That's GBP 7.7 million. So we've invested GBP 37.3 million of our initial GBP 45 million commitment, which was made, I think, back in 2017. And we've got the Offenbach Police Headquarters. This is a German-based -- or, sorry, this is an availability-based PPP in Germany. This reached financial close back in 2018. INPP put in a very small amount of capital at financial close, but the majority of the investment is made upon construction completion, which is scheduled for mid-2021. And we've got the 9 -- or the GBP 12.6 million contingent commitment on Diabolo, which, to the extent to which those are required, will be dependent on the evolution of passenger numbers over the coming months. And then finally, you can see the 3 OFTOs, all of which are at preferred bidder stage and all of which we hope to close within the next 12 months. Now I suppose historically, we've funded new investments using the corporate debt facility and then sought to raise new equity to pay down the facility. Again, I think we'll be taking a similar approach. And when the specific timing of these near-term investments become a little bit clearer, we'll consider the need to raise new capital. Of course, we review a lot more investment opportunities than just the ones we invest in, and the table at the bottom of the slide gives us a high-level indication of some of the longer-term opportunities that are under consideration. The focus will remain on making investments with predictable, inflation-linked cash flows that complement the existing portfolio. Finally, just on Slide 20 -- 21 in terms of the -- a summary and an outlook looking forward. We've tried to give additional detail where we've seen some uncertainty within the portfolio, but that is limited to a small number of assets. I think it's really important to stress that we've got a well-diversified portfolio of 130 different investments, which have demonstrated a great deal of resilience over what was an extremely challenging market. As we always have done, we'll continue to actively manage the assets to mitigate risk. And with the nature of the underlying cash flows, we've got confidence in our ability to meet our 2-year forward dividend guidance. And that strong level of inflation linkage puts us in a good position in the event that we do see an uptick in inflation. We'll, of course, remain responsible stewards of our critical infrastructure assets. And ESG considerations are already integrated across the investment life cycle, from the initial research and screening of new investments through to active management and monitoring and reporting. And we'll continue to improve our disclosures in line with evolving best practice. I think it's fair to say that most governments across the world acknowledge the benefit of infrastructure spending in order to kick-start their economies, generate growth -- jobs and ensure that we've got the resilient infrastructure that we need in order to meet the challenges of today's world. These projects might take time to come to market, and a lot of the government announcements that have been made haven't yet been backed up with finer details. But the burden that COVID has placed on public finances is likely to result in a greater need for private capital. So INPP via its Investment Adviser has a large origination team with a strong track record of delivering accretive investments and is very well placed to make the most of the infrastructure investment opportunities that the current sort of policy-rich environment should provide. I think that brings me to the end of the main part of the presentation, and I will hand back to the operator to start the Q&A session.

[Operator Instructions] And the first question comes from the line of Iain Scouller of Stifel.

It's Iain Scouller from Stifel. Just a couple of questions. Firstly, on revenue you expect to receive. Obviously, a number of investments haven't paid dividends in 2020. What are your thoughts on revenue receivable in 2021? I mean, that's flat or a further decline? And then the second one is the NAV bridge and the change in the discount rate seems to mask the 3.5p [indiscernible] NAV. It's just not terribly clear as to where that's come from. So can you just give us a bit of quantification on the change in valuations of Tideway, Diabolo and Cadent, please?

Fine. I'll ask Chris to talk you through the bridge chart again in a second on that, and we can pick up anything that's not clear. In terms of revenues, I mean, I think that there's 2 classes of revenues. There's various revenues which effectively have been deferred for us because in a few cases, I think that the boards of underlying investee companies have taken a view that it's inappropriate to have paid a dividend in 2020. And I think that you can understand why that view might well have been taken in Angel, particularly since the rail industry itself has been in receipt of so much government support. But tactically, seeing money going out to that business perhaps in the midst of that would be a bit politically naive. So I think an awful lot of -- so I think that -- and the deferrals we would see as being deferrals, how long they're deferred for, really, I think, depends on a number of factors, not all of which were in our control. But we ultimately do see those as deferrals, not lost revenues. I think in terms of Tideway, again we see this effectively as being largely a deferral because we see a route to both compensation and obviously to completion of the assets in due course. So the length of the concession we have there provides a lot of reassurance in terms of the very limited long-term nature of the impact of a single year's -- on a single year's revenue from that asset. And to an extent, the same is true in Diabolo. In Diabolo, obviously the revenue that we haven't received in 2020 is lost in a sense because it's linked to passenger numbers and there have been fewer passengers. The recovery of revenues in that asset is almost certainly going to be directly linked to the pace at which travel from Brussels Airport is -- number of passengers increases there. So that's a fairly sort of obvious linkage to COVID recovery. But as Chris remarked, in the longer term, there are compensatory mechanisms which can come into force on that asset. The only reason they haven't come into force to date is really because of better-than-expected performance on that asset in the past. So we tend to see that as being directly linked to a recovery in the travel industry in Belgium and, therefore, a short -- a shorter-term impact. So we're optimistic things won't get worse than where they are now in 2021. And again, I think we'd point to the fact that this has got a long-dated concession with 26 years still to go. So there's plenty of opportunity to recover from the effects year 2's lower numbers. And as I say, the usage was actually higher than our base case expectation prior to the pandemic, which obviously was [indiscernible] to returns. So hopefully, that answers your first question, which has given time for Chris to check his figures to answer your second question.

Yes. Thanks, Giles. I can do with a bit more time, if I'm honest, but I'll do my best. Iain, I do have sympathy for the question because, of course, we produce the NAV bridge. But I suppose what you'd ideally want to see is that on an asset-by-asset basis, which we can't do. But I suppose, firstly, let's focus on the NAV bridge on Slide 10. In terms of the change in the investment risk premium, which has offset the majority of the positive impact of the government bond yield reductions, on the -- let's call it the sort of potentially COVID-impacted assets of Tideway and Diabolo, and then you've got Cadent in terms of RIIO-2 and, to a smaller extent, BeNEX and Angel. I think the impact of discount rate changes there is in the region of negative -- oh, sorry, is in the region of GBP 15 million with a positive uplift on the other assets of GBP 20 million, which is effectively driving the GBP 5 million difference between government bond yields and risk premium. Now quoting numbers over the phone is quite tricky, so feel free to get in touch after this, and we can talk through that. But that's what's going on in the investment risk premium bucket. In terms of the NAV return, that is largely split between the 3 assets that we mentioned, being Cadent because of the RIIO-2 development, and the impact of that was largely put through in the first half of the year; and then you have the more prudent assumptions taken on the cash flows of Tideway and Diabolo largely because of COVID-19. I think the other point to mention is that on Slide 27, you can see the valuation of each of those investments or, in fact, all of the valuations of all the top 10 investments at the previous year-ends of 31st December 2019 and at 31st December 2020. And if you've got any specific questions on those, we're happy to answer that off-line, but it's difficult to provide any more granularity at this stage.

Okay. I mean just on the GBP 62 million of NAV return, if the provisions or the cautious approach to the valuation hadn't been included within that, what would the NAV return have been in total?

Yes, I suppose ordinarily, if -- you might expect the NAV return to be equal to the unwind of the weighted average discount rate in the region of 7% less the ongoing charges, which is, say, 1.2%. So ordinarily, you might expect a NAV return of 5.8%. And the extent to which you drop below that or above that is due to changes in the forecast cash flows.

Your next question is from Andrew Wheeler of RBC.

So it's Alex wheeler here. Two questions, both related to tax, please. On the GBP 30 million tax impact that you disclosed on Slide 30, I was wondering if you could give a little bit more color here. If I do a very simplified calc and take the 73% of the portfolio which is U.K. based and the 1% sensitivity that you have on that slide, which is 1.2p per share, on the NAV, then a 6% tax rise for 73% of the portfolio, I guess that'd be closer to 4p to 5p on NAV. I know you spoke about the Cadent tax pass-through. And the fact that it's 2 years away will also have some impact. But you're guiding to 1p to 2p per share as a NAV impact from that tax rise. So I guess I'm just interested to know what I'm doing wrong in the high-level calc to bring that number a bit further down, as I assume that the Cadent tax pass-through doesn't fully bridge that. And then secondly, just to check, that GBP 30 million adjustment, would that be a permanent adjustment on all future cash flows and not a temporary adjustment to the change in the tax rate?

I don't think you're doing anything wrong, Alex. I think the point -- and to be clear, the difference does relate to Cadent. Of course, the sensitivities that we published were calculated at December 31, 2020, which is part of the RIIO-1 regulatory period for Cadent and the change that is happening in terms of the reimbursement for tax rate changes happening from RIIO-2 onwards, i.e. when you look at the sensitivities at the half year that we publish, that will show a lower sensitivity because of this change in the regulatory mechanism on Cadent. So Cadent does account for the entire difference that you've calculated as well as, as you rightly alluded to, the fact that the change in the tax rate is in a couple of years' time rather than immediately, as it seemed within our sensitivity. In terms of whether this will be a permanent reduction, I think our policy has been historically to use enacted tax rates. Or, if we don't use enacted tax rates, it's using the tax rates that have a very high possibility of becoming enacted in the short term. So without confirming anything now, my guess is that we would use that lower -- no, sorry, that higher tax rate in our 30th of June 2021 forecast cash flows, and a higher tax rate would likely be maintained for the rest of the relevant concession periods.

The next question is from Christopher Brown of JPMorgan.

Chris, well, yes, thanks for that stuff on tax. Actually, I was going to ask about that as well. But that's interesting. So I've come to the same calculations as Alex. So I guess my other question really, I think looking at Cadent and thinking about the CMA appeal, and -- if you can give maybe some idea of the sensitivity of the valuation as it is now to sort of potentially a lower cost of capital -- sorry, higher cost of capital.

Yes, sure. I mean as we said -- I'm sorry, but as we said during the presentation, of course we've adopted the key terms within the final determination that was announced in December 2020. We obviously don't know what the CMA will find, albeit we can, of course, look across to the CMA findings in respect to the 4 water companies that appealed the PR19 determination. And hopefully, that is a positive indicator. I don't think we can confirm what the valuation impact might be. I don't expect it to be material. And I think the wider point for us is about making sure we get the right level of CapEx expenditure allowances in order to -- and the right level of return, of course, in order to facilitate and incentivize the right level of investment that we need in order to continue to make sure the networks are safe and are future proof for a hopefully lower carbon gas transportation in the future.

Okay. And just actually another question sort of expanding on what Iain was asking about with the valuations of Cadent, Tideway and Diabolo. You said you've got, obviously, the percentages as -- at various states. But clearly, thinking about some distributions, extra money going in, ForEx and things like that, is there any -- are there any things we should be wary of when trying to sort of do that calculation? I think you said you'd invested GBP 9 million in Diabolo in the second half, so I guess that would need to be taken out, but also particularly some ForEx movements there as well complicating things.

Yes. No, you're right. You can obviously do a detailed bridge on the valuations of those investments. And of course, naturally, you would expect those valuations to increase over time as the discount rates unwind, less, obviously, the distributions that are made in the period. I don't think there's too much more that I can say. I would comment that, obviously, FX doesn't impact Cadent, Tideway and Angel. It only impacts Diabolo and BeNEX. The net impact there was around GBP 4.5 million positive, so it's relatively small. And I suppose the other point is around the macroeconomic assumption changes because, of course, I mentioned earlier around the lower assumed interest rates going forward impacting some of those cash deposits. And the net impact across those assets because of that change was in the region of negative GBP 6 million. Other than that, it was because of the changes made to the forecast cash flows, the changes to the discount rates and the dividends that were paid in the period from some but not all of those assets, obviously, Angel being the exception whereby no dividends were paid out by Angel in 2020.

Your next question is from Colette of Numis.

I've just got a few, if I can. The first is just on asset management maybe, Michael, if you're available. Can you give sort of some insights into how relationships have been impacted through the process in terms of sort of the, I guess, the high-touch work [ Ofwat ] have done? What's been the biggest challenge for the team? And I guess has COVID sort of given you sort of more positives about those relationships? The second is on pipeline, specifically future pipeline rather than your committed, which is clear. Obviously, you've got things like digital connectivity and, you've said, new sectors. Can you give a bit of color around the potential areas you see there as options? And does the NDIF commitment sort of preclude you from certain types of digital investments? And then just a third one, if I can, just in the context of the dividend cover, obviously, despite not collecting all of your expected cash flows, be it through deferments, et cetera. Is there a sort of a crude way of understanding what dividend cover may have been? Or does your dividend cover have some calculations in a similar way that you would have for real estate for future rental uplift? Can you just give a sense on that dividend cover point, please?

It's Michael here. On relationships, I think the real positive is that we've got asset managers in all the jurisdictions and across all the sort of accommodation projects. So those relationships have been embedded over years. And given what we've seen over the last few years with Carillion and Interserve, the relationships were strong with the authorities. The first thing we did was to contact the counterparties and the public sector and then really focus with our operational partners to understand what they have in place and their resilience around staffing. So the key point for us was making sure the staff were available to continue to operate these facilities such that when the public sector clients wanted to use the facilities, they were actually available. So they were available, and the services were being provided. So I'd say the biggest challenge was just making sure with our operating partners that they have sufficient resource and they were able to put the teams together such that we could continue generating the services. On the OFTO assets, we made sure the engineers were kept apart. So you have 2, 3 different teams. So if one team was impacted, the second team could go in and do that. Chris, do you want to take on NDIF?

I think Giles is going to take it actually.

Okay. Anyone can get it. But, I mean, I think your question, Colette, really was what's on the horizon in terms of pipeline. That's talking about digital and what else might be out there. I mean I think dealing with digital first. I think we're very happy with the progress of the investments into fiber companies that INPP has made. I think that there's clearly a lot of capital chasing fiber companies. Quite recently, we've had 2 transactions on investee companies in the fiber space, both of which have been successful and which have been positive in terms of NAV accretion for the company. So that's positive. I think it's certainly open to us to do more fiber investments, and there's nothing stopping us doing that. We're not limited to doing it via the NDIF structure. And I think it's likely that any additional investment into new investee companies would be done outside that structure because that structure is sort of mature now. So that remains. And I think the other sort of opportunities we're alluding to in that table are quite broad in nature because we recognize that as the policy initiatives of governments change, there may be assets in a range of sectors which have basically either guaranteed or very resilient cash flows attached to them. And I think we're broadly ambivalent as to subsectors provided that the risk profile is homogenous with our existing assets. So that homogeneity is probably what we're looking for. So just to give you an example, we've been looking at things like heat networks in various countries. We've even looked to -- have been looking at assets such as social care where there's clarity on income. I mean -- I don't mean sort of housing association-type arrangements like some of the other [indiscernible] funds are doing. But, I mean, I think where we've got real clarity around availability-based payments for facilities, we are going to be interested in looking at those sorts of assets wherever they arise. So -- and I think we all recognize that the historic PFI and PPP assets which we were so involved with a decade or more ago aren't going to return in the same form, but our job is to effectively create or access similar assets with similar cash flow profiles. And provided those profiles are similar to what we've got already, then I think we'll look at any new sector which gives us that confidence. So I think that was the question on digital. And then the final question, Chris, I think, is a look at the...

Yes. I think your question was around what the dividend cover might have been had INPP received 100% of the forecast distributions in the period as opposed to the 88%. I don't have the exact figures in front of me, but we were forecasting to receive around GBP 170 million from the underlying investments. In the end, we received around GBP 150 million. So there's GBP 20 million of distributions that were either lost or deferred. And I suppose, just simplistically, if we did receive GBP 170 million, our distribution -- our dividend coverage would have been closer to what we had in 2019. So around the 1.3x.

[Operator Instructions] And the next question is from the line of Charles Murphy of Nplus1 Singer.

Two questions. Just back on the cash distributions. Was the reduction specifically sort of dominated by any one company? And then separately, on the energy white paper, you got any thoughts and insights about how offshore transmission may evolve as a result of that?

Chris, do you want to take the first one and I'll take the second one?

Yes. I was just pausing to buy ourselves some time to have a quick check.

That was good move. [indiscernible].

No. I mean I think just to be clear on where that shortfall of 12% came from, the distributions of the forecast from Diabolo in the period was split between the first half of the year and the second half of the year. Now the amount we received in the first half of the year was in excess of our forecasts. The amount we received in the second half of the year was 0. On a full year basis, I think the variance was in the region of GBP 3 million or GBP 4 million, but I'll have to double-check that. In terms of Angel, that was the only asset that didn't pay a dividend at all in the period because of the uncertainty around COVID-19. That is considered a complete deferral of funds. And the amount that was forecast from Angel was probably in the region of GBP 4-ish million, and we expect to receive that in 2021. In terms of Cadent, I think the variance there was -- again, I don't have the exact numbers in front of me but probably in the region of GBP 5 million, and that's because no dividend was paid in September 2020. I think they're the largest movements to comment on.

And I'll pick up the offshore transmission question. I mean I think -- I mean, to just try to answer it is who knows? Whenever you get consultations, then obviously we can only kind of take partners' consultations and see what happens. But I think fundamentally, we'd have a positive outlook. Clearly, whatever happens is unlikely to impact our existing assets or indeed the assets which we are on a preferred bidder stage. And obviously, they are a sizable portion of the portfolio. But, I mean, more positively, I think offshore transmission undoubtedly has been a huge success for the U.K. The scale of ambition to build further offshore wind farms is undimmed. And obviously, they all need the transmission links. And some of the ideas now are about creating more sort of offshore grid-type solutions. So rather than each wind farm having its own bespoke connection to the mainland, the idea is that you might actually want to link all these wind farms up so you've got more kind of redundancy in the connections and also to reduce the cost of future connections as those wind farms go further offshore. So, I mean, I think we welcome the maturity of the industry because effectively, we've been part of that maturing of the industry from being a sort of a novel, almost unknown sector to one that's now sort of seen as being highly mainstream. And obviously, that's had material benefits for our valuations over the years as those assets have become more kind of widely understood and accepted. So we think that the continuing kind of development is a strong positive for us. Like most mature industries, ultimately the more mature they get returns, returns do diminish. That's unfortunately a fact of life. But alongside that, you probably get more confidence in those returns.

And this concludes our question-answer session. I would like to turn the conference back over to the speakers for any closing comments.

Well, I think we're finished. Just some closing comments. So we're very grateful for all your support and assistance. There is a kind of virtual roadshow that's being organized through Numis currently. So if there are investors on the call who would like one-on-one sessions with us, then that can easily be arranged and contacting [ Amy ] Rush at Numis would be the way to do that. But otherwise, I'd just like to thank everyone for their time and attentions today and for their support over the years. So thank you very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.