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

Good afternoon, and welcome to the International Public Partnership Limited Investor Presentation. [Operator Instructions]. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Erica Sibree, Head of Capital Solutions and Investor Relations. Good afternoon.

Hi, all. Sorry, having a few technical issues to start the day, which is always helpful. Welcome to the International Public Partnership's Results Presentation for the 12 months ending the 31st of December 2022. Thanks so much for joining us today. As our introducer says, I am Erica Sibree. I head up Capital Solutions and Investor Relations here at Amber Infrastructure and that is the investment adviser to International Public Partnerships. While we're really pleased so many of you are able to join us here today. Just a reminder that this presentation is intended for a U.K. retail audience. And of course, I'd like to draw your attention to the important legal information that appears on the screen. Joining me here today to present the details of this result is Chris Morgan, the Investment Director at Amber, who has responsibility for the INPP portfolio. Also joining us is Dan Watson, who's our Head of ESG. At the conclusion of the speakers' remarks, we'll be happy to take Q&A from the audience. And as already suggested, this can be uploaded onto the platform as we're speaking. But without further ado, I'll hand over to Chris to take you through the results. Thanks so much, Chris.

Thanks, Erica, and good afternoon, everyone. I'm really pleased to present what I think is a fantastic result for the company, both in terms of financial and operational performance. But just before we dive into any of the detail, what I wanted to do is just pause for a moment and consider our approach in the overall investment proposition. So the approach hasn't changed since the IPO in 2006. We seek to maintain a diversified portfolio of low-risk infrastructure assets that we actively manage to deliver value for all of our stakeholders. I deliberately referenced the IPO date back in 2006 because I think it's important to remind ourselves that INPP has operated through various different market and economic cycles. And throughout those periods has continued to maintain high operational performance. It's continued to deliver growing fully covered dividends and it has now delivered an annualized total shareholder return of 7.5%. The assets within the portfolio have been carefully selected to provide predictable and resilient performance. If you think about the revenues that are generated by the majority of the underlying assets, they are availability based or regulated and they are paid to us by government or government-backed entities, which provides us with a very high level of security, overall income and, of course, a great deal of predictability. In terms of inflation linkage, the licenses or the project agreements that govern are regulated or PPP projects explicitly stipulate how our revenues will be adjusted to reflect prevailing inflation, giving a very high-quality inflation linkage within the portfolio. And this, of course, is a very key feature at the moment, and we'll talk a little bit more about that later on. But the high security that we have over our income streams, the predictability and the inflation linkage are really important factors, especially and probably even more so now when we're in a period of market and economic uncertainty. And these are really sought-after assets, as we'll talk about later on. So the portfolio is very well diversified. We have 138 different investments. They are spread by geography. So we have assets in Europe, Australia and North America. They're diversified across subsectors and by counterparties. What they all have in common is that they are all continuing to facilitate the delivery of various essential public services. Further progress was made during the year in terms of demonstrating our commitment to being a responsible investor or responsible steward of our assets, and we've done that through the categorization of INPP as an articulate financial product under the EU SFDR. We've also published INPP's second stand-alone sustainability report. And more generally, we further increased our ESG disclosures as Dan will talk about shortly. Just moving on to the next slide, which is a little bit of a dashboard in terms of both the financial performance on the left-hand side as well as showing the contribution of the underlying assets to the various UN sustainable development goals. Now in terms of the net asset value, that's increased significantly over the period from 148.2p to 159.1p, and you can see that from the top left of your screen. That obviously doesn't take into account the dividends that were paid in the period. So when you add that 10.9p of NAV increase with the dividends that were paid in the period, you can see there's a total NAV return that was generated of 18.5p or 12.5%. We'll go through the detail underpinning the change in NAV shortly, but it was really driven by changes to discount rates, the inflation linkage within the portfolio, the revaluation of our investment in the Thames Tideway Tunnel. And of course, the dividends that paid out to shareholders, as I mentioned. We've continued to meet the dividend guidance we put out. So typically, we'll have 2-year forward guidance set out for the dividend. We've continued to meet that within the period. You can see there from the second box on the left-hand side, the dividend growth in the period was 2.5%. And then looking at the adjacent box, you can see the dividend was well covered by net operating cash flows at 1.3x. Inflation linkage remains a really important feature and inflation linkage of 0.7%. What that really means is that if there were 100 basis points increase in inflation relative to the assumptions that we use within our valuations, we would expect a 70 basis points increase in the returns. So that's a really key feature, and we'll talk again more about that later on. From the bottom left box of the slide, you can see GBP 191.6 million of investments were made over the period, but we also committed to acquire another GBP 120 million worth of assets. And those acquisitions will ultimately continue to improve the resilience and diversification of the portfolio. Now just turning to the right-hand side of that slide. You'll see as we go through the other slides as well that showing the contribution of our assets to the UN sustainable development goals is a really key part of the way that we assess the wider benefits that our portfolio assets bring. So if I can just draw out perhaps a couple of examples. Looking at SDG 7 on the top right of that slide, the GBP 2.7 million. That comes from our OFTO, our offshore transmission assets. So these are the assets that we have that connect up to offshore wind farms. Now they are capable of transmitting sufficient renewable electricity to power the equivalent of 2.7 million homes, which is obviously helping to have a significant contribution to the net zero targets. In terms of SEG 6, the GBP 37 million that you can see there, that's referring to our investment in Tideway, which is the company building the super -- the 25-kilometer super sewer under the River Thames that's designed ultimately to reduce the volume of polluting discharges that are currently being released into the Thames every year. So on a typical year, Tideway once fully operational, should reduce polluting discharges by around 37 million cubic meters. Moving on to Slide 7. The chart at the top there shows our track record of increasing the dividend every year since the IPO in 2006. The average dividend growth has been around 2.5%. And you can see that we've also published guidance covering the next couple of years. So our FY 2023 target dividend of 7.93p and our FY 2024 target dividend is 8.13p. And again, that continues the trend of growing the dividend every year. We do occasionally get questions around the extent to which our dividend growth is linked to inflation in the market. I think what we've always sought to do is provide our investors with predictability and visibility of our dividend growth and hence, the dividend growth since the IPO has always been around circa 2.5%. And that's also remained the case where we've been through periods where inflation has run lower than our assumptions that we've used within our investment valuations. And I think the extent to which we have higher inflation and our assets generate more cash flows, and therefore, we have higher dividend cover. It's really important to stress that, that additional cash that's generated. We are quickly redeploying that into our attractive pipeline of investment opportunities. Now the chart at the bottom of that slide is really just a visual reminder of the fact that this is a long-term investment proposition. And as at 31 December 2022, INPP had a weighted average investment life of around 37 years. Just moving on to talk a little bit about valuations and when we value our assets, we effectively determine a risk-adjusted discount rate, which we apply to the forecast cash flows to determine the valuations. So we use a discounted cash flow valuation methodology. We don't publish the underlying discount rates that we use for each individual investment. But what we've tried to do on this slide is to provide a bit of an indication as to the rates used. So we've got a couple of weighted average discount rates, and we've got the risk capital discount rate range over on the right-hand side. And I suppose, perhaps just to point out that when we say risk capital, what we're talking about are our equity and our subordinated debt investments. and where you see sort of weighted average portfolio discount rate, that will include all of our investments, which includes both the risk capital and those lower-risk senior debt investments that we have that make up around 7% of the portfolio. In terms of discount rates, investor appetite and competition for high-quality infrastructure assets that provide long-term predictable cash flows with inflation linkage remains very high. But I suppose there has been a notable increase in government bond yields over the past 12 months, and that's something, obviously, we need to consider when we're determining the discount rates for these assets. So if you look at the table at the bottom of that slide and perhaps just for our focus on the penultimate row, which shows you the movement in the weighted average portfolio discount rate, that was around 50 basis points over the year. And there are really a couple of driving factors there. The first is, as I mentioned, government volumes have increased, and therefore, discount rates have increased overall. And the second driving factor is that one of our assets, our second largest asset, the Thames Tideway Tunnel, there was a transaction in that asset last year where we acquired a further stake along with our other co-shareholders in the assets. And therefore, that was effectively a market benchmark for the fair value of this asset. And under accounting rules, we are effectively required to mark the value of our investment to that data point. So that was a reduction in the in the discount rate used to value the Tideway asset, i.e., an increase in the value of the Tideway investment, and that really reflected the lower level of risk in that asset, now that construction is circa 85% complete. So those 2 factors on a net basis contributed to the circa 50 basis points increase in the weighted average discount rate. But as I'll come on to in a second, the impact of that higher discount rate was more than offset by higher inflation. So I've talked about the increase in the NAV over the period, but I think this is hopefully a helpful chart because this sets out the various component parts. So if I just perhaps run through this briefly. The first is the capital raising that occurred in May last year, where we raised GBP 325 million of new capital from both the existing and new investors for which we are very grateful. And of course, those funds were quickly deployed in the year. The next couple of bars, the negative GBP 574 million and the positive GBP 497 million. Those are the 2 component parts of the discount rates that we talked about on the previous slide. So I think it's worth taking those 2 together. And by doing that, you can see that the net negative impact of discount rate increases was circa GBP 77 million in the period. Moving on to the next part, the negative GBP 136 million. That was the dividends that were paid out to INPP shareholders during the year. And as I said, those were in line with forward guidance provided previously. And foreign exchange rates had a GBP 33 million positive impact on the valuation, and that was net of the FX hedging arrangements we have in place because we put some hedging in place over the next 4 years to make sure we have a bit more certainty around the GBP value of some of the investments -- some of the distributions coming from our overseas investments. Moving on to the change in macroeconomic assumptions, I think this one and the next bar are 2 really important ones. So the GBP 169 million relates to 2 principal changes. The first and by far the most significant is the change to our short-term inflation assumptions because we ultimately think that short-term inflation will run above our long-term assumptions. I think if you wanted to, you can have a look at Slide 31, and that will set out all of the macroeconomic assumptions that we use and if you see the short-term inflation assumptions that we've used there, you might also look out to the market and see some of the recent publications and say even those rates are now starting to look a little conservative. But the changes to the inflation assumptions overall had a circa GBP 140 million impact, that's i.e., the GBP 140 million of that GBP 169 million you can see there. The remaining GBP 29 million related to changes to the deposit rate assumptions. Just moving on to that penultimate bar of the NAV return of GBP 201 million. Now this is a little bit higher than we would ordinarily expect, and that's a positive thing, and that's ultimately driven by the higher levels of inflation during the year. And it's probably around GBP 50 million higher than we would ordinarily expect. If you take that GBP 50 million and add it to the GBP 140 million that's come about because of the change in inflation assumptions covering the next 12 to 24 months, you can see the overall benefit of the inflation linkage of the fund was circa GBP 190 million or around 10p per share. So what I was going to do over the next 5 slides is just provide a little bit more of a sort of detailed update on some of our larger assets before handing over to Dan, who will pick up in terms of our approach to responsible investment and some of the enhancements that we've made in that respect. So just starting with Cadent. Cadent is INPP's largest investment. It's a U.K. gas distribution business. It owns and operates 4 of the U.K.'s 8 regional gas distribution networks, ultimately taking gas to 11 million homes and businesses across the country. I think it's important to stress that Cadent doesn't buy or sell gas. It's not an energy supplier. It is simply paid an availability that effectively in available cash flow, regulated cash flow stream for providing a safe and reliable gas transportation service. The revenues that Cadent earned, as I said, they are regulated, they're regulated by Ofgem, the U.K. energy regulator, and they are determined for each price control period. So the current price control period runs up until March 2026, and then the next price control period will start. And the consultation that often will go through in order to determine the revenue allowances for that next price control period is due to start later this year. Now we've obviously seen a lot of volatility in terms of the price of gas in the market. We've heard of a number of supplier failures. But I think it's important to stress that other than sort of short-term timing differences, which had no notable impact in the period, Cadent is largely insulated from these changes owing to the nature of the revenue stream that it generates. More generally, Cadent is making very good progress in terms of demonstrating the crucial role that it can play in the transition to net zero. It is involved in various different projects and initiatives that are designed to determine the safety and feasibility of using the existing natural gas infrastructure to distribute cleaner fuels such as hydrogen in the future. You've probably also seen various different government policy announcements around large-scale trials of hydrogen for heating, initiatives around promoting or supporting the hydrogen economy more generally and increasing production targets. I think all of these are positive for the work that Cadent is doing. Even right now, though, Cadent is already upgrading the existing network to make it safer, to reduce the leakage of gas and hence reduce emissions and ultimately make the network green gas ready for the future. So I suppose in terms of summary on Cadent, Cadent already owns a really critical and extensive piece of the U.K.'s infrastructure, and we think it's really well positioned to play a key role in the transition to net zero. Now moving on to the next slide, Thames Tideway Tunnel. I've mentioned it earlier, but this is the second largest investment within the portfolio. It is building the 25-kilometer supers sewer under the River Thames. It's making very good progress. So during the year, primary excavation works were completed and overall construction works are now just in excess of 85% complete, which is really positive. The focus at the moment is principally on completion of the secondary lining and the secondary lining is ultimately required to make sure that the Tideway Tunnel can meet the 120-year design life that it's required a bit under the specification. And also the establishment of a system commissioning plan before the asset becomes fully operational, and that's currently scheduled for 2025. Estimated the cost of the project has increased by around 2% to GBP 4.4 billion, but I think it's important to stress that this had no material financial impact on investors and the estimate of the cost that [ tangible ] payers are still well within the estimate provided at the outset of the project. And as reported previously, in September 2022, the company increased its stake in Tideway, up to 18% by investing a further GBP 42 million. And I also mentioned that the valuation of this asset has increased considerably as a result of that transaction, which is positive. And I think overall, we were really pleased to make that additional investment in an asset that is obviously already providing very positive social benefit. But when it becomes operational, will provide hugely positive environmental benefits for River Thames and surrounding areas. Just moving on to Diabolo, this is the third largest asset in the portfolio. This is a rail transportation asset. It comprises a tunnel and a track that connects Brussels Airport with a wider Belgium rail network, effectively allowing people to travel to the airport using electric train. Now Diabolo doesn't run any of the passenger services. It doesn't collect any of the passenger fares, but it is paid effectively by the Belgium authorities and the majority of its revenue is linked to the usership or either the Diabolo rail link itself or the wider Belgium rail network. So over the last couple of years, we've obviously seen lower revenues because we've seen lower passenger numbers. But I think it's really encouraging that we are now seeing passenger numbers up to around 85% pre-pandemic levels. And our independent technical adviser estimates that we will now -- we will get back to pre-pandemic levels or 100% of pre-pandemic levels by 2024. The higher passengers were obviously driving higher revenues, which has allowed Diabolo to start paying dividends to INPP, the investors. And that's a really positive thing. So that started in January 2023. That was actually slightly earlier than we initially assumed as well, which is positive. We've talked previously about where we have perhaps lower passenger numbers. We are able, through the revenue adjustment mechanism to request a change in the passenger fare, which is obviously designed to restore revenues back to the level initially anticipated. We were engaged with discussions with the Belgian authorities last year around adjusting the fares, and we're pleased that we've now come to a conclusion with the authorities such that we can adjust the fares from February of this year, and that has obviously had a positive impact in terms of the forecast cash flows. So I think the summary on Diabolo is very positive. Passenger numbers are continuing to improve. Distributions have restarted, and we've managed to navigate the last couple of years whilst maintaining very high operational performance and very good relationships with the lenders and the Belgian railway authorities. Now here, I suppose I would ordinarily talk about our fourth largest investment, which is the Lincs OFTO. But given that we've got quite a few OFTOs in the portfolio, I thought it was worth just giving a more general update in terms of our portfolio of OFTOs. So OFTOs are the electricity transmission assets. They connect the onshore electricity grid to the offshore wind farms. The revenue streams that they generate are not dependent on the price of electricity or the amount at which the wind blows and hence electricity is generated by the offshore wind farm. Our OFTOs generate availability-based revenues. And therefore, as long as the cable is made available for use, we are paid. And we've paid that availability-based revenue stream for a term of 20 to 25 years as determined by the regulator of Ofgem. And INPP has 10 OFTO investments. They represent around 23% of the portfolio. But they are all individual investments. So they're all connecting up to different wind farms around the coast of the U.K. with different transmission assets and their own individual financing solution. And across that portfolio of 10 assets, and I think INPP started to invest in OFTOs back in 2010. INPP has an aggregate circa 70 years of operating history and availability of these cables over that period on average has been in excess of 99%, which is obviously fantastic. So the initial revenue period that we're granted by Ofgem is typically 20 to 25 years. But actually, the useful economic lives of these assets is typically in excess of that. And therefore, at the moment, Ofgem are consulting around the policy framework that will be used to ensure these assets continue to be used beyond the initial revenue period. Now the consultation started a couple of years ago. It's still running. There's been a couple of consultations that Ofgem has put out, and we're just waiting for the next announcement. But all of the announcements to date have been in line with our expectations. We're very actively engaged and work with them as part of that consultation. And of course, we will continue to do so to make sure the existing regime is extended in the most appropriate way. So ultimately, we see that consultation as a way of us being able to ensure that our OFTO assets will continue to play a key role in the transition to net zero. Just moving on to Angel before I hand over to Dan. Angel is INPP's fifth largest investment. It is a rolling stock leasing business. It owns more than 4,000 vehicles, and they are on lease to various different train operating companies or what we refer to as TOCs across the U.K. Now the lease rate set out in those lease agreements are not dependent on usage. So it doesn't matter if a small number of people get on the train or a large number of people get on the train. Actually, we continue to be paid the same amount. So the fact that we've seen lower numbers of people on the U.K. railways over the course of the year, whether that's the lingering effect of COVID-19 or it's industrial action, which there's been quite a lot during the period. That has had no material impact on Angel's revenues. I think it is, however, really positive that we are seeing positive numbers pick up quite considerably. So in Q4 of last year, passenger numbers were up to around 80% of pre-pandemic levels, and that's despite the industrial action that we've seen in both October and December. And if you strip out the effect of that industrial action, then actually the number was even more favorable relative to pre-pandemic levels. As you can see from the slide, during the year, Angel acquired a business called the Readypower Group. That's a company that provides specialized on and off track equipment to the railway industry. It's effectively in that way, playing a key role in terms of the modernization and the maintenance of the U.K.'s railways. And the investment that Angel made is evidence of its wider commitment to continue to investing or continuing to invest in the U.K. railways. Just touching upon decarbonization. I suppose Angel's business plan for many years has been geared towards decarbonization. It hasn't bought a diesel fleet for probably about a decade. The majority of this fleet is made up of electric multiple units supporting the industry's efforts towards decarbonization. Rail is one of the most environmentally friendly mode of transport. And therefore, we expect rail and Angel to play a key role in terms of reducing greenhouse gas emissions from transport in the U.K. So with that, I will hand over to Dan to cover the next couple of slides.

Brilliant. Thanks very much, Chris, and good afternoon, everyone. So just to start, the company holds the view that its investments have attractive environmental and social characteristics. And Chris has highlighted the positive contributions of a few of those being that the OFTOs, Tideway or Diabolo, just to name a few. However, the company recognizes the importance of evidencing SBA and has committed to enhancing its ESG disclosure. This not only provides the company with additional data to inform its own approach to asset management, but also provides data that its shareholders need for their own reporting requirements. Through engagement with its shareholders, the company has identified 4 categories of disclosure. Firstly, the company continues to draw on the sustainable development goals to communicate the positive environment and social characteristics of its investments. Secondly, the company also draws on the core SFDR indicators to communicate any potentially negative impacts of the portfolio. In doing so, the company continues to work towards providing an environment and social balance sheet for its shareholders. In support of the company's approach to asset management, it continues to draw on its bespoke ESG KPIs, which focus on areas that the company is able to control or influence. And finally, the company also draws on the task force and climate-related financial disclosures to communicate the climate risks and opportunities associated with its investments. Now the outcome of these disclosure work streams has been presented in the company's sustainability report, which has been released alongside the annual report. We've tried to design it to allow easy identification of the disclosures that the company shareholders require, and hopefully, you'll find it an interesting read as well. Moving on to the next slide. The company continues to demonstrate its leadership in responsible investment and made good progress against this ESG policy objectives. In April 2022, the company categorized itself as an Article 8 Financial Product under the EU SFDR regulation. Following on from this, the company's investment adviser undertook an extensive exercise to develop in-house tools and processes to enable it to capture and calculate the relevant data in a cost-efficient way. Whilst we've been focusing on disclosure, it's important to note that the company has been actively engaging with the U.K. government's Infrastructure and Projects Authority to develop a net zero approach to PPP investments within the U.K. The company continued to develop its approach to considering climate risks and opportunities in line with TCFD and has recently undertaken a detailed review of climate risks in accordance with its updated climate risk framework. This process included developing a bespoke infrastructure climate risk tool with leading catastrophe model provider, RMS, who has been working within the insurance sector for decades. The outputs from these exercises have been included within the sustainability report, but we have selected a few to summarize here. Firstly, the company continues to be aligned with the sustainable development goals with 100% of investments aligning with at least 1 SDG. We have also been able to collect greenhouse gas emissions from across the portfolio with 97% coverage, a minimal requirement for estimation. This has given the company an initial carbon footprint figure of 27 tonnes of carbon dioxide equivalent for every GBP 1 million invested and initial greenhouse gas intensity figure of 145 tonnes of carbon dioxide equivalent for every GBP 1 million of revenue. Now from a climate risk perspective, the results of the climate risk screening supports the company's view that it has a high degree of climate resilience. Of the 101 investments screened to date, 100 of those were categorized as extremely low or very low risk by RMS with the one remaining investment categorized as low risk. So we've been really pleased with the progress that we've made today and would encourage you to look at our sustainability report. Now to round out today's presentation, I'm going to hand back over to Chris to cover off the look ahead, Chris?

Thanks a lot, Dan. So just -- I've just got 2 slides left. So please stay with us. In terms of the pipeline, we've got a -- the table at the top of the slide there shows you the committed or known near-term pipeline, which totals around GBP 230 million. I mean, really, this pipeline is -- these include -- these are similar assets that we have in the portfolio. So it really demonstrates our continued focus on assets that provide government-backed cash flows on an availability basis. So we've got the Moray East OFTO, which is another one of those OFTOs that I mentioned earlier. We have been appointed the preferred bidder by Ofgem, the U.K. Energy regulator, and we expect to complete that investment in the next few months. The next one, the New Zealand portfolio. We flagged this in about October or November last year. So during 2022, we committed to acquire 5 operational assets in New Zealand, which is really exciting because it's a new geography for us and just really continues to demonstrate our ability to access attractive opportunities in new attractive geographies. We expect to complete that investment similar to Moray East OFTO during the course of the next few months. The third and fourth assets within that table, the Flinders University Health and Medical Research Building and the Gold Coast Light Rail Stage 3 or 2 availability-based PPPs in Australia. They are both under construction and we expect to fund those once they reach construction completion in 2024 and 2026, respectively. And beyond the near-term identified pipeline, there are various factors and government policies that underpin our confidence in the scale of opportunities going forward. These include things like historic underinvestment in infrastructure, the requirement to spend on infrastructure to drive economic growth to make sure we have climate resilient assets and of course, to meet decarbonization targets. And I suppose with public finances being as stretched as they are, we see there being a really significant role for private capital to play. To ensure we have the capital available, we have now agreed in principle with our banks an extension in the corporate debt facility that we have. So an increase in the size of that from GBP 250 million to GBP 350 million, and we've agreed in principle to amend the maturity date from March 2024 to March 2025. So that will really just make sure we have the liquidity available to take advantage of these opportunities as they come through. Finally, though, I think it is worth just noting that whilst we want to acquire new attractive assets when it's appropriate to do so, we're not required to acquire any. So the projected returns and the dividend guidance we provided, we are not dependent on acquiring additional assets in order to meet those targets. We'll continue to acquire assets on a selective basis in analyzing each opportunity on a risk profile basis and also looking at things like its contribution to the UN sustainable development goals. Finally, I suppose it's just worth highlighting that where we do acquire new assets, the focus will continue to be on acquiring assets that provide investors with that portfolio of long-term inflation linked to predictable cash flows. Just moving on to the summary and the outlook. I suppose in terms of summary, we're really happy with the portfolio. It's performed exceptionally well from both a financial and an operational perspective during the period. The high level of inflation linkage has really come through. That's contributed to the high level of dividend cover in the period at 1.3x, as I mentioned earlier. But it's also contributed significantly to the NAV. And I mentioned earlier that GBP 190 million or 10p per share that's been generated because of the inflation linkage within the underlying projects. And I think given where we are now, inflation is still running very high. I think it's still -- the inflation linkage within the portfolio remains a very important feature. Again, we've met our dividend target for 2022, and we've provided new targets for 2023 and 2024, and they continue the trend of growing the dividend every year since the IPO. We're obviously mindful that along with our infrastructure sector peers and others in the listed investment trust world, INPP shares haven't been immune to recent market volatility and currently trade at discount to the NAV. I think what I would say is that this is one of only a very few number of occasions during the company's 16-year history, of which the shares have traded at a discount to NAV. And whilst we'll, of course, continue to monitor the situation carefully, we're really confident in terms of the reliability, robustness and predictability of our forecast cash flows. In terms of the outlook for future investment opportunities, we've just touched upon our very healthy near-term pipeline of GBP 230 million. We talked about the extra liquidity that we'll have available through the changes made to our corporate debt facility and have also touched upon the various factors that underpin our confidence in terms of the larger future opportunity set. So overall, I think we've got a really good strong track record of delivering attractive investments, and I think we're well positioned to take advantage of additional future investment opportunities as they become available. So that's all I was going to say. I think at this point, I'll hand over to Erica.

Fantastic. I was just going to say, Erica, perhaps before I -- before we go into the questions, I'd just like to ask the attendees that they can continue to submit them. But with that, I'll just hand straight over to you Erica [Operator Instructions]

Yes, absolutely. And before we do that, to give every chance to quickly draw any other thoughts they might have done. Obviously, the team has presented the results. And I understand that the recording of this presentation will be available on the Investor Meet website. But also to say that this presentation and a whole suite of other result materials will be available or are available on the internationalpublicpartnerships.com website under the Investor tab, if you want to delve into the annual report and other information. So do feel free to have a look there. Just in terms of the Q&A, I can see quite a lot to come up, so we'll endeavor to get through as many of these as we can. And I'll try and clump them into categories of questions because I can see that a few have come up that are quite common. A couple of questions around dividend and inflation. Chris, one of the questions that's come up is in relation to the dividend and how much of it is covered from income on the sort of going concern basis and how much might be coming from asset sales? I think that's quite a quick question -- quick answer.

Yes. We can confirm that the dividend was fully covered by net operating cash flows, even exclusive of asset sales, which in the period, I think, totaled around GBP 8 million. So we were still well covered even if you exclude the asset sales.

Yes. The question that's come up a couple of times, I think, relates to the inflationary environment and our thoughts around dividend policy. And I know you touched on this briefly in your presentation, maybe just worth reiterating what the -- what the sort of thoughts are around the growth in the dividend vis-a-vis a higher inflationary environment.

Yes, of course. I think we've always ultimately try to provide our investors with visibility and predictability. So rather than sort of moving the dividend around from period to period depending on prevailing inflation, we've sought to provide consistency in terms of that annual circa 2.5% growth. And we've -- in the past, we've maintained growth of 2.5% in the dividend when inflation has been running at much lower levels than our assumptions. So I think it's something we'll continue to do. I think investors perhaps be told otherwise, but I think investors appreciate that level of predictability and visibility. And of course, it's not that we're generating additional cash and sat on it, doing nothing. We are reinvesting that capital into attractive investment opportunities. And we see that ultimately as a more compelling way to drive longer-term value for shareholders.

And I guess somewhat again, related question. You noted that the INPP share price has been trading at a discount to the published NAV and has been for a little while. And the question that's come up is how we intend to fund future acquisitions. I think you touched on the facility extension. Obviously, there's not much drawn on that currently. Presumably, that will be an important point in terms of the funding of future acquisitions.

Yes, absolutely. So we've obviously, historically, we had a corporate debt facility for many years. The corporate debt facility currently is GBP 250 million in size. It is utilized around GBP 17 million at the moment. So we have circa GBP 233 million available to us. As I said, we are in the final throes of agreeing changes to increase that to GBP 350 million in size. And obviously, the maturity date is being amended to June 2025. So we've got a fair bit of -- a lot of liquidity available for a reasonable period of time as well. So I think we're okay in terms of that front.

Yes. I guess also worth saying that the discounts trading to NAV is not uncommon for the whole of the sector or the infrastructure sector, much less sort of the alternative investment company sector as well. So I think the market backdrop is not particularly favorable at the moment. But I think clarity around company strategy and performance is obviously quite key. In terms of other questions, there's a question around sort of competition for assets and how we manage our portfolio from an allocation perspective, both from a geographic and sectoral composition? You wanted to comment on that?

Yes. I mean diversification of our portfolio is obviously key. In terms of finding new opportunities, we have people on the ground across various countries within Europe, in North America and Australia, who are constantly reviewing investment opportunities for us. I think we are obviously not investing in listed equities. So we can't day by day, pick and choose and change the composition. What we have to do is wait to see what opportunities are our investment teams can find and then assess them on an opportunity-by-opportunity basis. But obviously, you're absolutely right in that overall, we are trying to maintain a well-diversified portfolio of assets. And I think we have continued to do that.

Yes, fantastic. And obviously, the team at Amber is large or 170-odd people, around 1/3 of the team here are focused on originating opportunities across various of our mandates, but it's fair to say those boots on the ground are a really important way of us sourcing opportunities for the company. A question someone just raised around the cost of the credit facility, which I think probably not at liberty to talk about in huge amounts of detail and you covered off, I think, in your comments, but anything you'd like to add there?

Well, I think we can add in terms of the margin and commitment fees and things like that, we're not expecting any changes to that as part of the current negotiations. We are as part of the current negotiation just focusing on the size of that committed amount and obviously the maturity date.

Yes. A question around the impact of U.K. corporation tax and likely impact on future investments and, I guess, the attractiveness of the U.K. as an investment opportunity.

In terms of the changes to the U.K. corporation tax, I assume the question is around changes to the corporation tax rate that were enacted a while ago. They obviously step up from April this year, I think they're already reflected within all of our modeling and have been so for a while. So there's no impact in terms of the valuation of our investments. And obviously, when we are reviewing new investment opportunities, we are assuming the enacted rates, i.e., these higher rates in our modeling and making sure the resulting equity returns remain attractive to us.

Great. Look, I'm conscious that we've taken everyone's time. We've run for a full 45 minutes. So I think we will have to start to look to wrap up. There are a couple of questions that were outstanding, but I think they're all very much in a sort of similar theme relating to share price dividend that we've covered. So hopefully, everyone feels like we have addressed their issues throughout the presentation and the Q&A. As I said, this is all available for you to refer that to if you'd like. We really appreciate your continued support for the company and look forward to speaking with you at the next update. Thanks again for your time. Goodbye.

That's fantastic. Thank you very much, indeed, Erica, and thank you to Chris and Dan as well for updating investors today. Now please ask investors not to close the session, should be automatically redirected to provide your feedback. In order the team can better understand your views and expectations. This will only take a few moments to complete and those are greatly valued by the company. On behalf of the management team of International Public Partnership Limited, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon to you all.