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

Good afternoon, and welcome to the International Public Partnerships Limited Interim Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to note the following [ poll ]. I'd now like to hand you over to Erica Sibree, Head of Capital Solutions and Investor Relations. Good afternoon.

Good afternoon, everyone, and thank you for joining the International Public Partnerships interim results presentation for the 6 months ending 30 June 2023. As our kind administrator said today, I'm Erica Sibree, Head of Capital Solutions and Investor Relations here at Amber Infrastructure, the investment adviser to International Public Partnerships. While we're pleased that so many of you are able to join today, it's reminder that the presentation is intended for a U.K. audience that is for retail investors. And I draw your attention to this important legal information that appears on the screen. Obviously, we'll leave this presentation online. So you can, if you choose, read the fine detail in due course. Joining me here today to present the details of the result is Chris Morgan, Investor Director at Amber, who has responsibility for the INPP portfolio. We're also joined today by Amber's Head of ESG, Dan Watson. At the conclusion of the presentation, our speakers will be happy to take Q&A from the audience and obviously follow the directions again from the investor meet representatives on that front. As you'll hear from the team today, the company has performed well over the first half of 2023, and that's notwithstanding more challenging conditions facing equity markets in the U.K. And to take you through these details, I'll hand you over to Chris. Thanks very much, Chris.

Thanks, Erica, and good afternoon, everyone. But just before we dive into the details of the results, I just wanted to run through a couple of slides that set out our approach and the investment proposition as well as some of the responses that we -- and actions that we're taking in response to the current market environment. Now our approach hasn't changed since the IPO back in 2006. We continue to seek to maintain a diversified portfolio of low-risk infrastructure assets that we actively manage to deliver benefits for all of our stakeholders. Now the assets continued to perform well during the period. And I think that -- and that's obviously despite the changes or volatility in the macroeconomic environment that Erica mentioned. And really, that continued good performance and the resilience that assets have are down to a few key characteristics of the underlying assets. And I'll just run through those briefly. So the majority of our assets are generating availability-based or regulated revenues that are paid to us by government or government-backed counterparties, and that gives us a great deal of predictability and security around our income streams. The second key characteristic is around the inflation linkage. Now the contracts that underpin our assets have explicit mechanisms that set out how our revenues are adjusted and when they're adjusted to reflect prevailing inflation. And again, that gives us a good level of quality or quality of inflation linkage that comes through, obviously, preserving the value of returns in higher inflation environments. And finally, we've implemented really robust capital structure. So we have very limited exposure to increases in debt financing costs. Now since the IPO in 2006, INPP has obviously been through a number of different market cycles and environments, and those key characteristics that I just mentioned, underpin the resilience in the cash flows and have ultimately enabled INPP to continue to perform very well throughout cycles, and increase the dividend every year since the IPO, so 16 years of consecutive dividend growth. Now the portfolio is very well diversified. We have over 140 different investments. They're spread across developed stable geographies with strong credit ratings and rule of law. And obviously, there's further diversification in terms of subsectors and counterparties. But what the facilities and what the investments all have in common is that they're all facilitating the delivery of the central public services. Being a good steward of those essential infrastructure assets is really important to us, and it's beneficial to shareholders, individuals and communities that are served by the assets as well as wider society and wider stakeholders. And we've continued to demonstrate our commitment to being a responsible investor through our alignment with various sustainability frameworks and regulations. So just moving on to the next slide. Now in terms of the current market environment. I mentioned that INPP has continued to perform very well from an operational and a financial perspective. But obviously, things like central government interest rate policies and other factors have weighed on the share price. And that's not just INPP, that's across the investment trust universe. And we believe that the share price materially undervalues the company. And therefore, we've set out a number of actions that the Board has committed to take in order to make sure that the fund remains well positioned in the current market. So the first is around enhancing short-term dividend growth. So we've sought to restate our 2023 dividend and that restated dividend now represents 5% growth compared to the 2022 dividend and really that acknowledges the high level of inflation that we've seen recently. A couple of these actions are related to the cost of our corporate debt facility. So as interest rates increase, the cost of debt financing increases. Now at the asset level, we have very good protections in place such that the impact on equity returns is mitigated. But at the fund level, we have a corporate debt facility that does become more expensive. And therefore, we've got a couple of actions to address that. The first is that we're looking to realize value from the existing portfolio and use the proceeds from that realization to pay down the corporate debt facility. And the second is a more wider and more general commitment to reducing the use of the debt facility and effectively making that our capital allocation priority. And then it's important to stress that we acknowledge that changing macroeconomics has obviously rendered our long-term return target out of date. And therefore, we are committed to reviewing that target once the macroeconomic environment stabilizes. And these are the 4 key actions the Board has committed to take, and I'll touch up on these in more detail as we go through the presentation. So this slide just sets out -- it's a bit of a dashboard in terms of the financial highlights for the period, but it also sets out some of the contributions that the assets make to the UN sustainable development goals, and those are set out on the right-hand side of the slide. If we start with the net asset value, that has reduced modestly over the period. And really, that's driven by the changing valuations of the assets, which themselves are a function of discount rates that include government bond deals. So the fact that government bond yield has increased means discount rates that we use to value our assets has increased, and that's driven some of that reduction in the net asset value that you can see. And that reduction has been mitigated partly by the inflation linkage and cash deposit rates, which were higher than we expected, had a positive impact in the period. I mentioned a moment ago that we've restated our 2023 dividend and that's why you can see the 5% dividend growth stated there comparing our 2023 dividend to our 2022 dividend. Our assets, as I said earlier, continued to perform very well during the period. And at the start of each period, we forecast the cash flows we expect to receive from our assets. And I'm pleased to say that we received distributions from our assets in line with expectations during the period. And that allowed us to pay the dividends that we promised to our investors previously. And those dividends were paid -- the dividends that were paid were well covered by net operating cash flows. And you can see cash dividend cover there of 1.2x. Inflation linkage remains a really important feature of the portfolio. We've noted 0.7% there. And what that means is if inflation were to run 100 basis points above our model assumptions, then we would expect a 70 basis points pickup in returns. So again, protecting returns in higher inflation environments. And I think that's still an important feature given where inflation rates are currently. In terms of investments in the period, we completed on acquisitions that we've signed in 2022 and that we flagged previously to investors, and that includes a portfolio of operational assets in New Zealand. And obviously, that acquisition further improves our geographic diversification because it's our first acquisition in that geography. And our ongoing charges have increased slightly in the period, and that's really a function of the mechanics of the calculation, which include the reduction in the NAV over the period. Just looking at the right-hand side of the slide, obviously, alignment with the UN sustainable development goals is a key part of assessing the environmental and social benefits that are delivered by our portfolio. And we're obviously really proud of the contributions that the assets make. Those statistics are broadly the same as they were 6 months ago. So I won't run through them in detail, but perhaps just because I mentioned the assets in New Zealand that were acquired, it's worth pointing out that the number of students that are attending our school facilities has increased because of the education PPPs that we've acquired in New Zealand. So that's really positive. Let's move on to -- thank you. Now the graph at the top of the slide here, really that's just designed to demonstrate our track record of growing the dividend every year since the IPO in 2006. And you'll see that we have grown the dividend relatively consistently at 2.5% and that's despite the fact that we've seen inflation run slightly higher and slightly lower than our expectations over that period to 2022. And obviously, what we've seen in the last 12-ish months is the inflation has been running a lot higher than expectations. And we've tried to acknowledge that by restating our 2023 dividend to 8.13p, which is 5% growth based on 2022 and also restating our 2024 dividend to 8.33%, which reflects a reversion that we currently assume to our long-term dividend growth rate of 2.5%. Now in determining those revised dividend targets, we've tried to consider a number of factors. Of course, we would like investors to be able to participate in and benefit from the inflation linkage. We also want to retain some capital so that we can pay down our corporate debt facility. And obviously, we want to be able to retain our ability to grow that dividend sustainably over time. Just in terms of that chart at the bottom and really this is the demonstration of the longevity of the portfolio, I think one key stat that's worth drawing out other than the dividend yield of 6.3%, which I think is attractive in its own right, but the longevity of the portfolio is such that as the portfolio is currently without further investments, we are able to continue to service our existing and progressive dividend policy for the next 20 years. So that includes the 5% growth in 2023 and 2.5% growth thereafter. Just going to move on to talk briefly about discount rates because, as I mentioned earlier, we value our assets using a discounted cash flow valuation methodology. So we effectively determine a discount rate for each of our individual investments and we apply that to the forecast cash flows to determine a valuation. Now we published a few metrics here. We've got a weighted average risk capital discount rate, which includes our assets that are in the form of equity and subordinated debt. We've got our weighted average portfolio discount rate, which includes all of our assets. And the reason we split out risk capital in the portfolio there is just so that you can take our risk capital rate and compare that to other funds that may only invest in risk capital. And on the right-hand side, you can see the discount rate range that we used to value those risk capital investments. I think investor appetite for these sorts of high-quality infrastructure assets that provide predictable long-term inflation-linked cash flows remains very high. And we've got data points that have supported our valuations in the period. And some of those data points are market based and others are generated through our internal activity. So through our realization activity, through our bidding activities and through transactions in companies in which we already invested. I think we've obviously seen a slightly greater increase in some of the discount rates used on our U.K. assets compared to our overseas assets and really that's just driven by the greater increase in underlying bonds in the U.K. compared to some of those overseas assets. But just stepping back, I think for me, the punch line is that if you look at the weighted average portfolio discount rate of 8%, that is 440 basis points or 4.4% above the weighted average risk-free rate of 3.7%, which I think is a very conservative premium over the risk-free rate. I think that is a conservative weighted average portfolio discount rate that we have there. Now I'll just go through this slide relatively briefly, but this just underpins the component parts of the discount of the net asset value movements over the period. So the first couple of bars, the first orange and first green, they relate to the discount rates -- and when you add those -- they are the 2 component parts. So the first is the government bond and second, the investment risk premia. When you look at those together, you can see that the net impact of increasing discount rates was around GBP 110 million in the period. We then got the dividends that were paid out in the period. As I said, we're in line with forward guidance and well covered by net operating cash flows. So that's the GBP 74 million roughly in the middle of your screen. Then in terms of foreign exchange rates, we saw a strengthening of sterling against the foreign currencies against which always we're exposed to and obviously had a negative GBP 30 million impact in the period. I'll just mention the hedging that we have in place. We have short-term hedging arrangements. So we put in place short-term forward contracts. They're just designed to give us confidence and certainty around the GBP value of the distributions that are coming from some of our overseas assets because, obviously, paying the dividend in line with expectations is of critical importance. And so we don't want foreign exchange rates, which are otherwise outside of our control, the impact on our ability to do that. Then we've got the change in macroeconomic assumptions of GBP 36 million. For the most part, this relates to inflation rates where we expect short-term inflation rates to run above our expectations -- sorry, above our long-term expectations. And then finally, net asset value return, that is probably around GBP 15 million more than we would have otherwise ordinarily expect. And really, that is driven by the inflation running above our forecast for the period. So overall, on this slide, what you can see is that the macroeconomic assumptions and the benefit of the inflation linkage have partially offset the negative impact from rising discount rates. Just moving on to the next slide. We've talked about increases in interest rates. I thought it was just worth briefly setting out our approach to leverage and the protections that we have in place to rising rates. Now we have debt at the asset level, and we'll talk about that first, is relatively prudent in quantum. So I want to sort of look through basis, if you take the weighted average leverage of all of our investments, it's just under 65%. And we have 90% of the portfolio benefits from mechanisms which mitigate the impact of rising debt financing costs. So that 90%, if you cost rise over to the right-hand side of the screen, it's broken down. So 62% is the PPPS and the OFTOS where we have fixed term, fixed rate financing with the principal advertisers to nil over the concession period. And we've then got 28%, which is represented by 2 of our investments, Cadent and Tideway, we'll talk about those shortly. But those assets operate under regulatory frameworks where there are regulatory mechanisms and such that the regulator returns of those assets generate adjust to compensate for changes in the cost of debt. And that makes up 90% to the portfolio where we have specific mitigations in place. And then we have 10% of the portfolio that are operating businesses like our investments in Angel Trains, which is a rolling stock leasing business or BeNEX Rail, which is a similar business in Germany. There, the assets are very long term, and we typically expect the increases or any increases in debt costs to be passed on to consumers over time. So for example, if we are leasing a fleet of trains at the end of that lease agreement, the lease rates would be reassessed in order to take account of prevailing macroeconomic conditions. Then that's the asset level debt. Then at the company level, we have a corporate debt facility. It's GBP 350 million in size. It's available until June 2025, and we use it prudently to acquire assets. So at the end of the period, it was around GBP 107 million cash draw with net debt, obviously taking off the cash that we had on the balance sheet, net debt of only GBP 34 million, which is a prudent amount of net debt relative to the size of the fund being circa GBP 2.5 billion in size. We sold one of our assets post the period end. This was Airband, one of our existing digital infrastructure investments, and we used the proceeds from that sale along with free cash flow to reduce cash drawings down to GBP 87 million. And that's -- if you look at our GBP 87 million as our gross debt at the fund level as a percentage of the overall NAV, you can see it's less than 3%. So again, a prudent level of drawing there. Now I mentioned earlier that obviously increases in interest rates have prompted an increase in the cost of using this facility. And therefore, the company has a focus on -- or an enhanced focus on paying down this -- the corporate deficit as a capital allocation priority. And that's expected to be done through free cash flow but also through realizing value from across the portfolio. And the realization of Airband post the period end is our first demonstration of this commitment, but we expect to realize further value from the portfolio over the coming months, and we expect to use the proceeds from that realization to pay down the corporate debt facility further. Now the next few slides are just designed to provide a brief update on some of the assets within the portfolio. So I'll just -- I'll start with Cadent, which is a gas distribution business. It owns and operates some of the regional gas distribution networks in the U.K. So it doesn't buy or sell gas. It's not an energy supplier. It is paid a regulated revenue stream for maintaining a safe and reliable physical distribution network. And as revenues are regulated by Ofgem, which is the energy regulator in the U.K. and they're regulated for each price control period. So the current price control period runs until March 2026, at which point, we will enter into a new price control period. And Ofgem is expected to start consulting on that period at the end of this year. But I think fundamentally, the design of that price control and then the duration of that price control will be very similar to the price control that's currently applied. Now Cadent continues to make good progress towards its own net zero ambitions with the business reducing emissions across its operational activity through things like zero emission vehicles and net zero construction sites and the upgrades that it's making to its distribution network. And those upgrades ultimately, they make the network safer. They reduce leakage and hence reduce emissions, and they also make the network green gas ready for the future. And I've alluded to it there, but in the longer term, we obviously see hydrogen and alternative green energy sources as an important part of the energy mix. And Cadent continues to work on various projects that are designed to demonstrate the safety and the feasibility of using the existing infrastructure to distribute cleaner fuels in the future. Just moving on to Tideway. Tideway is the second largest asset in the portfolio. This is the company that's building the 25-kilometer super sewer under the River Thames and the purpose of that asset is to ultimately cleaning up the river. So it's to prevent millions of tonnes of untreated sewage from discharging into the river each year as happens currently. Good progress has been made in terms of construction. We are -- at the end of the period, we were 90% complete, and the project is on course to be fully operational in 2025, at which point the new infrastructure will prevent approximately 95% of the current overflows that are discharged into the river each year. So it will have a hugely positive impact on the water quality of the river and deliver wider environmental benefits as well. Now there's been a lot of coverage in the media around Thames Water's financial position. And we put out a notice, I think it was at the beginning of July, just to clarify the situation there because Thames Water is a completely separate company to Tideway. And whilst Thames Water does collect Tideway's revenue for it and pass those revenues over to Tideway, Tideway has afforded regulatory and statutory protections that would mitigate the risk or mitigate the -- any disruption to the revenue flows should Thames Water's financial standing worsen. So ultimately, this issue is not expected to have a financial impact on the company's investment in Tideway. The cost of the project has increased slightly. That's largely driven by inflation. But I think the really important point to stress there is that the cost to individual bill payers of this project is in line with the estimates -- well within the estimates set out at the start of the project back in 2015. And also that cost increases had no material financial impact on investors. Just moving on to Diabolo. This is an asset that consists of a tunnel and a track that connect Brussels Airport to the rest of the Belgian rail network. And we're not running train services. We're not effecting passenger fares but the amount of money that we receive from the authorities there is linked to the usership of the asset. I think that link to usership is -- makes Diabolo a little bit of an outlier in the portfolio because, as I mentioned earlier, the majority of the assets are generating availability-based or regulated cash flows. So this is a little bit of an outlier but I think it's important to stress that that exposure to passenger numbers isn't unmitigated because we have a contractual right to change the passenger fare in the event that returns and passenger numbers drop below a certain threshold. And we actually exercised that contractual right in 2022. And as you can see from the second bullet on the slide, the passenger fare increase became effective in the period. So we're now seeing really good passenger numbers on Diabolo, 2.5 million people used the asset in the first half of the year, which is around 95% of the number of people who used the asset in H1 2019. I'm using 2019 as a comparison to a pre-pandemic level. So I think we're seeing really good passenger numbers, and we continue to expect to reach pre-pandemic levels during 2024. Diabolo started distributing again. There was a pause in distributions because of the low of passenger numbers, but it started distributing again. And just as a reminder, it's noted at the bottom left of the screen, but this is a long-duration asset. Diabolo is granted a long concession period, which runs until 2047. So it still has some 23, 24 years still to run. And the outlook for the asset is very positive. Just moving on to give a brief update on our OFTOs. As a reminder, OFTOs are electricity transmission assets. So they're effectively connecting offshore wind farms to the onshore grid. So they're allowing the renewable electricity that's being produced by the offshore wind farm to be transmitted into the grid. Now there is no exposure to the amount of electricity that's produced. So it doesn't matter if the wind farm is producing lots of electricity or no electricity, there's no exposure there and there's no exposure to the price of electricity. Instead, these assets are paid availability-based inflation-linked revenues. And these are really highly sought-after assets because of that predictability of the cash flows on to the availability basis. And because of the high level of inflation linkage and obviously because of the significant contribution of the assets making to net zero targets more generally. Now we have a portfolio of 10 of these. They represent around 22% of the portfolio, and they continue to perform very well. So I mentioned they're paid on an availability basis. So availability during the period was 100% for these assets. So as I said, they're performing very well for us. Now the initial revenue period, these assets are granted by the regulator typically 20 to 25 years. But actually, the ethnic lives of a lot of the component parts of the OFTOs on are longer than that. And therefore, we've seen the energy regulator Ofgem consult on what the regulatory framework will look like after that initial revenue period ends. That's a consultation on multipart concentration that's been running for a couple of years now, and we expect further information from Ofgem towards the end of this year. But all of the decisions and announcements Ofgem have made to date are in line with our expectations. We've been involved in the consultations. We've been engaged with Ofgem and other industry stakeholders and ultimately, everyone is aligned in terms of the critical importance and ensuring the continued use of these assets in order to meet the government's target of having 50 gigawatts offshore wind by 2030 and of course, the net zero targets. Angel Trains, so this is the fifth largest asset within the portfolio. It's a rolling stock leasing company. So it owns over 4,000 vehicles that are on lease to various different train operating companies or TOCs around the country. Now the lease rates that are within those lease agreements are not subject to usage. So it doesn't matter if there are lots of people on the train or there's no one on the train. Actually, Angel's contracted revenues will be unaffected by usage. So the fact that we've seen industrial action during the period, which has resulted in service cancellations and lower passenger numbers, that's had no impact on Angela's contracted revenues. But I think it is positive, though, that we're seeing good passenger numbers on the railways. Despite the industrial action in Q1 of this year, we saw passenger numbers reach 90% at pre-pandemic levels which is really positive. And I referenced Q1 because we don't yet have the Q2 data. I think that's due out in early October, but we expect that trend of increase in passenger numbers to continue. Rail is obviously a really environmentally friendly mode of transport, and Angel continues to innovate and invest in new technologies. And as you can see from the third bullet on the slide there, it was participating in the development of a sustainable rail blueprint during the period, which hopes to further or set our road map to further improve the sustainability of rail, such that rail can be the backbone of a green economy and a green transport system. And I think it's worth noting that the Chief Executive Officer of Angel Trains; Malcolm Brown, actually chaired the group that's developing that blueprint. So that really emphasizes Angel's position within the industry as a thought leader. And just moving on to cover off a few final updates before I hand over to Dan. We'll start with the availability-based PPPs. As I said earlier, they've performed very well during the period. You can see from the top left of it on your slide, there were very minimal deductions during the period. And whilst deductions are typically passed on to a facilities management provider under a long-term fixed price contract, they are really important to us because they're a key performance indicator as to how well our assets are performing for our public sector clients. You might have seen an RNS or notice we put out to the market earlier in the week that referred to the issue that's been reported on relatively widely in relation to RAAC or reinforced autoclaved aerated concrete. Actually, the use of that material in the construction of public facilities predates INPP's, PPPs. None of our facilities have closed, and we don't expect any financial impact in this respect. You've also probably seen more recent news around Birmingham City Council, which is in financial difficulty. And obviously, the local authorities are our counterparties on availability-based PPPs. So I think more generally, it's just worth noting that we are up to date in terms of our invoicing across our PPP portfolio. Local authorities are generally supported by central government and obviously, the extent to which local authorities do enter financial difficulty, then generally, what happens is there's a prohibition on new spending, but actually existing obligations continue to be met. So again, we don't expect any financial impact from a recent news. Perhaps the final point I'll pull out on this slide in relation to digital infrastructure. I mentioned earlier the sale of one of our investments there, Airband. That leaves us with 2 digital investments. One is called tube and the other is community fiber. And I think community fiber made very good progress in the period, and it passed a milestone of having passed over 1 million homes with fiber. And by doing so, became London's largest 100% full fiber broadband provider, which I think is really good progress. So Dan, I think I'll just hand over to you for the next slide, if that's okay.

Absolutely. Absolutely. Thanks very much, Chris. Good afternoon, everyone. Great to be here. This is just going to be a very brief overview of progress in relation to responsible investments. So last year, we undertook a significant exercise to update all of our policies and processes to capture the data required to allow us to report in line with the task force on climate-related financial disclosures and also the EU sustainable finance disclosure regulation. And all of that data was provided in the second edition of the company's sustainability report, which was published earlier this year. Moving on to the first half of this year, we've been continuing with our ESG strategy and we've continued our focus on the regulatory side of things. Although there have been no new regulations, we are very mindful of the forthcoming task force nature-related financial disclosures which are due to be published. The guidelines are due to be published on the 18th of September. And also the U.K. sustainable disclosure requirements. So whilst the company has got a very clear focus on integrating ESG into all that we do, we're very mindful of making sure all of our disclosures are useful for investors and their own requirements. Now taking practical action on net zero, we've been continuing to engage with the Infrastructure and Projects Authority, where we've recently been working with them to develop a set of guidance for how you can effectively integrate net zero into PPP investments. Now following the publication of that, we've been working hard to implement some of those recommendations on several pilots, which we are progressing across the company's portfolio. Now the last point I just want to touch on is in relation to climate disclosures. So as mentioned earlier in the year, we disclosed TCFD-aligned disclosures. And that is based on guidance that is produced by Partnership for Carbon Accounting Financials, or PCAF. Now the guidance that is available is useful, but it's not a perfect fit for infrastructure investment. So Amber has become a member of PCAF over the last sort of few weeks with a view to engaging with them on developing more appropriate guidance for infrastructure investments. That's all I wanted to touch on just now. So I will hand over to Chris again to follow up and finish off the presentation.

That's great. Thanks a lot, Dan. So just -- I've just got 3 final slides. So please be with me. Now just in terms of portfolio development, we have a couple of existing and long-standing commitments -- those are to the Flinders University Health and Medical Research Building and Gold Coast Light Rail Stage 3 projects. Both of those projects are in Australia and are currently under construction, and we have committed to invest in those projects when they reach construction completion, which is in 2024 and 2025, respectively. And the total investment that we expect to make there is circa GBP 17 million. Beyond that, we don't need to make any further additional investments to deliver current projected returns. So when I talked through earlier around the profile of the forecast dividends and how we can continue to meet dividends for 20 years, we don't need to make any further investments in order to meet those current projected returns. And I've also talked about how it is a priority for the company at the moment to reduce the drawn balance on the corporate debt facility. But we have got some options. We previously announced our intention to acquire the Moray East OFTO. That's another one of those OFTOs electro transmission assets that I talked about earlier and to invest further into one of our existing digital infrastructure investments. And the expectation is that we will still make these investments, but that is subject to circumstances justifying the acquisitions and progress having been made on our realization activities. I think there will be a lot of opportunities going forward more generally. Those are driven by the need to replace or upgrade aging infrastructure to make sure our assets are climate resilient to meet decarbonization targets, et cetera. And whilst we have a current focus on reducing the drawn balance on the corporate debt facility given its increased costs, it's really important that we continue to monitor the market so that once circumstances justify we are then able to capitalize on opportunities that we expect to be available to us. Just moving on and in terms of a summary for the period. The assets have continued to perform very well financially and operationally. We've obviously increased the dividend targets. The 2023 dividend target is 5% greater than what we delivered in respect of 2022. Inflation linkage remains very high at 0.7%, meaning that returns are largely protected in a higher inflationary environment. And that, as I said earlier, remains a core feature given where inflation is currently. And dividends that are paid in the period were well covered. And that's really because the assets did perform well, as I said earlier, meeting our expectations in terms of cash that they generated. And hence, we were able to meet the dividends that would promise to investors. We have a strong liquidity position. We use leverage prudently, and net debt at the end of the period was only GBP 34 million, notwithstanding our enhanced focus on reducing the use of that corporate debt facility. The portfolio remains very well diversified. Geographic diversification was improved in the period with the acquisition of those operational assets in New Zealand. I'll just skip over to the final box at the bottom right there in terms of responsible investor. Dan has spent some time talking through our progress there. We've maintained very high levels of stewardship. We've obviously published our second stand-alone sustainability report, which includes enhanced disclosures in line with new regulations. And the final point I'll make on this slide is in terms of the projected returns as at 30th of June. And if you can see the box there titled attractive returns, I think they are very attractive. I mean, the share price at 30th of June implied a projected net return for INPP of nearly 9%, that's 8.7%, which is roughly 4.5% more than was offered by a U.K. government bond. So I think projected returns are very attractive, and that's obviously the overall projected return. But if you think even just about the dividend, our dividend yield at the end of the period was 6.3%, which again, I think is attractive. So very finally then, we're very positive in terms of the future. The company is committed to delivering long-term shareholder value and it has obviously set out some actions that we expect to take in the short term in order to ensure the fund remains well positioned in the current environment. I've touched upon those many times as we've gone through the presentation, but those are enhancing the short-term dividend growth, realizing value from the existing portfolio, reducing the use of the corporate debt facility and reviewing the long-term target return once the macroeconomic environment stabilizes. So in summary, INPP has been through many different market cycles and macroeconomic conditions previously. The defensive characteristics that it has that I set out at the start of the presentation in terms of the predictability of its income stream, the security over its income stream, the inflation linkage and coupled with the essential role that core infrastructure plays in societies more generally means that we continue to believe that INPP remains a very attractive investment proposition. So that's all I was going to say. Thank you for listening. And I was just going to hand over to Alessandro to facilitate the Q&A.

Perfect. Chris, Daniel, Erica thanks very much for your presentation. [Operator Instructions] But just while the company take a few moments [indiscernible] questions have been submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed by your investor dashboard. As you can see received questions throughout today's presentation, Erica, if I could just hand over to you to just to chair the Q&A, and I'll pick up from you at the end.

Great. Thanks, Alessandro. Just a couple of questions so far. One in relation to realization and what the process or catalyst is to trigger a recycling of capital into new opportunities. Chris, I wondered if you might take that.

Yes, of course. I mean, the catalyst for undertaking realization activities is really prompted by the increase in the cost of using our corporate debt facility. So by realizing value from across our portfolio, we can use the proceeds from that realization to pay down that cost of the debt facility, which improves returns or long-term returns for shareholders. I think that answers the question, but please do tell me if not.

I guess sort of -- the second question is sort of almost a reverse of that. And what is the process that we undertake to find new investments, particularly those overseas. And obviously, Ambers the investment adviser has 180-odd employees. Chris, I wonder if you wanted to elaborate on how a subset of those go about finding new investments.

Yes. I mean we have a team -- I mean, Erica, you said we've got around 180 people. In terms of the number of people that are focused on originating new opportunities, it's -- Erica will know better than me, but it's in the region of 30 to 40, something like that. And we have people not just in the U.K., we've got people in North America and Continental Europe and in Australia as well. So we've got people on the ground in all of the various jurisdictions in which we invest. And those people and the business more generally have got a strong track record of continuing to originate new opportunities over time.

Yes. Great. A couple of questions around whether we have any intention to undertake share buyback to reduce the discount to NAV. I think that's come in from several different people. Obviously, we talked about some of the Board's plans in terms of addressing the discount to NAV. Chris, I wonder if you wanted to address that specifically.

Yes. And I think they're really good questions, and they are obviously things that the Board have been discussing. We've had extensive discussions with the Board around all the various different options. I think the commitments at the moment have been well set out. We are taking 4 actions that we've talked about already, and we will take things step by step. So we will take those actions. We'll reassess where the market is, where our corporate debt facility is, where the opportunities are, and then we'll take further action there if necessary. But absolutely, options like share buybacks will remain under consideration by the Board.

Thanks. A question around our future dividend forecasts and whether the increased dividend can be maintained with future increases sort of going forward. And obviously, we've had the 5% increase this year and 2.5% indicated for 2024. Just wondered if you wanted to comment on kind of longer-term intentions.

Yes. I think forgive me if I get it wrong, I think it's Slide 7, where we've set out the projected investment receipts from the portfolio. So that gives you a feel for the longevity of the underlying assets and for how long we can continue to grow our dividends. Thanks, Erica. And I think the stats I was trying to pull out earlier was that actually, if we don't make any more investments at all, we can continue to meet our existing dividend policy. And by that, I'm saying 5% in 2023 and currently assumes 2.5% thereafter, we can meet that for the next 20 -- just over 20 years, it is actually. So hopefully, that answers the question, but please feel free to write again if not.

Yes. Fantastic. And I think that concludes all the questions that we have so far. So assuming no one is seriously typing, we might leave it there. But naturally, very happy to take any questions that we might otherwise get post this through investor meet or other channels. And I think I'll hand back to Alessandro, who can explain how the mechanism will work hereafter, but all I can do is thank you from the team here at Amber and International Public Partnerships for attending the call today and your continued support of the company. Thanks very much.

Chris, Erica, thank you once again from investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This is going to take a few moments to complete but I am sure it will be greatly valued by the company. On behalf of the management team of International Public Partnerships, I would like to thank you for attending today's presentation, and good afternoon to you all.