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

Good afternoon, ladies and gentlemen, welcome to the International Public Partnerships Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet company platform. [Operator Instructions] And I would now like to hand you over to Amy Edwards. Amy, good afternoon.

Good afternoon, everyone, and thank you for joining us today. We are pleased to welcome you to the International Public Partnerships results presentation for the year 31 December 2024. I'm Amy Edwards, I'm working with Capital Solutions and Investor Relations team at Amber Infrastructure, the investment adviser to INPP. Joining me today to present the detail of the results is Chris Morgan, Senior Investment Director at Amber, who has responsibility for INPP. And we are also joined by Amber's Head of ESG, Dan Watson. At the end of the presentation, we'll be happy to take Q&A from the audience. Please register your questions through the Q&A function. And finally, before we start, as a reminder, the presentation is intended for a U.K. retail audience, and I would like to draw your attention to the slide that is currently appearing on the screen, which has the important legal information that is necessary to read. With that said, I will now hand over to Chris to take you through the 2024 results.

Thanks, Amy, and good afternoon, everyone. Thanks so much for joining. If we can just move to the first slide. And I suppose before we get into the details of the results, I just wanted to spend a few moments talking about what it is we're trying to do and how we do it. So we are trying to maintain a diversified portfolio of low-risk essential infrastructure assets that generates predictable and consistent returns for investors as well as delivering social and/or environmental benefits for those that rely on our facilities as part of their daily lives. And the predictable and consistent nature of the cash flows is underpinned by our approach to sourcing assets that generate generally long-term contracted or regulated revenues with a high degree of contractual indexation. And generally, those revenues are paid to us by government or government-backed entities. We then reduce risk by ensuring that the portfolio is well structured such that it is diversified across geographies, subsectors and counterparties. But the key thread that brings all of the assets together is they're all helping to facilitate the delivery of essential public services. Now Amber Infrastructure, the investment adviser has one of the largest teams in the sector, and got a strong focus on active asset management. And it's through this team that the company optimizes the performances or the performance of its investments, and it also leverages the wider origination capability of the investment adviser to help improve the portfolio construction through accretive investments and/or divestments. And ultimately, all of these characteristics and factors combined to create a resilient portfolio that is capable of delivering financial, environmental or social benefits for stakeholders over the longer term. And I think that's been demonstrated throughout the life of the fund to date. So INPP was established back in 2006. It's obviously, therefore, been through many different macroeconomic cycles, geopolitical events, so obviously been a global pandemic and other factors. And throughout that time period, it's continued to generate very solid operational performance and it's growing the dividends that it pays to its investors every single year. If I can move on to the next page because what I want to do now is step into what does the current investment case look like. So from a financial perspective, the projected net returns of 10.7%, we think are extremely compelling. If we compare that to a 30-year U.K. government bond and look at the premium, we think you're getting a sort of 5.6% premium compared to a U.K. bond, which we think is very attractive relative to what's been available from the stock historically. The majority of those returns at 10.7% are also being delivered through the current dividend yield, which is 7.6% and dividends are forecast to grow in the coming years as well. Inflation linkage, I think, remains an important feature. What that 0.7% means is that if inflation were to run 100 basis points above our expectation, we would expect a 70 basis points increase in return. And I know that inflation has moderated over the last couple of years. And I think we saw yesterday that inflation over the year has come down. There is still some acknowledgment that inflation could pick up in the latter half of this year, and therefore, the inflation linkage provides good protection to investors. The portfolio currently has over 140 different investments. They are spread across 8 stable developed OECD member countries and the vast majority of those investments are generating long-term contracted or regulated revenues. The focus on active asset management that I mentioned earlier has yielded very strong operational performance of our assets to date. And obviously, the ability to further optimize the performance of the individual investments and the portfolio as a whole could result in outperformance of projected returns going forward. And finally, the assets within the portfolio provide significant environmental and social benefits. And hopefully, you can understand, as we go through the presentation, you'll see our alignment with the UN Sustainable Development Goals, investors will be able to understand the nonfinancial benefits that they're supporting through their investment into INPP. So moving on to some of the key developments in the period. The net asset valuation has come down from 152.6p to 144.7p. That's really due to the increase in the discount rates that we use to value the assets. That is effectively reflective of our understanding of current market pricing from the insight that we have. It's not a reflection of a change in the risk profile of our assets or any issue to do with the performance of our assets, which continues to be very good. It's also worth noting that the NAV is stated post the dividends that were paid in the period. So we paid out 8.3p of dividends in the year to investors. So when you add back or add in the dividends that were paid out, you can see there was a positive, albeit small, but a positive total return for the year. Again, we've increased dividends, delivering 3% dividend growth for 2024. We've now growing our dividends for 17 consecutive years, and we've done so whilst maintaining cash dividend cover. So we are 1.1x covered in the period. The ongoing charges for the vehicle has come down slightly from 1.17% to 1.14%, and we expect that to come down further over the next couple of years as the changes to the management fees, which we'll talk about in a moment, start to flow through, generating greater value for shareholders. I mentioned a moment ago that alignment with the UN Sustainable Development Goals remains a really important part of assessing and demonstrating the nonfinancial contribution of the portfolio. And you can see some of the key statistics at the bottom of Slide 6. So the underlying performance of the assets has continued to be very good, but that performance has been set against a challenging macroeconomic and geopolitical backdrop. And whilst we, of course, hope that conditions and factors change and act as a tailwind to the share price in the coming months, we recognize that we can't sit back and hope for that change. We need to be proactive. We need to take actions to try and reduce the discount to which the shares currently trade and ultimately enhance shareholder returns. So we think we've done quite a lot over the last 18 months or so. And we divested a further GBP 44 million worth of assets during 2024, which brings our total realizations to GBP 260 million over the 18 months to 31 December 2024. And importantly, those realizations have happened across a few different subsectors. So we've had realizations in the electricity transmission sector, social infrastructure sector and the digital infrastructure sector, both in the U.K. and overseas. And I think that's a good spread of assets. And importantly, those sales have happened at prices that were in line with our carrying values or in line with the valuations that we published prior to disposal. And that should give you confidence in terms of our approach to valuations and the fund's net asset value more generally. With the shares trading at a discount to the NAV, we recognize that buying back our own shares is a very attractive use of capital. We started a share buyback program early in 2024. And to date, we've bought back GBP 55 million worth of shares, which because of the accretive nature of that purchase has driven an extra 0.5p of value per share for shareholders. We reinvested GBP 92 million of the divestment proceeds. That went into 2 assets. We purchased the Moray East offshore transmission owner for GBP 77 million in the year. And we also put an additional GBP 15 million into BeNEX, which is an existing rail asset that we have in Germany. And it's really important to stress that the Board elected to make those investments instead of buying back more shares because the strategic benefits and the projected returns from those investments were greater than those implied for a share buyback. So it really helps to enhance long-term returns for shareholders. We've delivered the 5% dividend growth for 2023, a further dividend growth of 3% for 2024. We've also announced that dividends will be paid quarterly rather than semiannually from June 2025, providing investors with a more regular income stream. And finally, we reduced or fully paid off the drawn balance on our corporate debt facility, and we also reduced its size down to GBP 250 million, and that reduces the costs for the vehicle whilst also retaining access to liquidity should we need it. So that debt facility remains undrawn at present. And finally, and I've alluded to it already in terms of the importance of assessing new investment opportunities against the merits of a share buyback, but we formally restated the target return for new investments in the period to explicitly consider the returns implied by share buyback. Now despite the actions that we've taken over the last 18 months or so, we continue to believe that the share price materially undervalues the company. And therefore, we are setting out more additional measures today that will build on the work that we've done over the past 18 months or so and try and improve returns for shareholders. So firstly, we're enhancing our divestment program, and that's in effect in order to facilitate an increased capital return to shareholders. But in terms of the divestments themselves, we have very minimal investment commitments. I think they totaled GBP 9 million at present. We have an undrawn debt facility, and therefore, we're not forced sellers. We adopt a very structured approach to our divestments. We analyze the portfolio and we assess from a qualitative and quantitative basis. We assess which assets will be primed for divestment such that we leave the portfolio in a better position post the sale than it was before in light of the current environment. So we're looking to improve the attractiveness of the portfolio through our divestment process. Post period end, we announced that we've agreed to sell our interest in a number of U.K. education PPPs for a total of GBP 8 million. And we've got various other larger divestment processes that are currently ongoing, the next of which we expect to announce in the coming weeks. And these additional divestments should provide further support to our approach to valuations and the NAV as well as facilitate greater returns of capital to shareholders, where we've set out today an enhanced target of returning up to GBP 200 million to shareholders over the period to 31st of March 2026. That's an increase from our current target of GBP 60 million. So it's an increase of GBP 140 million. And if you look at today's share price, deploying that GBP 200 million through the buyback program could generate an additional 2p of value for shareholders on a per share basis. Whilst the priority is on disposing of assets in order to facilitate that increased capital to shareholders, the Board will carefully consider new investment opportunities where it makes sense to do so. And what that means is we'll look at new investment opportunities against the alternative options, which is, for example, a share buyback, and the Board will consider electing for reinvestment of proceeds over and above a share buyback where the strategic benefits and the projected returns from that new investment opportunity are greater than the returns on benefits available from a share buyback. Now recognizing that consistently growing dividend is a really important feature for our investor base. We are further growing the dividends. We've set out targets for each of 2025 and 2026 to grow the dividend by a further 2.5% per annum, again, continuing the trend of growing the dividend every year. And finally, we've amended the fees payable to the investment adviser. So from 1st of July this year, rather than the fees payable to the investment adviser being based on the book value of the portfolio, they will be based on the average of the net asset value and the market capitalization. And what that will do is a number of things. Firstly, it will immediately reduce the cost of running the vehicle. So looking at today's share price, that should reduce costs by region of 10%. It will result in a greater alignment of interest between shareholders and the investment adviser. And hopefully, it is also a demonstration of the confidence and commitment that the investment adviser has in terms of the future success of the company. So this is -- this slide is just a visual representation of our track record of growing that dividend every year. I think it is a standout feature if you look across the wider listed infrastructure investment trust sector, having grown the dividend every year is a standout feature, and it's something we're very proud of. I've already set out our 2025 and 2026 targets, but on a pence per share basis, they're 8.58p and 8.79p and effectively result in a current dividend yield of close to 8%, so 7.6%. In terms of dividend growth beyond that time frame, what we've said and what we continue to say is that the existing portfolio is forecast to generate sufficient cash flows without any further investment that will allow INPP to service a growing dividend to its investors for at least the next 20 years. And hopefully, as we move on to the next slide, you'll sort of be able to see that visually. So this slide, as well as the point I just mentioned, which I'll come back to in a moment, this slide sets out the sources of cash flows. So the breakdown of the investment receipts that the fund expects to receive from its underlying investment portfolio broken down across the PPP portion of the portfolio as well as the regulated assets and the operating businesses. And what you can also see via the red line on the chart is an illustration as to how the NAV could be expected to evolve over time, other things being equal. Now this chart covers only the next 30 years, so it runs up to 2055. But there are, of course, cash flows beyond that point in time as can be inferred by the fact that the weighted average investment life of the fund is 38 years and by the fact that the projected NAV at that point in time is still north of GBP 1 billion. Now there is a little bit of lumpiness that people occasionally ask us about. And so I'll just cover that off. There's a couple of reasons for it really. When you get to the end of a PPP investment, typically, there's a period by which you've repaid the senior debt financing and effectively reserving requirements that are placed on the business have fallen away. And therefore, that entity is able to distribute additional cash flows to the equity investor. So one example of that is where you can see a slight spike in the dark blue portion of the bar in 2036. Another example relates to our offshore transmission assets. These are the assets that help transmit renewable electricity generated by an offshore wind farm through to the onshore grid. And those assets are granted typically a 20- to 25-year initial revenue stream by Ofgem, the energy regulator. And during that initial revenue stream, the OFTO are paid availability-based revenues with no exposure to the price of electricity or amount of electricity that's generated. But the point there is that the economic lives of the assets that we own outright is closer to around, let's say, 35 years versus an initial revenue stream of 25 years. And therefore, whilst we probably will be able to model out over time, what we're doing at the moment is we've got residual value in our modeling after the end of that initial revenue period. And you can see a couple of examples of that in, say, 2044 and 2047, where the light blue portion of the bar has increased in size in those years. So in summary, the purpose of this chart is to clearly set out the source of our revenues over the next 30 years as well as to act as a reminder as to the predictability and longevity of the fund and the associated expectation that we can service a growing dividend for at least the next 20 years. Turning to valuations, and I picked some of this up at the start of the presentation, but we use a discounted cash flow valuation methodology when we're determining the value of our assets, and we've tried to provide some data around that on this slide. So you can see the weighted average discount rate of 9%, and you can also see the range of discount rates that we use to value not only some of the segments of the portfolio, but also the portfolio as a whole. And on a weighted average basis, the discount rate has increased by 60 basis points from 8.4% to 9%, and that's really based on our insight into current market pricing for these sorts of assets. And I would say that, that is predominantly driven by increases in government yields that we've seen over the year, and that's obviously led certain investors to have higher return requirements. And whilst the number of transactions that we've seen has been relatively low, because we are running these divestment processes that I've been mentioning, we have got a great deal of insight into the current market pricing, and we've effectively triangulated between all these sort of data points and factors that we have in determining the 9% weighted average discount rate. I think one transaction that is noteworthy is the upcoming take private of BBGI, another listed infrastructure investment fund. That portfolio is not identical to INPP. There's not a perfect read across there. They had assets in slightly different jurisdictions, and they had a slightly greater composition of availability-based PPPs. But I think nonetheless, the offer price for that vehicle, which was around 20% above the pre-offer share price demonstrates the value that we believe is out there and provides strong support for the valuation of INPP's investments. Now the weighted average discount rate, the reason that's relevant is because if you were to buy into the fund at the NAV, that less the fees is effectively the return you would expect to generate. But actually, because there's currently the opportunity to buy in at less than the current NAV, you can generate greater returns, and that's effectively the 10.7% projected net returns that I keep referring to. I'll just move on to the next slide, which I'll go through relatively quickly, but this just sets out the various factors underpinning the change in the NAV over the period. So the first orange bar is the share buyback. I mentioned that we've deployed GBP 55 million so far. That's to date. But actually during the calendar year, it's GBP 43 million. What this shows is that the NAV has gone down because we've spent money, so cash has gone out the door to buy back shares. But obviously, on a NAV per share basis, the share buyback is accretive and generated 0.5p per share of value during the year. The next 2 bars relate to the discount rates. They are the 2 component parts of the discount rate, the government bond yields and the investment risk premium. And when you take those together, you can see there's a negative GBP 136 million impact because of the net increase in the discount rates that I mentioned on the previous page. Paid out GBP 157 million of dividends in the period, and that was in line with expectations. We've then got a couple of bars, which relate to macroeconomic assumptions, so changes in foreign exchange rates and small tweaks to short-term inflation rates and deposit rate assumptions. And then we've got the NAV return, sort of the green bar on the right-hand side, which was marginally below expectations for the year, but that was really because inflation ran lower than we expected throughout the year and because we took a prudent approach to -- that was running at slightly lower levels of availability because of an offshore cable fault. That's all been remedied, and we'll talk about that in a moment. But I think the point is we took a prudent approach during the year. Now I'll just move on to the next few slides, which are designed to give a little bit more insight into the performance of the underlying assets. I'll start with the regulated assets, which make up 50% of the portfolio and comprise 13 different investments. Just on Cadent, now this is a business that facilitates the distribution of gas to around 50% of the U.K.'s population. It's not just to residential properties, it's also to hospitals, schools, other buildings and industry. And the way it does that is through its extensive network of gas pipelines. It owns and manages some 130,000 kilometers of pipelines. And to put that in context, it's the equivalent of going around the world 3.5x. So it's a large business with an extensive asset base. That business continues to perform very well. It's achieving outstanding levels of safety and reliability for consumers, and it remains highly cash generative. So it's delivering distributions to INPP in line with our forecast, actually slightly ahead of our forecast for the year. Now this company has a very critical role to play in the transition to net zero because it needs to carry on reliably and safely providing gas to consumers to facilitate the incremental and increased use of more intermittent renewable technologies over time. I suppose that's more of a medium-term, longer-term objective, but it's important to stress that Cadent is actually doing quite a lot now to reduce emissions in the near term. So it's using new technology to both detect and repair gas leaks. It's replacing old cast iron pipes, and it's also growing the number of biomethane connections to the network as well. In terms of the revenues that, that company generates, they're determined by Ofgem, the energy regulator in respect of each 5-year price control period. And Ofgem is currently consulting on the revenues that will be available for the next price control period, which starts in April of next year. And it recently came out and noted that its approach to regulation won't change significantly in the next period. And obviously, it highlighted the importance of the regulatory framework to be adaptable to protect both consumers and investors in light of there being various different pathways to net zero. So bringing that together, it's really the extensive nature of Cadent's assets, its key role in the transition as well as the inherent protections afforded to it through the regulatory framework that provide us with a great deal of confidence in terms of the future performance of the business and the key role that will play in the energy system for decades to come. Moving on to Tideway, major construction works for the Super-Sewer completed during the period. And actually, post period end, that asset became fully connected with London's wider sewage infrastructure. So that asset is now moving into the commissioning phase. But as part of the commissioning phase, it is being operated. And therefore, it's really exciting that we're able to tangibly talk about that, that asset is now delivering. And actually, if you go to Tideway's website, and I think there's a link at the bottom of this slide, you can see there's a dynamic live tracker on that website, which shows you the amount of sewage that Tideway has helped to prevent from going into the River Thames since it became -- since it started to operate in September of last year. And that figure at the moment stands at 6 million cubic meters of sewage. And to put that into context for you, that's around 2,500 Olympic-sized swimming pools worth of sewage. So this is an asset that we're really proud of and will have a hugely positive environmental impact. I think it's also a really strong demonstration of how an innovative delivery model where you've got private sector investment alongside a bespoke regulatory framework and a government support package can come together to efficiently deliver new infrastructure. And this is a model that you'll hear the government talk about and may look to apply to new infrastructure projects in the U.K. in the future. We've talked many times in the past about the protections that Tideway has in relation to Thames Water, and we continue to state our confidence in the effectiveness of the protections, both statutory and regulatory that it has in place such that any change to the status of Thames Water is not expected to have a material impact on Tideway. Now I mentioned earlier, our offshore transmission owners or OFTO investments where these assets are effectively transmitting renewable electricity into the grid, and they have a license that's granted to them by Ofgem, the regulator during which they're generating availability-based revenues. But importantly, what they have within their license are protections built in that hold those assets harmless in the event that there's a lower level of availability due to a factor outside of the OFTO's control. And that's very relevant because when we reported our interim results for 2024, we said that actually one of our OFTO, the East Anglia One OFTO was operating at a lower level of availability because it suffered an offshore cable fault. Our asset management team worked really hard to make sure that the asset was repaired and returned to service as quickly as possible. And it was actually back in service earlier than expected. I think it returned to full service in early October of last year. But it also made sure that the root cause analysis work was undertaken promptly so that it could work closely with Ofgem to progress our license claim to be held harmless against the otherwise availability deduction that it would have suffered. And I'm pleased to say that Ofgem came out post period end and confirmed that the OFTO would be held harmless and there would be no revenue deduction for the outage. And I think that's a really strong testament not just to our approach to asset management, but also in terms of our relationship with the regulator and in terms of the regulatory protections more generally. Finally, Ofgem continued to consult. So -- I talked earlier about the fact that, that initial revenue period comes to an end after around 25 years, but Ofgem are continuing to consult on how they go about extending that revenue stream so to continue to operate those assets. I think I've mentioned this probably for the last 3 years because that consultation or series of consultations has been going on for a while now, but all of the outcomes and discussions and decisions to date are in line with our expectation, and we fully expect our assets to continue to be used beyond that initial revenue period. So just moving on to the PPP assets. These make up 38% of the portfolio, and there are around 120 different PPPs or individual concession-based investments ranging from police headquarters to schools, libraries and courts and they're across U.K. and Continental Europe, North America, Australia and New Zealand. And they continue to perform very well. So availability for those assets in the year was 99.8%. Now generally, any deduction, so the sort of 0.2% shortfall there, any deduction would generally be passed on to a third-party facilities management contractor. So it's not something that would impact on the fund in any case, but it is a really important indicator for us because it tells us how well our assets are performing for our public sector clients. And obviously, we want to make sure these assets are generating cash in line with our expectations. Clearly, the need for greater spending on infrastructure has been widely acknowledged by governments, both overseas and in the U.K. where the U.K. government has acknowledged that new infrastructure spending is a central part of its mission to grow the economy. So we're looking forward to seeing the 10-year national infrastructure strategy when that comes out in June. And we expect that to set out the government's approach to new economic and social infrastructure as well as how private capital can help in the delivery of that infrastructure. And ultimately, we expect that strategy to result in more investment opportunities for INPP in PPP-like delivery models going forward. I've talked about the divestments that we've made a few times. Again, the key point being that these divestments we made in line with our carrying values, which should provide you with confidence in terms of our approach to valuations. The handback of PPP assets and the associated services at the end of the concession period is something that we have talked about a few times before and we'll continue to talk about because it's an important feature. But the majority of our assets won't come to the end of their concession period until the mid-2030s or so. So we do have one asset that's actually going through the handback period -- handback process this year, but the vast majority aren't for another 10, 15 years or so. In respect to that asset that's going back to the authority this year, activities are well underway and no notable issues have been identified. Moving on to the third sort of segment of assets within the portfolio, the operating businesses. It is 12% of the portfolio and comprises 4 different investments. Angel Trains, which is the U.K.'s largest rolling stock leasing business, continues to perform very well with trains on lease to train operating companies or TOCs as expected and distributions to INPP in line with forecast. The passenger rail industry has been subject to a lot of criticism over the years for being overly fragmented. And therefore, you might have heard about government's ambitions to set out railroad reform and there are a couple of 2 key areas really. The first is around bringing the operations of passenger services back in-house. And the second is around the establishment of Great British Railways, which will act as a sort of directing mind and effectively unify and simplify the railway. I mean I don't -- on the first point around the nationalization of the train operating companies or the services, the legislation required to do that was passed in late last year. And in terms of GBR, whilst legislation hasn't yet been passed to establish GBR, the government is currently consulting on various measures in relation to its establishment. But I think the key point there is that this is all associated with improving passenger services. It's not designed to nor are there any plans to change the way in which rolling stock is leased. So we don't expect these initiatives to have any material impact on Angel Trains. BeNEX rail is a German business. We've owned the business for many years, and we've talked previously about it being a platform for growth in some ways. And so we're really pleased in the period, we managed to acquire Abellio's’ German rail business, which principally comprised of 2 train operating companies, bringing BeNEX' total to 8. And those 2 train operating companies that were acquired are generating availability-based revenues under contract with federal states across Germany. And importantly, or usefully, those operations are in areas where BeNEX currently has little to no presence. So it really provides that business with an opportunity to build its relationships and build its reputation in new regions, which should provide with further growth opportunities over time. That GBP 15 million acquisition was made using divestment proceeds and importantly, the projected returns and the strategic benefits from making that investment were significantly greater than those available through a share buyback, which is why the Board elected to make that acquisition. Finally, INPP has invested in 2 digital assets. They represent 2% of the portfolio, so a very small portion, but they continue to perform very well, both building out their respective fiber networks in different areas of the country. I won't say too much more on those. It's such a small portion of the portfolio. Instead at this point, I will hand over to Daniel, who will give us a brief...

Great. Thanks very much, Chris, and good afternoon, everyone. I'm pleased to share an overview of the steps we've taken in 2024 in relation to responsible investment as well as what we have got plans going into 2025. So I'll start with summarizing what we've delivered this past year across 3 core areas: disclosure, KPIs and net zero. 2024 saw the launch of the U.K. Sustainability Disclosure Requirements, or SDR. And recognizing the potential implications of SDR on the company's investors, we undertook a round of engagement to seek the views of stakeholders to inform our approach. Through this process, we identified that the provision of a wide range of nonfinancial data remain useful for investors, including those who have elected to adopt sustainability labels under SDR labeling rules. As a result of that, the company has elected to not adopt a sustainability label at this point, but has continued to provide a selection of nonfinancial data within the sustainability report released today. However, we have made disclosures available that summarize the environmental and social characteristics of the company's investments in line with SDR, which can be found on the website. Now continuing on the theme of engagement, Amber has been working closely with a number of portfolio companies throughout the year to drive performance against the updated KPIs. This engagement enabled us to make progress on the company's KPIs and the important groundwork for continued improvement. As part of its suite of ESG KPIs, the company expects 100% of its investments to meet minimum governance policies and procedures covering areas such as conflicts of interest, financial crime mitigation, diversity, equality, inclusion, cybersecurity and whistleblowing. During the year, Amber has strengthened the definitions and guidance for these governance requirements. This includes further detail on what policies and procedures are considered suitable for investment companies with best practice examples for each specific governance topic. And we're pleased to report that continued performance with the portfolio maintaining 100% alignment despite this more rigorous approach. It's also been really great to get started on the company's net zero pathway KPI framework. And this has included sector-specific engagement actions like supporting investment level emissions forecasting and benchmarking for those against credible net zero pathways. For example, we've successfully worked with the company's OFTO portfolio to set an economically viable emissions reduction target that is aligned with the science-based targets. We're also particularly pleased to report that the company has successfully installed a mounted solar PV array at Ryburn Valley High School, which is part of the Calderdale Schools portfolio. The success of this project will hopefully serve as a model for further carbon saving projects in the PFI sector as the company continues to work with stakeholders to identify energy efficiency and decarbonization opportunities. And this marks a really big step in supporting our public sector partners and delivering the company's net zero KPIs. Now looking ahead to 2025, we're seeking to build on this momentum with further action planned across the same 3 areas. From a TCFD perspective, we're considering a refresh of our physical climate risk assessment, including how to better incorporate emerging climate hazards such as extreme heat. Regarding KPIs, we'll continue our stewardship efforts through Amber in 2025 to further progress against ESG KPIs across our investment portfolio. And finally, we'll seek to build on the experience gained this year of integrating low-carbon initiatives at Ryburn Valley School and look to identify additional opportunities to decarbonize social infrastructure assets. This is going to include exploring new funding sources and deepening collaboration with facilities management companies who are critical partners in delivering decarbonization on the ground. So we hope these actions demonstrate our commitment to embedding responsible investment throughout our operations. And in doing so, we'll continue to support our public sector partners and reduce risk for investors and also help investors meet their own policy objectives. Now for more information, including access to all regulatory ESG data you may need, please refer to the company's sustainability report, which we published today and is available on the website. And with that, I will hand back over to Chris.

Thanks, Dan. I've just got 2 more slides, and then we can move to Q&A. So I've noted throughout this presentation that the priority is to enhance the divestment program in order to make capital available to increase the share buyback program. Just running through the sort of pie chart, we've realized GBP 260 million of assets over the 18 months to 31st of December 2024. We -- I mentioned earlier that we signed an agreement post period end to sell U.K. education assets for a total of GBP 8 million, and we've got other and larger divestment processes that are ongoing, the first of which we expect to announce in the coming weeks. We've returned GBP 55 million of capital to investors since the start of 2024, and we've now set an increased target of returning up to GBP 200 million over the period to March 2026. Now in terms of new investment opportunities, the first point to make is that we are not required to make any investment -- any further investments in order to deliver current projected returns. But I think there are various factors that underpin the pressing need for governments to both upgrade existing infrastructure and build a new infrastructure. And obviously, the competing demands being placed on government finances at the moment, we think means that there'll be a lot of opportunities to invest in essential infrastructure across the company's core geographies going forward. So whilst there is a very high bar for new investments and the Board will carefully consider the allocation of capital, looking at the various merits of the different options, where the strategic benefits and projected returns are greater than those available from a share buyback, the Board will consider reinvesting divestment proceeds. And just moving on to the final slide, and I suppose in terms of summary. If we could just move on to the final slide. There we go. The portfolio continues to perform very well, demonstrating its resilience against a challenging market backdrop. And I think that's really a testament to years of disciplined asset selection and our active approach to asset management of low-risk essential infrastructure assets. We continue to believe that the current share price materially undervalues the company and as a result, offers extremely compelling entry points with projected net return at the moment of 10.7%. I've mentioned the dividend yield already, but that currently stands at close to 8%, so 7.6% and we've obviously set out guidance and plans and intentions to grow those dividends over the coming years. In terms of inflation linkage, I mentioned earlier, but just yesterday, the government is signaling slightly higher inflation towards the back end of this year. So again, I think the inflation linkage provides good protection for investors. And the new measures that we've announced, which include further portfolio optimization and increase in the amount of capital that's being returned to investors, a reduction in costs and growing dividends should help unlock further shareholder value and drive outperformance of projected returns. So finally, I think the key point is that we think the current investment case is very strong, and we believe the fund is well positioned going forward.