TIDMINPP
RNS Number : 6789W
International Public Partnership Ld
16 November 2017
INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED
PORTFOLIO UPDATE FOR THE PERIOD 1 JULY TO 15 NOVEMBER 2017
16 November 2017
International Public Partnerships Limited ('INPP', the
'Company'), the listed investment company which invests in global
public infrastructure projects, today issues the following
portfolio update for the period 1 July to 15 November 2017.
OPERATIONAL HIGHLIGHTS
-- The Company's portfolio of 127 investments in regulated and
public infrastructure projects is performing fully in line with
expectations.
-- An additional GBP38.4 million was invested into three
projects and GBP45.0 million of investment commitment was made to
digital infrastructure in the period.
-- The portfolio currently has 12.9%(1) of assets in physical
construction, providing opportunities for capital growth as those
assets progress to full operation.
-- The Company maintains an attractive pipeline of investment
opportunities across the UK, Northern Europe, Australia and North
America, and will continue to deploy capital to meet its existing
investment commitments to the landmark Thames Tideway Tunnel
project.
FINANCIAL HIGHLIGHTS
-- 1.8% increase in Net Asset Value ('NAV') per share to 144.7
pence for the six months to 30 June 2017 (31 Dec 2016: 142.2p).
-- The portfolio maintains a leading level of inflation-linkage
such that a 1.00% increase in inflation leads to a 0.83% increase
in return(2) .
-- A first half year 2017 dividend of 3.41 pence per share was
declared on 7 September 2017 and was paid on 9 November 2017.
-- A minimum target dividend for the 2017 and 2018 financial
years has been set at 6.82 and 7.00 pence per share, respectively;
in line with an average increase of c.2.5%(3) or greater each
year.
-- The Company has delivered a Total Shareholder Return
(comprising share price growth and aggregate dividends) since IPO
in November 2006 to 15 November 2017 of 165.6% or 9.3% on an
annualised basis(4) .
PORTFOLIO PERFORMANCE
The Company's portfolio of assets continues to perform well with
revenues and cash receipts in line with management forecasts and
levels of satisfaction remaining high amongst public sector
clients.
The portfolio currently has 12.9%(1) of assets still in physical
construction. The weighted average investment life of the portfolio
is currently 37 years(1) with a weighted average (non-recourse)
debt tenor of 36 years(1) .
As at 30 September 2017 the portfolio comprised economic
interests in 127 projects with a composition as detailed below(1)
:
Geographic Investment Sector Investment
breakdown Fair Value breakdown Fair Value
% %
---------------- ------------ -------------------- ------------
United Kingdom 74.9% Energy Transmission 20.6%
---------------- ------------ -------------------- ------------
Belgium 9.9% Education 20.5%
---------------- ------------ -------------------- ------------
Australia 6.1% Transport 16.6%
---------------- ------------ -------------------- ------------
United States 3.1% Gas Distribution 14.9%
---------------- ------------ -------------------- ------------
Germany 2.8% Waste Water 10.9%
---------------- ------------ -------------------- ------------
Canada 2.1% Health 4.9%
---------------- ------------ -------------------- ------------
Ireland 1.1% Courts 3.8%
---------------- ------------ -------------------- ------------
Italy <0.1% Military Housing 3.1%
---------------- ------------ -------------------- ------------
Other 4.7%
---------------- ------------ -------------------- ------------
Investment Investment Investment Investment
life Fair Value stake Fair Value
% % %
--------------- ------------ ----------- ------------
<20 years 41.3% 100% 48.8%
--------------- ------------ ----------- ------------
20 - 30 years 29.7% <50% 7.7%
--------------- ------------ ----------- ------------
>30 years 28.9% 50% - 100% 43.5%
--------------- ------------ ----------- ------------
Debt facility, gearing and cash position
The Company has now deployed all of the capital it raised in May
2017 and has utilised GBP20.6 million of the credit available to it
under its corporate debt facility by way of letters of credit,
leaving GBP379.4 million of the GBP400.0 million facility available
for investment.
Investments
During the period since 1 July 2017, GBP38.4 million was
invested into three projects and GBP45.0 million was committed (but
not yet invested) towards investment into the digital
infrastructure sector.
Thames Tideway Tunnel
Progress on the Thames Tideway Tunnel construction is
continuing. Work has started ahead of schedule at the key drive
sites, with construction scheduled to complete in 2022. During the
period an additional GBP500 million of long term financing was
successfully raised by Tideway to support its construction
activities bringing total long term financing raised since
Financial Close to GBP1.8 billion.
Since 1 July 2017 the Company has invested a further GBP22.0
million into the Tideway project leaving GBP7.9 million to be
invested during the remainder of 2017 (currently supported by a
letter of credit).
Gold Coast Light Rail - Phase 2
In April 2016, the Company committed to invest into a 7.3km
extension to the Gold Coast Light Rail PPP concession project in
Queensland, Australia. In December 2016, INPP acquired a further
3.33% interest in the project from Aveng Group.
The commitment into this second phase of the project was
supported by a letter of credit provided by the Company. GBP3.6
million of investment was made directly into the project during the
period with GBP0.9 million still supported by the letter of
credit.
Victoria Schools Project
In September 2015, the Company as part of a consortium was
selected to design, build, finance and maintain the New Schools
Public Private Partnership Project in Victoria, Australia. The
project comprises the delivery of 15 schools across 12 sites which
are due to be completed by 2018.
The Company provides 100% of the project risk capital which was
supported by a letter of credit during construction. In the period
from 1 July 2017, GBP12.8 million of investment was made into the
project with GBP8.2 million still supported by letter of
credit.
Digital infrastructure
The Company committed jointly with HM Government to make an
investment in digital infrastructure and particularly fibre optic
broadband connections. The Company sees long term parallels between
the essential nature of broadband connectivity to the home and
workplace, and the established businesses of gas and electricity
distribution and transmission with which it is already
experienced.
The investment that INPP has committed to will be made through a
co-investment vehicle into which INPP has committed up to GBP45
million and HM Government has committed up to GBP150 million. This
co-investment vehicle has been established as part of the UK
Government's Digital Infrastructure Investment Fund initiative.
Top Ten Investments
As at 30 September 2017 with adjustments for subsequent
transactions, the Top Ten Investments of the Company in terms of
value were as set out below(1) :
Rank Asset Investment
Fair Value
%
------ ------------------------------ -------------
Cadent (gas distribution
1 network) 14.9%
------ ------------------------------ -------------
2 Thames Tideway Tunnel 10.9%
------ ------------------------------ -------------
3 Diabolo Rail Link 9.9%
------ ------------------------------ -------------
4 Lincs Offshore Transmission 9.6%
------ ------------------------------ -------------
5 Ormonde Offshore Transmission 6.7%
------ ------------------------------ -------------
6 Angel Trains 3.7%
------ ------------------------------ -------------
7 U.S. Military Housing 3.1%
------ ------------------------------ -------------
8 Royal Children's Hospital 2.3%
------ ------------------------------ -------------
9 BeNEX Rail 2.1%
------ ------------------------------ -------------
10 Northampton Schools 1.6%
------ ------------------------------ -------------
VALUATION
The Company's investment portfolio valuation is determined
semi-annually by the Directors after advice from the Investment
Advisor and is reviewed by the Company's auditors, EY. In addition,
the Company provides quarterly NAV guidance predominantly based on
movements over the period in the government bond yields of
countries where the Company holds investments and changes to
relevant foreign exchange rates.
This quarterly guidance does not include any changes (positive
or negative) in NAV arising from matters specific to individual
investments (e.g. changes in asset specific risks, timing
implications of delayed or accelerated cash flows, changes to cash
flow projections and assumptions, indexation adjustments due to
changes in inflation etc.), although any material
investment-specific issues occurring in the period can be expected
to be reported on separately in this quarterly update. The
Directors' valuations published with the Company's full and interim
results are reviewed by the Company's auditors and are updated to
reflect both investment-specific and macroeconomic factors.
The Company published its NAV at 30 June 2017 of 144.7 pence per
share when it released its 2017 first half year results (on 7
September 2017). Since that date government bond yields in the
majority of jurisdictions in which the Company invests have
decreased. On a net basis and other things being equal, the net
decrease in government bond yields could be expected to have a
positive effect on the Company's NAV.
Over the same period, the Sterling strengthened against the
Australian Dollar and the U.S. Dollar but weakened against the Euro
and the Canadian Dollar. The net impact of the foreign exchange
rate movements could be expected, other things being equal, to have
a broadly neutral effect on the NAV.
Inflation rates in the UK continue to run ahead of the current
assumption used in the Company's UK investment valuations and,
other things being equal, this is expected to have a positive
impact on the Company's NAV.
In the course of its normal practice the Company also reviews
market based evidence (market intelligence and its own experience
of the secondary market for assets such as those owned by the
Company) in its assessment of NAV. Since 30 June 2017 the Company
has seen continued evidence of rising valuations for assets of the
type it owns. The extent of the positive impact which this is
likely to have on NAV is being considered and will be reported on
more fully at the time of the Company's full year results.
DISTRIBUTIONS
On 7 September 2017, the 2017 first half year distribution of
3.41 pence per share was declared for shareholders on the register
as at 29 September 2017. This distribution was made in respect of
the period 1 January 2017 to 30 June 2017 and represents a c.2.5%
increase on the distribution paid in the previous corresponding
period.
The Scrip Dividend Alternative Circular applicable to that
dividend was available to investors and the associated scrip
allotment or dividend payment was paid on 9 November 2017.
The Board of Directors have previously announced minimum targets
for the 2017 and 2018 distributions of 6.82 pence per share and
7.00 pence per share (respectively), providing additional guidance
to investors as to the Company's future intentions. The targeted
payments would represent a minimum c.2.5% increase on the preceding
distributions and would continue to be in line with the growth
target indicated at the time of the Company's IPO in 2006(2) .
INVESTMENT ENVIRONMENT AND OUTLOOK
The market outlook for the Company remains positive.
Infrastructure ranks highly on many government agendas and this
asset class continues to be a key driver for economic growth and
positive social impact. The global scale of the capital investment
ambition of governments is significant and we anticipate this will
generate more investment opportunities in the developed OECD
geographies in which the Company invests.
Political uncertainty and consequential economic risk present
potential market-wide challenges, which need to be analysed and
assessed as and when they materialise. The nature of INPP's
investment portfolio and the active approach we have adopted to
asset management both provide a firm foundation from which to react
to any emerging risks.
The Company notes the increasing public attention paid to the
assessment of the value for money private sector investment in UK
public infrastructure provides. As a long-standing and leading
originator, investor and operator of public infrastructure projects
globally, the Company firmly believes that the public private
partnerships models with which it is involved, bring significant
benefits to its public sector partners, and ultimately their end
users.
These include the benefits of fixed-maturity, fixed-price
contracts covering the whole of the life of the asset and the risk
transfer to the private sector arising through detailed payment
mechanisms imposing penalties where standards fall below those
required by the project contracts.
The greatest volume of commentary relating to historical
projects procured under the Project Finance Initiative (PFI) has
been associated with large, acute hospital projects. The Company
has no such projects in its portfolio in the UK.
Currently, 8.5%(1) of the Company's portfolio is comprised by
equity investment in assets considered to have been developed under
"classic" PFI in the UK. A further 1.6%(1) is comprised of debt
investment in such assets.
A further 10.7%(1) is comprised of equity investment in schools
developed under the Building Schools for the Future Programme (a
successor programme developed by the government between 2004 and
2010 with similarities to (but also significant differences from)
the original PFI structures).
A further 2.5%(1) of the Company's portfolio is invested in the
senior debt of school investment projects developed under a revised
programme of the UK government called Private Finance 2. This
further successor programme was established in 2012.
The Company has strong, productive relationships with all its
public sector customers on these projects.
Overall the Company remains positive about its prospects
regarding both the performance of its existing investments and the
opportunity to add high-quality investments to the portfolio in the
short-to-medium term.
Notes to Editors:
While it is no longer a requirement under the Disclosure and
Transparency Rules for the Company to issue Interim Management
Statements, the Board believes it is in the interest of
shareholders for the Company to provide quarterly updates in
addition to its half year reports.
1. This is based on the fair valuation of the Group's
investments as at 30 September 2017 calculated utilising a
discounted cash flow methodology as stated in the valuation section
and includes the Company's investments in the Gold Coast Light Rail
and Victoria Schools projects which were made subsequent to the 30
September 2017 valuation date. As the Group's investment commitment
to digital infrastructure has not yet been called, it has not been
taken into account in the calculations above.
2. In aggregate, the weighted average return of the portfolio
would be expected to increase by 0.83% per annum in response to a
1.00% per annum inflation increase over the currently assumed
inflation rates across the whole portfolio. Based on analysis as at
30 June 2017.
3. Dividend targets are targets and not profit forecasts and
there can be no guarantee they will be achieved. Projections are
based on the current individual asset financial models and may vary
in the future.
4. Source: Bloomberg, share price appreciation plus income.
S.
For further information:
Erica Sibree +44 (0)20 7939 0558
Amber Fund Management Limited
Hugh Jonathan +44 (0)20 7260 1263
Numis Securities
Ed Berry/Mitch Barltrop +44 (0) 20 3727 1046/1039
FTI Consulting
About International Public Partnerships (INPP):
International Public Partnerships ('INPP') is a listed
infrastructure investment company which invests in global public
infrastructure projects developed under the public private
partnerships ('PPP'), regulated asset and other similar procurement
methods.
Listed in 2006, INPP is a long-term investor in 127 social and
transport infrastructure projects, including schools, hospitals,
courts, police headquarters, transport and utility and transmission
projects in the UK, Europe, Australia and North America. INPP seeks
to provide its shareholders with both a long-term yield and capital
growth through investment across both construction and operational
phases typically of 25-40 year concessions.
Amber Infrastructure Group ('Amber') is the Investment Adviser
to INPP and consists over 100 dedicated staff who manage, advise on
and originate investments for INPP.
Visit the INPP website at
www.internationalpublicpartnerships.com for more information.
Important Information
This announcement contains information that is inside
information for the purposes of the Market Abuse Regulation (EU)
No. 596/2014.
This announcement is an advertisement. It does not constitute a
prospectus relating to the Company and does not constitute, or form
part of, any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for, any shares
in the Company in any jurisdiction nor shall it, or any part of it,
or the fact of its distribution, form the basis of, or be relied on
in connection with or act as any inducement to enter into, any
contract therefor.
Forward-looking statements are subject to risks and
uncertainties and accordingly the Company's actual future financial
results and operational performance may differ materially from the
results and performance expressed in, or implied by, the
statements. These forward-looking statements speak only as at the
date of this announcement. The Company, Amber and Numis Securities
expressly disclaim any obligation or undertaking to update or
revise any forward-looking statements contained herein to reflect
actual results or any change in the assumptions, conditions or
circumstances on which any such statements are based unless
required to do so by the Financial Services and Markets Act 2000,
the Prospectus Rules of the Financial Conduct Authority or other
applicable laws, regulations or rules.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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