TIDMINPP
RNS Number : 4430O
International Public Partnerships
01 June 2020
PORTFOLIO UPDATE FOR THE PERIOD 1 JANUARY 2020 TO 29 MAY
2020
1 June 2020
International Public Partnerships Limited ('INPP', the
'Company'), the listed investment company which invests in global
public infrastructure projects and businesses, has today issued the
following portfolio update for the period 1 January 2020 to 29 May
2020.
OPERATIONAL HIGHLIGHTS
-- The Company reaffirms that the operational performance of its
investment portfolio remains as expected and there has been no
material change since it announced its results for the year-ending
31 December 2019 on 9 April 2020
-- The Company's portfolio of 130 investments in public and
social infrastructure assets and related businesses continues to
deliver benefits for all its stakeholders
-- The Company's Investment Adviser, Amber Infrastructure Group
('Amber') and its asset management team are fully resourced and
continue to actively manage portfolio performance
-- The team continues to provide clients with the support they
need, whilst ensuring the health and safety of staff during this
time of uncertainty - the full extent of the Covid-19 pandemic and
its associated impact on the Company cannot yet be ascertained
-- Through our Investment Adviser, we have been proactively
engaging with our public sector clients and supply chain to
determine how to provide support and develop solutions, where
possible.
Covid-19 Update
We continue to closely monitor the performance of all of our
investments but we specifically note the following:
-- Tideway - (9.2% of Investments at Fair Value(4) ) - we note
Tideway's announcement on 12 May 2020 stating that it has now
recommenced work at many of its construction sites following a
series of detailed safety reviews and the implementation of
measures to protect its workers and the wider community.
Notwithstanding, Covid-19 and the associated Government guidance is
likely to result in some degree of extra cost and delay to the
project, the impact of which cannot yet be accurately assessed. The
Tideway project documentation includes provisions to share
additional costs between stakeholders (including INPP) up to a
threshold, beyond which they are borne by Government
-- Diabolo Rail - (8.6% of Investments at Fair Value(4) ) -
approximately 75% of revenues are linked to either the usage of the
rail link itself or the wider Belgian rail network. Passenger
numbers are significantly lower than the same period in the prior
year although they are showing some signs of recovery and we note
that there are contractual mitigants available where passenger
numbers result in the project returns falling below a certain
threshold (which have been used effectively previously)
-- Social accommodation assets - we note the closure of certain
schools, blue light facilities and other public buildings across
the portfolio. Amber has engaged positively with our public sector
partners over affected facilities within the investment portfolio.
We currently expect that the Company will be in a no worse position
as a result of closures or reduced operations owing to the
availability-based nature of the revenues. Amber continues to work
proactively with our public sector partners, with many of the
facilities having been repurposed to help with broader Covid-19
initiatives including school kitchens being used to provide meals
to the wider community
-- Minority investments - the Company notes that it is not in
direct control of the timing or amount of distributions from
entities in which it is a minority investor. However, the
overwhelming majority of distributions due in the period have been
received in line with forecasts set at the time of the 31 December
2019 valuation.
FINANCIAL HIGHLIGHTS
On 9 April 2020, the Company announced its results for the 12
months to 31 December 2019 reporting:
-- 2.5 pence increase in Net Asset Value ('NAV') per share to
150.6 pence (31 Dec 2018: 148.1 pence per share)
-- The portfolio maintains a high level of inflation-linkage
such that a 1.00% increase in inflation leads to a 0.82% increase
in return(1)
-- A second half-year 2019 dividend of 3.59 pence per share was
declared on 9 April 2020 and is expected to be paid on 19 June
2020
-- This distribution was made in respect of the period 1 July
2019 to 31 December 2019 and represents a 2.6% 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 is expected to be paid on 19 June
2020
-- A target dividend for the 2020 and 2021 financial years has
been set at 7.36 and 7.55 pence per share, respectively, in line
with a target annual increase of c.2.5%(2) . Whilst we currently
have good forward-visibility of the cash flows projected to be
generated by the Company's investments we continue to monitor the
portfolio for the impact of Covid-19 related risks including those
noted above.
-- The Company has delivered a Total Shareholder Return(3) since
IPO in November 2006 to 29 May 2020 of 204.84% or 8.6% on an
annualised basis
VALUATION
-- The Company's investment portfolio valuation is determined
semi-annually by the Directors after advice from the Investment
Adviser and is reviewed by the Company's auditors, EY. This
semi-annual valuation is published within the Company's interim and
annual accounts, the last of which was published with the Company's
results ended 31 December 2019 on 9 April 2020
-- The Company also 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,
changes to cash flow projections and assumptions, indexation
adjustments due to changes in inflation, etc.) although attention
is drawn to the COVID-19 update provided above
-- Since the Company published its 31 December 2019 NAV of 150.6
pence per share, government bond yields have decreased in all
jurisdictions in which INPP is invested. Other things being equal,
the decrease in government bond yields could be expected to have a
positive impact on the Company's NAV
-- Since 31 December 2019, Sterling has weakened against the
Canadian Dollar, the Euro and the US Dollar, and has strengthened
against the Australian Dollar. The net impact of these foreign
exchange rate movements could also be expected, other things being
equal, to have a small positive impact on the Company's NAV.
Debt facility, gearing and cash position
-- The Company's liquidity position remains strong with a GBP400
million revolving debt facility (maturing in July 2021) of which
only c.GBP 20.2 million is currently utilised.
-- The Company currently also has c.GBP121 million of cash
available with additional cash reserves held within the underlying
investments
Investments
During the period since 1 January 2020 the Company made new
investments of c.GBP11.5 million, including previously existing
commitments.
On 26 May 2020, the Company committed a further c.GBP6.8 million
to acquire stakes in the two PFI project companies of the Essex
Building Schools for the Future Project (the 'Project') that own
the four schools which provide education facilities to over 3,700
secondary school pupils across Essex, UK. The acquisitions increase
the Company's existing investment to 28 per cent on phase 1 of the
project and 100 per cent on phase 2 of the project.
In July 2017, the Company agreed to invest up to GBP45 million
into UK digital infrastructure alongside the UK Government through
the National Digital Infrastructure Fund ('NDIF'). As part of this
commitment, the Company made further investments across NDIF's
existing portfolio during the period.
PORTFOLIO UPDATE
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 9.2%(4) of assets still in
physical construction. The weighted average investment life of the
portfolio is currently 34 years(5) with a weighted average
(non-recourse) debt tenor of 32 years(5) .
-- As at 31 December 2019, the portfolio comprised economic
interests in 130 projects and businesses with a composition as
detailed below which has largely remain unchanged to 29 May 2020 as
there has been limited investment over the period(4) :
Sector breakdown Investment Fair Value %
----------------------- --------------------------
Energy Transmission 22%
----------------------- --------------------------
Transport 20%
----------------------- --------------------------
Education 18%
----------------------- --------------------------
Gas Distribution 17%
----------------------- --------------------------
Waste Water 9%
----------------------- --------------------------
Health 3%
----------------------- --------------------------
Courts 3%
----------------------- --------------------------
Military Housing 3%
----------------------- --------------------------
Other 5%
INVESTMENT ENVIRONMENT AND OUTLOOK
-- Our portfolio of investments provides essential
infrastructure to over 13 million people, households and businesses
daily across the countries in which we invest
-- The appetite for long-term responsible investment into public
and social infrastructure remains high. There continues to be a
positive outlook for private sector investment into public
infrastructure across the geographies that the Company invests
in
-- However, the Company is also acutely aware of the significant
impact that the Covid-19 pandemic may have on the broader economy
and continues to work hard to understand the likely impacts on the
Company's operations
-- While we are in no way complacent about the future, which is
full of uncertainties, we take comfort from the fact that the
overwhelming majority of our assets benefit from payments either
linked to the availability of that asset for use, or made through a
legislatively backed regulated mechanism
-- In addition, the Company continues to monitor developments as
Brexit preparations progress and as previously expressed, we do not
believe that we are unusually exposed or that there will
necessarily be a significant impact on the Company's existing
investments. However, this cannot be guaranteed, and we continue to
monitor developments closely, as the new relationship between the
UK and the EU continues to evolve
-- The pipeline for the types of assets the Company invests in
is positive and the Company remains confident in the ability to
continue to source and develop high-quality, well-performing
opportunities, globally, that deliver long-term, predictable cash
flows with strong inflation-linkage that meet the Company's
risk-return profile
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. In aggregate, the weighted average return of the portfolio
would be expected to increase by 0.82% 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
31 December 2019.
2. 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.
3. Source: Bloomberg. Share price appreciation plus dividends
assumed to be reinvested.
4. This is based on the fair valuation of the Company's
investments as at 31 December 2019 calculated utilising a
discounted cash flow methodology as stated in the valuation
section.
5. This includes non-concession entities which have potentially
a perpetual life but are assumed to have finite lives.
ENDS.
For further information:
Erica Sibree/Amy Joslin +44 (0)20 7939 0558/0587
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):
INPP is a listed infrastructure investment company that invests
in global public infrastructure projects and businesses, which
meets societal and environmental needs, both now, and into the
future.
INPP is a responsible, long-term investor in 130 infrastructure
projects and businesses. The portfolio consists of utility and
transmission, transport, education, health, justice and digital
infrastructure projects and businesses, in the UK, Europe,
Australia and North America. INPP seeks to provide its shareholders
with both a long-term yield and capital growth.
Amber Infrastructure Group ('Amber') is the Investment Adviser
to INPP and consists of 130 staff who are responsible for the
management of, advice on and origination of infrastructure
investments.
Visit the INPP website at
www.internationalpublicpartnerships.com for more information.
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END
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