Interim Management Statement

RNS Number : 0778S

International Public Partnership Ld

15 November 2011

 



International Public Partnerships Limited

Interim Management Statement

For the period 1 July 2011 to 14 November 2011

15 November 2011

International Public Partnerships Limited ("INPP", "the Company"), a listed infrastructure investment company which invests in global public infrastructure projects including those developed under public private partnership ("PPP") and private finance initiative ("PFI") procurement methods, today issues the following Interim Management Statement for the period 1 July 2011 to 14 November 2011.

Highlights

·        The portfolio of 110 public infrastructure investments continues to perform in line with 
expectations

·        Investments totalling £117 million have been completed since 1 January 2011 including £77 million of investments made during the period 1 July 2011 to 14 November 2011. Investments in the period since 1 July 2011 comprised:

·      Investment in a 100% interest in two offshore electricity transmission assets (Gunfleet Sands and Barrow);

·      Investment in a 100% interest in Building Schools for the Future Investments LLP.  In addition minor follow on investments have also been made with respect to this asset.

·        Completion of Phase 1 of the Royal Children's Hospital in Melbourne, Australia which was opened by Her Majesty the Queen in October.  Clinical services are expected to commence in late November 2011.

·        An interim distribution of 2.925 pence per share was paid to shareholders on 28 October 2011

·        £52 million of new capital was raised via an equity issue in September, adding to the Company's robust overall funding position

·        Despite uncertain economic conditions, a continued strong pipeline of exciting 
opportunities exists in UK, Australia, and Europe across a variety of infrastructure sectors

Asset Performance

The Company's asset portfolio continues to perform well with revenues and cash receipts in line with management forecasts.

The Company reports its Net Asset Value (NAV) every six months when it publishes its full and interim results in March and August each year. In addition, the Company provides quarterly NAV guidance predominantly based on changes in risk free rate movements in the countries where INPP holds investments and changes to foreign exchange rates.  This quarterly guidance does not reflect any changes (positive or negative) in NAV arising from matters specific to individual investments (eg de-risking, indexation adjustments due to changes in inflation etc).

Since 30 June 2011 (NAV: 113.6p), risk free rates have decreased in the majority of countries in which INPP is invested.  The reduction in these rates would be expected to have a positive effect on the Company's NAV.

Over the same period, foreign exchange ("FX") movements have seen GBP strengthening against the three currencies the Company has exposure to. The strengthening GBP would lead to a corresponding decrease in NAV.

Overall, the negative effects of FX movements on NAV would be outweighed by the positive effects of falling risk free rates.  Based on these two macroeconomic updates the NAV would therefore have increased since 30 June 2011.

New Investments

During the period since 1 July 2011 INPP made £77 million of new investment including:

·     Acquiring 100% of the interests in Building Schools for the Future Investments ("BSF") LLP from the Department for Education and Partnerships UK for £58.4 million.  This provides the Company with minority interests in 48 'Building Schools for the Future' projects, relating to over 100 individual schools.  The acquisition is, to date, INPP's largest transaction in the secondary market.  Since the date of the acquisition further additional follow on investments have been made in BSF which are expected to be accretive to the original acquisition economics; and

·     Acquisition of its second and third offshore electricity transmission projects in the UK, Gunfleet Sands and Barrow, where it invested £18.6m in return for 100% of the equity and subordinated debt in those projects.

All projects are expected to be accretive for investors in both NAV and yield terms.

Interim Distribution

On 28 October 2011, an interim distribution of 2.925 pence per share was paid to shareholders on the register as at 16 September 2011. This distribution was for the period 1 January 2011 to 30 June 2011 and is a 2.6% increase on the distribution paid in the previous corresponding period.

The Scrip Dividend Alternative Circular issued in September saw 26% of shareholders electing to take scrip in the Company, in lieu of cash, and resulted in the issuance of an additional 3.5 million shares.

The Board also announced a target distribution for the year 1 January 2011 to 31 December 2011 of 5.85 pence per share, which represents a near 3% increase over the previous year and a fourth consecutive annual increase. The Board confirms that it expects to increase distributions in future years at least in line with its long term inflation assumption of 2.5% per annum (provided for guidance only, not intended to be a forecast).

Capital Raising and Share Capital

In September the Company announced that it had raised approximately £52 million from the issuance of new equity.  46,428,447 new ordinary shares of 0.01p each were issued for cash on an ex-dividend basis at 112.075 pence per share (the "Issue Price").

The Issue Price represented a premium of 1.3 per cent to the equivalent ex-dividend net asset value of 110.68 pence per ordinary share as at 30 June 2011, being the last net asset value published prior to issue.

The funds raised from shareholders has allowed the Company to offset its existing drawn corporate facility and will enable it to continue to take advantage of a strong pipeline of long-term investment opportunities.

As at 14 November 2011 the Company had 534,234,191 shares in issue. This included 46.6 million shares issued under the tap facility in September and 3.5 million shares issued under the scrip dividend alternative in October.

Balance Sheet and Funding

The Company had approximately £32 million of cash available for the payment of distributions and working capital as at 14 November 2011.  In addition, the Company has approximately £84 million of net capacity within its corporate debt facility and it is expected that this and any surplus cash over that required to fund distributions and working capital will be used to finance new opportunities as they arise.

Portfolio

The assets in the Company's portfolio continued to perform in line with expectations.  A highlight during the period was the opening of the Royal Children's Hospital in Melbourne, Australia by Her Majesty the Queen.  The opening of Phase 1 of the Hospital for clinical services was an important milestone for the project, which is due to complete in its entirety in late 2014.

As at 14 November 2011, the portfolio comprised economic interests in 110 projects with a geographical split as detailed below:

Location	Number of projects	Sector	14 November 2011 %1	30 June 2011 % 1
United Kingdom	95	Health Govt accommodation Courts Police Authority Education Offshore Transmission	57	49
Australia	7	Health Roads/Tunnels Health/Custodial Entertainment	16	19
Canada	2	Education Courts	7	8
Belgium	1	Transport	11	14
Germany	2	Transport Education	7	8
Ireland	1	Courts	2	2
France	1	Health	<1	<1
Italy	1	Health	<1	<1

1.   This breakdown is based on the fair value market valuation of the Group's investments calculated utilising discounted cash flow methodology, adjusted for European Private Equity and Venture Capital Association (EVCA) guidelines.

Top Ten Investments

The Top Ten Investments of the Company as at 14 November 2011 were:

Investment	%
Diabolo Project	11
BeNEX	6
Royal Children's Hospital	6
Hereford & Worcester Magistrates Courts	6
Strathclyde Police Training Centre	5
Alberta Schools	5
Northamptonshire Schools	5
Orange Hospital	3
Tower Hamlet Schools	3
Long Bay Forensic and Prison Hospital	3

Outlook and Pipeline

INPP's existing portfolio of assets has performed well and, despite recent volatility in sovereign debt and other global markets, this performance is expected to continue.  The Company is also confident that it can continue to deliver growing dividends to shareholders over the long-term. 

The Company is also pleased to report a continued strong pipeline of investment opportunities. In the UK the Company sees a variety of opportunities for further investment.  This includes investment in the education sector through its interest in BSF, both through follow-on investments from existing schemes as well as the potential to acquire stakes from other existing BSF investors who may wish to divest their stakes.

In addition, as previously announced, the Company is shortlisted for a further three projects in the £1 billion second round of UK offshore electricity transmission tenders.  Preferred bidder status on these projects is likely to be announced by the Government over the next twelve months.

The Company is also pursuing a number of encouraging opportunities in Australia and Europe, focused on further investments in the education, transportation and health sectors.

The Company continues to review proposals from third parties seeking to dispose of assets meeting the Company's investment criteria.  It continues to apply its very disciplined approach to the evaluation of these opportunities and to the extent that an investment is made, it will only be on the basis that they are projected to be accretive to the Company's cashflows and projected returns.

End

For further information:

Erica Sibree                                                    [phone]

Amber Fund Management Limited                                

Nick Westlake/Hugh Jonathan                            [phone]/1263

Numis Securities       

Ed Gascoigne-Pees/Ed Berry                              [phone]/7297
FTI Consulting

Notes to Editors:

About International Public Partnerships (INPP):

International Public Partnerships Limited (INPP) is a listed infrastructure investment company which invests in global public infrastructure projects developed under the public private partnerships (PPP) and private finance initiative (PFI) procurement methods.

Listed in 2006, INPP is a long-term investor in 110 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and renewable energy projects in the U.K., Europe, Australia and Canada. INPP seeks to provide its shareholders with both a long-term government-backed yield and capital growth through investment across both construction and operational phases of 25-40 year concessions.

Amber Infrastructure Group (Amber) is the Investment Advisor to INPP and consists of more than 60 dedicated infrastructure specialists which originate and source a strong pipeline of projects for INPP.

Visit the INPP website at www.internationalpublicpartnerships.com for more information.

This interim management statement has been prepared solely to provide additional information to shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules and the interim management statement should not be relied on by any other party or for any other purpose.

Forward-looking statements are not guarantees of future performance. The Company's actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this document.  Subject to their legal and regulatory obligations, International Public Partnerships  and its Investment Advisor expressly disclaim any obligations to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

 

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