Interim Management Statement

RNS Number : 9461E

International Public Partnership Ld

17 May 2013

 



International Public Partnerships Limited

Interim Management Statement

For the period 1 January to 16 May 2013

17 May 2013

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"), private finance initiative ("PFI"), regulated asset and similar procurement methods, today issues the following Interim Management Statement for the period 1 January to 16 May 2013.

Highlights

·        The portfolio of 122 public infrastructure investments continues to perform in line with expectations

·        In the period covered by this IMS, the Company announced its 2012 Annual Result for period to 30 December 2012 reporting an increase in Net Asset Value ("NAV") per share to 121.0 pence (31 December 2011: 116.9 pence per share)

·        Since that time the portfolio has continued to perform well and assets in construction continue to progress as planned.  At the macro economic level, favourable foreign exchange movements have offset the marginal net increase in government bond yields observed since 31 December 2012. This could be expected to lead to a slight increase in NAV compared to  31 December 2013 NAV, other things being equal

·        A second half year 2012 dividend of 3.0 pence per share was declared on 28 March 2013 and is expected to be paid on 14 June 2013.  A full year 2013 target dividend¹ of 6.15 pence per share was announced (up 2.5% from full year 2012)

·        An additional £46.5 million of new capital was raised from investors during January and April/May by means of tap issuance to support the near term pipeline of opportunities and to satisfy investor demand that could not  be met through the secondary market

·        The 25% interest minority interest in the Alberta Schools project in Canada not already owned by the Company was acquired for £7.5 million in April 2013.  The Company now owns 100% of this asset

·        The Company has delivered a Total Shareholder Return (comprising share price growth and aggregate dividends) since IPO in November 2006 to 16 May 2013 of 79.9%²

Portfolio performance

The Company's portfolio of 122 assets continues to perform well with revenues, cash receipts in line with management forecasts and levels of satisfaction remaining high amongst public sector clients.    

Good progress was made on the circa 9% of assets in the portfolio that are currently under construction.  The Company recently hosted a very successful Investor Day at the new Liverpool Central Library project showcasing the new facility and the Company's leading role in its development.  Pleasingly, the £50 million refurbished library is being opened to the public for the first time today.

Valuation benefits from successful completion of the construction phases of these projects are expected to be realised throughout the next year as sustained operational performance is demonstrated.  All construction currently within the portfolio is due to be completed by December 2014.

As at 16 May 2013, the portfolio comprised economic interests in 122 projects with a geographical split as detailed below:

Location	Number of projects	Sectors represented	16 May 2013 %a	31 December 2013 % a
United Kingdom	107	Health Govt accommodation Courts Police Authority Education Offshore Transmission	61	62
Australia	7	Health Roads/Tunnels Health/Custodial Entertainment	14	14
Belgium	1	Transport	13	12
Canada	2	Education Courts	6	5
Germany	2	Transport Education	4	4
Ireland	1	Courts	2	2
France	1	Health	<1	<1
Italy	1	Health	<1	<1

a.     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 16 May 2013 were:

Investment	%
Ormonde offshore energy transmission project	14.3
Diabolo Project	12.7
Building Schools for the Future portfolio3	8.5
Royal Children's Hospital	6.5
Hereford & Worcester Magistrates Courts	4.4
BeNEX	4.2
Alberta Schools	4.1
Northampton Schools	3.9
Strathclyde Police Training Centre	3.3
Orange Hospital	3.0

Valuation

The Company reports its Net Asset Value (NAV) every six months when it publishes its full and interim results each year. In addition, the Company provides quarterly NAV guidance predominantly based on movements in the government bond yields of countries where INPP holds investments and changes to relevant foreign exchange rates. This quarterly guidance does not reflect any changes (positive or negative) in NAV arising from matters specific to individual investments (eg changes in asset specific risks, timing implications of delayed or accelerated cashflows, changes to cashflow projections and assumptions, indexation adjustments due to changes in inflation etc). Such matters are reflected in the half year directors' valuations published with the Company's full and interim results.

Since 31 December 2012 (NAV: 121.0 pence per share), government bond yield movements have been mixed, though on a weighted average portfolio basis we have seen a slight net increase. The net increase in these rates could, other things being equal, be expected to have a negative effect on the Company's NAV.

Over the same period, foreign exchange ("FX") movements have seen GBP weaken against the three currencies to which the Company has exposure. The weakened GBP could, other things being equal, be expected to have a positive effect on the Company's NAV.

Overall, the negative effects of the government bond yield movements on NAV would be outweighed by the positive effects of the FX movements. Based on these two macroeconomic updates alone (other things being equal) the NAV could be expected to have increased slightly since 31 December 2012. 

In the course of its normal practice the Company also reviews market based evidence (market intelligence and its own experience bidding in the secondary market) in its assessment of NAV. Since 31 December 2012, assets comparable to those owned by the Company have shown increasing evidence of valuation shifts broadly in line with the cumulative net effect of such macroeconomic factors over recent periods.

Distribution

On 28 March 2013, the 2012 second half year distribution of 3.0 pence per share was declared for shareholders on the register as at 26 April 2013. This distribution was for the period 1 July 2012 to 31 December 2013 and was 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 made on 14 June 2013. 

The Board also confirms that the target distribution from income received in the year 1 January 2013 to 31 December 2013 of 6.15 pence per share, which represents a 2.5% increase over the previous year and a sixth consecutive annual increase. The Board continues to expect to increase distributions in future years at least in line with its current long term inflation assumption of 2.5% per annum⁴.

Capital raisings, gearing and cash position

During the period, a total of £46.5 million of new capital was raised from investors by means of tap issuance.  £40.0 million was raised in January to support the near term pipeline of opportunities and an additional £6.5 million was issued during April/May to satisfy demand for the Company's shares that cannot be met through the secondary market, noting that the Company's share price has been trading at a premium to the prevailing NAV per share in the period since the start of 2013..

As a result and taking into account the recent Alberta Schools acquisition the Company had approximately £85 million of cash available for investment as at 16 May 2013.  In addition, the Company has £100 million of capacity within its corporate debt facility available for re-draw by the Company, representing 100% of the facility.

Outlook and Pipeline

The Company's portfolio continues to perform well and the Company is confident that there continues to be a number of attractive infrastructure opportunities in the UK and in the overseas jurisdictions in which the Advisor is represented and knowledgeable.  These include the preferred bidder and other preferential positions held by the Company (referred to in more detail below) which have a combined investment value anticipated to exceed the amount of cash and debt facility currently available to the Company.

The recent commitments to infrastructure procurement made by the UK Government and governments in other jurisdictions in which we invest also support the longer term likelihood of a continued supply of such opportunities. Additionally, we are encouraged by continued investor demand for the infrastructure sector.

The Company continues to review opportunities brought to it by third party developers and their advisers.  While these are reviewed on their individual merits, the Company's current analysis is that some of these opportunities as unattractive at the prices being sought.

More positively this trend may well have positive connotations for the value of the Company's existing portfolio.  It also illustrates how better value for shareholders may be obtained by investing in off-market transactions such as those developed from earlier stages by the Company's Investment Adviser.  A number of the opportunities referred to below fall into this category.

Areas of particular focus for the Company currently include⁵:

·    Continued application in the area of UK offshore transmission where the Company has a strong market leading position, including being part of a consortium appointed preferred bidder in a fifth project, which is expected to reach financial close during the 2013 financial year;

·    Delivery of additional investments through pre-emptive positioning within the BSF investment portfolio and follow-on investments emanating from the existing portfolio of assets;

·    The wider regulated utility market both in the UK and elsewhere, where attractive returns can be projected from assets with low risk profiles;

·    Social infrastructure projects in Germany, Canada, Australia and elsewhere, which conform to the existing risk profile within the Company's portfolio;

·    Opportunities arising in the UK health and social care sphere where an active pipeline of small to medium sized opportunities continue to exist;

·    Opportunities that arise from re-pricing of capital in the debt capital markets; and

·    Proposals from third parties seeking to dispose of assets meeting the Company's investment criteria.

Overall, we continue to be optimistic about the prospects for the Company, both in terms of the performance of its existing assets and the opportunity to add high quality assets to the portfolio in the future.

End

For further information:

Erica Sibree                                                    [phone]

Amber Fund Management Limited                                

Nick Westlake/Hugh Jonathan                            [phone]/1263

Numis Securities       

Ed Berry/Harry Stein                                        [phone]/7141
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), private finance initiative (PFI), regulated asset and other similar procurement methods.

Listed in 2006, INPP is a long-term investor in 122 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and utility and transmission projects in the U.K., Europe, Australia and Canada. INPP seeks to provide its shareholders with both a long-term 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 80 dedicated staff who manage, advise on and originate 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.  It does not constitute an invitation to subscribe for or otherwise acquire or dispose of securities in the Company (defined below) in any jurisdiction.  The information contained in this interim management statement about the Issue is subject to updating and amendment, and does not purport to be full or complete.  No reliance may be placed for any purpose on the information contained in this interim management statement in connection with the Issue or the purchase of securities in the Company.  This interim management statement does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, any investments nor shall it (or the fact of its distribution) form the basis of, or be relied on in connection with, any contract or commitment whatsoever.  Any decision to purchase shares should be made solely on the basis of the information contained in the final prospectus issued by the Company.

The potential acquisition by the Company of any of the investments referred to in this interim management statement is subject, among other things, to those projects reaching legal completion and to the Company having conducted satisfactory due diligence in relation to such investments. Although the Company has a right of first refusal for investments disposed of by the Amber group, any acquisitions will be subject to agreement having been reached between the Company and the relevant counterparty as to the terms of the acquisitions.  In addition, some of the investment opportunities are those where Amber or the Company is currently undergoing a bidding process.  There is no guarantee that they will be successful in any such bidding process. There is therefore no guarantee that any of the investments will be acquired and if they are on what terms. 

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.

¹  Note this is a dividend target and not a profit forecast

²  Source: Bloomberg

³   This represents the minority shareholdings only.

⁴  Provided for guidance only. This is a target and not a profit forecast. There can be no guarantee that any
   distribution will be paid.

⁵  Subject to due diligence etc. There is no certainty such assets will be acquired by INPP

 

END

 

 

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