Interim Management Statement

RNS Number : 4222D

International Public Partnership Ld

16 May 2012

 



International Public Partnerships Limited

Interim Management Statement

For the period 1 January 2012 to 15 May 2012

16 May 2012

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") and similar procurement methods, today issues the following Interim Management Statement for the period 1 January 2012 to 15 May 2012.

Highlights

·        The portfolio of 119 public infrastructure investments arising from 69 separate projects continues to perform in line with expectations

·        Announced 2011 Annual Results for period to 31 December 2011 reporting solid increase in Net Asset Value ("NAV") per share to 116.9p (2010: 113.1p per share)

·        Announcement of an intended Placing, Open Offer and Offer for Subscription (the "Issue") of new ordinary shares during the second quarter of this year with a target size of £180 million.  Proceeds of the Issue will be used to:

o  Pay down the existing debt under the Company's corporate revolving debt facility; and

o  Acquire approximately £170 million of investment, representing three exclusive opportunities.

·        Awarded preferred bidder status for the long-term licence and operation of Lincs offshore transmission project

·        Completion of construction at South Bristol Community Hospital and the £35 million Moray Schools project

·        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 31 December 2011 (NAV: 116.9p), risk free rates have decreased slightly in the majority of countries in which INPP is invested.  The reduction in these rates could 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 could be expected to 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 alone the NAV could be expected to have increased slightly since 31 December 2011.  

In the course of its normal practice the Company also reviews market based evidence in its assessment of NAV.  Since 31 December 2011, the Company has not seen demonstrable evidence that values of infrastructure assets have increased in line with the net effect of such macroeconomic factors thus on balance the Company considers that its NAV has remained stable over the period (after allowing for distributions declared).

Distribution

On 19 April 2012, the 2011 final distribution of 2.925 pence per share was declared for shareholders on the register as at 27 April 2012. This distribution was for the period 1 July 2011 to 31 December 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 issued on 8 May 2012.  The associated scrip allotment or dividend payment is expected to be made on 15 June 2012.

The Board also announced a target distribution from income received in the year 1 January 2012 to 31 December 2012 of 6.0 pence per share, which represents a 2.6% increase over the previous year and a fifth 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.  This is a target and not a profit forecast.  There can be no guarantee that any distribution will be paid.)

Capital Raising

On 8 May 2012 the Board of International Public Partnerships Limited announced that it expected to proceed with an Issue of new ordinary shares during the second quarter of this year.

As previously advised, the Company has approximately £170 million of investment opportunities, representing three potential investments in respect of which it has exclusivity, that have progressed to an advanced stage.  In addition, the Company has a strong pipeline of other longer term opportunities.  The proceeds of the fundraising, which is anticipated to have a target size of £180 million, are expected to be used to pay down the Company's corporate revolving debt facility and fund the acquisition of the assets in respect of which it has exclusivity, leaving the Company with the ability, through the revolving debt facility, to purchase additional accretive assets in the medium term.  

It is envisaged that a prospectus will be published in May with trading in the new shares commencing after the Company's Annual General Meeting in June. Further details as to the precise timing and size of the Issue will be announced in due course.

Balance Sheet and Funding

The Company had approximately £38 million of cash available for the payment of distributions and working capital as at 15 May 2012.  In addition, the Company has approximately £81.9 million of net capacity within its corporate debt facility.

Portfolio

The assets in the Company's portfolio continued to perform in line with expectations.  Highlights during the period include the completion of construction at South Bristol Community Hospital and the £35m Moray School project which replaced the existing facilities at Keith Primary and Elgin Academy. 

As at 15 May 2012, the portfolio comprised economic interests in 119 projects with a geographical split as detailed below:

Location	Number of projects	Sector	15 May 2012 %1	31 December 2011 % 1
United Kingdom	104	Health Govt accommodation Courts Police Authority Education Offshore Transmission	55	55
Australia	7	Health Roads/Tunnels Health/Custodial Entertainment	17	18
Canada	2	Education Courts	6	6
Belgium	1	Transport	13	12
Germany	2	Transport Education	6	6
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 15 May 2012 were:

Investment	%
Diabolo Project	13
Royal Children's Hospital	7
BeNEX	6
Hereford & Worcester Magistrates Courts	6
Strathclyde Police Training Centre	5
Northamptonshire Schools	5
Alberta Schools	4
Orange Hospital	3
Tower Hamlet Schools	3
Angel Trains	3

Outlook and Pipeline

The market for infrastructure is strong but evolving. The Company is well placed to take advantage of such evolution.  The general trend is for governments to be very supportive of additional private sector investment in infrastructure.  More specifically however we are seeing fewer UK private finance initiative projects being developed due to UK Government spending cuts.  However for the Company any decline in this area is currently being more than made up by current and prospective opportunities in other areas and geographies. More detail is provided on specific opportunities in the Group's recently published 2011 Annual Report.

Overall there continues to be a strong pipeline of investment opportunities and we are encouraged by governments' reaffirmation of the importance of private sector involvement in the provision of such assets.  This includes, in the UK, through the National Infrastructure Plan the likelihood of greater investor interest in the sector, bolstered by the Government's proposed plans to involve UK pension funds in the provision of financing to infrastructure schemes.

There are also a number opportunities in Australia and Europe, focused on education, transportation and health sectors which, through the Investment Advisor, the Company is also actively pursuing.  The Company continues to review proposals from third parties seeking to dispose of assets meeting the Company's investment criteria.

Any such investment, whether sourced from the primary or secondary market, is assessed in a very disciplined way and to the extent that an investment is made, it will only be on the basis that it is projected to reinforce the Company's cashflows and projected returns. To the extent that additional capital is required, the Company has previously indicated that it may approach investors during the year to fund these acquisitions. 

Overall, we continue to remain positive 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 during the remainder of 2012. 

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

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) and other similar procurement methods.

Listed in 2006, INPP is a long-term investor in 119 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.  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.

 

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