Interim Management Statement

RNS Number : 1665R

International Public Partnership Ld

15 November 2012

 



International Public Partnerships Limited

Interim Management Statement

For the period 1 July 2012 to 14 November 2012

15 November 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"), regulated asset and similar procurement methods, today issues the following Interim Management Statement for the period 1 July 2012 to 14 November 2012.

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 2012 Interim Results for period to 30 June 2012 reporting a solid increase in Net Asset Value ("NAV") per share to 118.4 pence (31 December 2011: 116.9 pence per share)

·        A half year 2012 dividend of 3.0 pence per share was paid on 19 October with a full year 2012 target dividend of 6.0 pence per share (up 2.6% from full year 2011)

·        The Company deployed £166 million of the £200 million capital raised from investors in June 2012, most notably through new investments in the offshore electricity transmission (OFTO) project at Ormonde and further investments in Building Schools for the Future education projects

·        Total Shareholder Return (comprising share price growth and aggregate dividends) since IPO in November 2006 to 14 November 2012 amounts to 66.5%¹

·        Announced the appointment of Claire Whittet to the INPP Board with effect from 10 September 2012.  Claire brings significant experience in the finance sector, particularly within credit markets, together with knowledge of corporate governance and regulation

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 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 -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 30 June 2012 (NAV: 118.4 pence per share), risk free rates have decreased in all of the countries in which INPP is invested.  The reduction in these rates could, other things being equal, 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, other things being equal, be expected to have a negative effect on the Company's 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 (other things being equal) the NAV could be expected to have increased slightly since 30 June 2012.  

In the course of its normal practice the Company also reviews market based evidence in its assessment of NAV.  Since 30 June 2012, the Company has seen some evidence from market intelligence and its own experience of bidding in the secondary market for such assets that values of infrastructure assets comparable to some of those owned by the Company have increased in line with the cumulative net effect of such macroeconomic factors over recent periods.

Distribution

On 30 August 2012, the 2012 first half year distribution of 3.0 pence per share was declared for shareholders on the register as at 14 September 2012. This distribution was for the period 1 January 2012 to 30 June 2012 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 was made on 19 October 2012.  Approximately 18% of investors chose to receive the recent dividend as Scrip.

The Board also confirms that the 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 current long term inflation assumption of 2.5% per annum.²

Balance Sheet and Funding

The Company had approximately £24.2 million of cash available for the payment of distributions and working capital as at 14 November 2012.  In addition, the Company has £100 million of net capacity within its corporate debt facility available for re-draw by the Company, representing 100% of the facility.

Portfolio

The Company's portfolio of assets continued to perform in line with expectations and with high levels of satisfaction from public sector clients. 

Highlights during the period include:

·     Completion of the £115.1 million acquisition of the Ormonde offshore energy transmission project

·     Completion of an additional £20.7 million of investment in 7 Building Schools for the Future projects

Following the completion of these acquisitions approximately £166 million of the £200 million capital raised in June of this year has been deployed.

Good progress was also made on the c.10% of assets in the portfolio that are currently under construction.  Valuation benefits from successful completion of construction of these projects are expected to come through once sustained operational performance is demonstrated.  All construction within the portfolio is currently due to be completed by December 2014.

As at 14 November 2012, the portfolio comprised economic interests in 122 projects with a geographical split as detailed below:

Location	Number of projects	Sectors represented	14 November 2012 %a	30 June 2012 % a
United Kingdom	107	Health Govt accommodation Courts Police Authority Education Offshore Transmission	62	54
Australia	7	Health Roads/Tunnels Health/Custodial Entertainment	14	18
Belgium	1	Transport	11	14
Canada	2	Education Courts	5	6
Germany	2	Transport Education	4	5
Ireland	1	Courts	2	3
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 14 November 2012 were:

Investment	%
Ormonde offshore energy transmission project	15.0
Diabolo Project	11.3
Royal Children's Hospital	6.2
Hereford & Worcester Magistrates Courts	4.6
BeNEX	4.3
Strathclyde Police Training Centre	3.6
Northamptonshire Schools	3.5
Alberta Schools	3.4
Orange Hospital	2.9
Angel Trains	2.3

Outlook and Pipeline

The market for infrastructure continues to receive high levels of interest from investors as they recognise the benefits of the asset class. Specifically the nature of the contracted or regulated revenues in which INPP predominantly invests is attractive to retail and institutional investors alike.

There continues to be good performance in the Company's portfolio of existing assets and work continues on delivering the remaining projects under construction on time and to budget. 

Overall there also continues to be a good pipeline of investment opportunities for INPP. The Company is 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 and recently announced incentives and support for infrastructure projects, the likelihood of greater investor interest in the sector, bolstered by initiatives 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 the regulated asset, transmission, education, transportation and health sectors which, through the Investment Advisor, the Company is also actively pursuing. The Company continues to receive and review proposals from third parties seeking to dispose of assets meeting the Company's strict investment criteria.  

There continues to be a limited number of new start "greenfield" project opportunities in the UK and other markets which limits the opportunity to invest in new construction phase assets.  Nevertheless the nature and number of current opportunities with respect to operational assets (eg OFTO's and other similar utility and public infrastructure assets) in the Company's view makes up for this.  As a result however the Company expects that the proportion of the portfolio in construction will remain lower in the short to medium term  than in prior periods. 

More detail is provided on opportunities in the Group's recently published 2012 Interim Report.

Overall, the Company continues to remain positive about its prospects for the remainder of 2012 and into 2013. 

End

1   Bloomberg

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

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.

 

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