TIDMINPP
RNS Number : 7235V
International Public Partnerships
05 December 2023
PORTFOLIO UPDATE AND RESCHEDULED CAPITAL MARKETS DAY
NOTIFICATION
5 December 2023
International Public Partnerships Limited, the listed
infrastructure investment company ('INPP', or the 'Company'), which
invests in public or social infrastructure assets and related
businesses internationally, has today issued a portfolio update for
the period 1 July 2023 to 5 December 2023.
KEY HIGHLIGHTS
-- The Company's portfolio of 143 projects and businesses has
continued to perform well during the period, delivering strong
operational and financial performance with cash generation in line
with expectations.
-- Acknowledging the recent higher levels of inflation, the
Company previously announced an increase in its 2023 dividend
target to 8.13 pence per share(1) , representing a 5% increase
compared to the 2022 dividend. The Company expects this revised
dividend to be fully covered by net operating cash flows.
-- In the current environment, the Board maintains a disciplined
approach to capital allocation. In July 2023, the Company completed
the divestment of Airband, a UK fibre to the premise and fixed
wireless access network. The proceeds from the sale of Airband,
together with free cashflow, have been used to reduce the cash
drawn balance on the Company's Corporate Debt Facility ('CDF') to
GBP80 million.
-- The Company is pleased to confirm that it is making good
progress on another divestment and expects to realise sufficient
proceeds to pay down the full GBP80 million cash drawn balance on
the CDF within the next eight weeks. Once completed, the Board
intends to consider what further measures, such as a share buyback,
it may take to address the discount to NAV at which the Company's
shares are currently trading. More information will be provided in
due course.
-- Following the publication of the Company's second
Sustainability Report in March 2023, the Company is seeking to
enhance its ESG KPIs, including its approach to net zero, and
considering the implications of the FCA's recent guidance on the UK
Sustainability Disclosure Requirements.
FINANCIAL PERFORMANCE
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. The last
semi-annual valuation was published with the Company's half-year
results ending 30 June 2023 on 7 September 2023. This reported that
as at 30 June 2023, the net asset value ('NAV') per share was 155.2
pence.
The Company observes that the relevant government bond yields
have increased modestly since the publication of the 30 June 2023
NAV, although it notes that historically discount rates have not
moved in lockstep with government bond yields. The 31 December 2023
NAV is expected to be published in conjunction with Company's
full-year results at the end of March and whilst a comprehensive
review of valuation datapoints will be undertaken in due course,
the Company is not currently aware of any relevant valuation
datapoints that would indicate a need to significantly change its
discount rates.
Since 30 June 2023, the Company has observed a marginal
weakening of Sterling against the foreign currencies it is exposed
to. Other things being equal, this would have a negligible positive
impact on the Company's NAV.
Cash generation from the investment portfolio remains in line
with expectations and the Company remains on track to meet its 2023
dividend target of 8.13 pence per share (1) . The interim 2023
dividend of 4.06 pence was paid on 17 November 2023 and it is
expected that the remaining 4.07 pence will be paid in June 2024.
The 2024 dividend target is currently 8.33 pence per share(1) .
These dividends are all expected to be fully covered by net
operating cash flows.
The Company has delivered a Total Shareholder Return(2) since
IPO in November 2006 to 29 November 2023 of 194.3% or 6.5% on an
annualised basis.
CAPITAL ALLOCATION
As noted in the highlights section, the Board is acutely
focussed on the way it allocates capital in the current
environment. Through the Airband divestment and the use of surplus
free cash flow, the Company has already reduced the cash drawings
on its CDF from GBP107 million at 30 June 2023 to GBP80
million.
As part of the Company's Interim Results announcement, the Board
announced its intention to realise additional value from the
existing portfolio in order to further reduce the cash drawn
balance on the CDF. The Company is pleased to confirm that it is
making good progress on another divestment and expects to realise
sufficient proceeds to pay down the full GBP80 million cash drawn
balance on the CDF within the next eight weeks.
Once the Company is in a position where it has repaid the cash
drawn balance of its CDF and has cash available, the Board intends
to consider what further measures, such as a share buyback, it may
take to address the discount to NAV at which the Company's shares
are currently trading.
Fundamentally, the Company does not need to make additional
investments to deliver current projected returns. Moreover, the
projected cash receipts from the Company's portfolio are such that
even if no further investments are made, the Company would be able
to continue to meet its existing progressive dividend policy for at
least the next 20 years(3) .
The Company is aware that current market conditions are not
optimal for raising new equity financing and therefore any further
investment opportunities, including long-standing opportunities
that form the Company's near-term pipeline, would need to be funded
by recycling capital from the existing portfolio and ultimately
improve the overall portfolio composition and key metrics.
Moreover, the economics of such opportunities would need to be
considered against alternative capital allocation options whilst
taking into account the longer-term strategic rationale.
RESCHEDULED CAPITAL MARKETS DAY
The Company previously advised it had to postpone its October
Institutional Capital Markets Day ('CMD') due to rail strikes. The
CMD has now been rescheduled and will be held on the morning of 27
February 2024 at the Tate Modern, London. Institutional investors
and sell-side analysts who wish to join the event should register
by emailing: investorrelations@amberinfrastructure.com . Details of
the event will be provided upon registration.
OUTLOOK
INPP, together with peers across the listed investment trust
segment, continues to be impacted by significant market volatility,
as financial markets respond to various political and economic
headwinds. The Board continues to believe that the discount to the
NAV at which the Company's shares are trading materially
undervalues the Company.
Good progress is being made on initiatives to address the
discount to NAV at which the Company's shares are trading, and the
Board expects to make a further announcement in the coming
weeks.
Overall the Board believes that the financial returns offered by
the portfolio together with the inflation linkage(4) and wider
environmental and social benefits, continue to make the Company an
attractive investment proposition. Further, the thesis for
infrastructure investment continues to be underpinned by key global
trends and, notwithstanding current market headwinds, the Company
will continue to ensure that its portfolio delivers long-term
benefits for all stakeholders across the public and social
infrastructure sectors in which it invests.
Notes to Editors:
While it is no longer a requirement under the Disclosure
Guidance 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 updates between its half
year and full year reporting cycles.
1. Future profit projections and dividends cannot be guaranteed.
Projections and targets are based on current estimates and may vary
in future.
2. Source: Bloomberg. Share price appreciation plus dividends assumed to be reinvested.
3. This is reflective of the increased 2023 and 2024 dividend
targets, and c.2.5% annual dividend growth thereafter.
4. The weighted average return of the portfolio (before
fund-level costs) would be expected to increase by 0.7% per annum
in response to a 1.0% per annum increase in all of the assumed
inflation rates. This is c alculated by running a 'plus 1.0%'
inflation sensitivity for each investment and solving each
investment's discount rate to return the original valuation. The
inflation-linked return is the increase in the portfolio weighted
average discount rate.
S.
For further information:
Erica Sibree +44 (0) 7557 676 499
Amber Fund Management Limited
Hugh Jonathan +44 (0)20 7260 1263
Numis Securities
Ed Berry / Mitch Barltrop +44 (0) 7703 330 199 / (0) 7807 296
032
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 over 140
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, New Zealand 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 over 170 staff who are responsible for the
management of, advice on and origination of infrastructure
investments.
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END
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