TIDMINPP
RNS Number : 6461A
International Public Partnerships
03 June 2021
INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED
PORTFOLIO UPDATE
FOR THE PERIOD 1 JANUARY 2021 TO 31 MAY 2021
3 June 2021
International Public Partnerships Limited ('INPP', the
'Company'), the FTSE 250 listed investment company which invests in
global public infrastructure projects and businesses, has today
issued the following portfolio update for the period 1 January 2021
to 31 May 2021.
OPERATIONAL HIGHLIGHTS
-- The Company is performing successfully and its portfolio of
130 investments in public and social infrastructure projects and
businesses continues to deliver essential services to all its
stakeholders, maintaining high levels of asset availability
-- There have been no material changes to the Company's
operational or financial performance since it announced its results
for the year ended 31 December 2020 on 25 March 2021
-- The Company continues to have the benefit of a high-quality
pipeline of near-term investment commitments equating to c.GBP200
million, including Beatrice, Rampion and East Anglia One Offshore
Transmission Projects
-- The Company has now delivered a Total Shareholder Return(1)
since IPO in November 2006 to 28 May 2021 of 243.3% or 8.8% on an
annualised basis
-- In line with previous forecasts a second half-year 2020
dividend of 3.68 pence per share was declared on 25 March 2021
supported by a strong 2020 cash dividend cover of 1.2x(2)
-- Whilst in overall terms the Company's portfolio has
experienced limited impact as a result of Covid-19, it continues to
monitor certain specific risk areas, particularly relating to
Tideway and the Diabolo Rail Link ('Diabolo'), as previously
highlighted
-- The Company retains a specific focus on highlighting its ESG
performance and continues to evolve its sustainability reporting
and align its disclosures with the recommendations of the Task
Force on Climate-related Financial Disclosures ('TCFD'). The
Company's ESG Committee meets at least twice a year
PORTFOLIO UPDATE
The Company's portfolio of assets continue to deliver
successfully on the Company's objectives for its shareholders and
wider stakeholders.
-- The portfolio currently has 9.1%(3) of assets still in
physical construction. The weighted average investment life of the
portfolio is currently 32 years(4) with a weighted average
(non-recourse) debt tenor of 30 years(4) .
-- As at 31 December 2020, the portfolio comprised economic
interests in 130 projects and businesses with a composition as
detailed below. This has remained substantially unchanged to 31 May
2021:
Energy Transmission 22%
----------------------- ------
Transport 19%
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Education 19%
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Gas Distribution 17%
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Waste Water 9%
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Health 4%
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Courts 3%
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Military Housing 3%
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Other 4%
PORTFOLIO REVIEW
The overall portfolio has continued to perform well. This
section provides a brief update on key assets where there have been
noteworthy developments since the Company's results for the year
ended 31 December 2020 were published on 25 March 2021.
Tideway, UK | SDGs 6, 9 & 11: clean water and sanitation,
industry, innovation and infrastructure and making sustainable
cities and communities
Tideway is building a 25km 'super sewer' under the River Thames
to create a healthier environment for London by cleaning up the
city's greatest natural asset. The impact of Covid-19 on both the
cost and schedule of the project was reported previously and it was
noted that, in addition to existing contractual and regulatory
safeguards, Tideway has been in discussions with Ofwat on a package
of measures that would further mitigate the financial impact of
Covid-19 on Tideway's shareholders (the Company is a 16%
shareholder in Tideway). Since the release of the Company's annual
results, progress has been made in these discussions and the
proposed measures were the subject of a recent public
consultation(5) run by Ofwat. The consultation has now closed and
Tideway expects the measures to be formally implemented via
modifications to its licence before the end of 2021. The Company is
pleased that these modifications seem likely to ensure a more
appropriate allocation between stakeholders of the impact that
Covid-19 is expected to have on the project's cost and schedule. At
the time of writing, the project is approaching being 65%
complete.
Diabolo, Belgium | SDG 11: Making sustainable cities and
communities
Diabolo is a rail infrastructure investment which integrates
Brussels Airport with Belgium's national rail network. The majority
of revenues generated by Diabolo are linked to passenger use of
either the rail link itself or the wider Belgian rail network.
Accordingly, Diabolo has been impacted by the restrictions on
international travel and national lockdowns implemented in Belgium
as a result of the Covid-19 pandemic. As previously disclosed, the
Company invested GBP9.1 million in December 2020, and made a
further contingent commitment of GBP12.6 million, to protect
Diabolo's liquidity position and ensure its debt covenants continue
to be met. Since the release of the Company's annual results the
asset has continued to operate fully in compliance with its
contractual obligations and the Company is continuing to closely
monitor passenger numbers. Whilst the full GBP12.6 million
commitment referred to above remains available to support Diabolo's
liquidity position, ensure debt covenants will continue to be met
and protect the value of the Company's investment, the extent and
timing of any further cash injections will depend upon the
trajectory of the recovery in passenger numbers over the coming
months.
Gas distribution, UK | SDG 7 & 9: affordable and clean
energy, and industry, innovation and infrastructure
The Company's investment in the UK's largest gas distribution
network which serves 11 million customers is the Company's largest
asset by investment fair value. As previously announced, following
Ofgem's final determination for Cadent in respect of RIIO-2 in
December 2020, Cadent has sought an independent review by the
Competition and Markets Authority as it believes this approach will
best serve Cadent's customers' interests. The outcome of the appeal
is due later in the year.
FINANCIAL HIGHLIGHTS
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. This semi-annual
valuation is published within the Company's interim and annual
accounts, the last of which was published with the Company's annual
results for the year ended 31 December 2020 on 25 March 2021
reporting:
-- A net asset value ('NAV') per share of 147.1 pence (31 Dec 2019: 150.6 pence)
-- The Company's underlying revenues continue to be underpinned
by strong inflation-linkage with a projected increase in return of
0.78% p.a. for a 1.00% p.a. increase in inflation (31 December
2019: 0.82% p.a.)(6)
-- A second half-year 2020 dividend of 3.68 pence per share was
declared on 25 March 2021 and is expected to be paid on 4 June
2021. This dividend is in respect of the period 1 July 2020 to 31
December 2020 and represents a c.2.5% increase on the dividend paid
in the corresponding period in the prior year
-- The Scrip Dividend Alternative Circular applicable to that
dividend was available to investors and the associated scrip
allotment or dividend payment is due to be paid on 4 June 2021
-- The Company will target full-year dividends in respect of
2021 and 2022 of 7.55 and 7.74 pence per share, respectively, in
line with the current targeted annual increase of c.2.5%(7) .
Whilst the Company currently has good forward-visibility of the
cash flows projected to be generated by its investments, the
Company continues to monitor the portfolio for any impact from
Covid-19 related risks, including those noted above
-- In March 2021, the UK Government announced that the headline
rate of corporation tax will be increased from 19% to 25% with
effect from April 2023. This future tax rate increase was not
reflected within the 31 December 2020 valuations owing to the
timing of the announcement (which occurred following the period
end) but was estimated to have a c.GBP30 million negative impact on
the Company's NAV once the increase is reflected in the forecast
investment cash flows. This is likely to be reflected within the 30
June 2021 valuations
As at 31 May 2021, the Company had utilised GBP60 million of the
credit available to it under the debt facility, leaving GBP190
million of the new GBP250 million committed facility available for
the Company's exiting investment commitments.
As previously announced, the Company is transitioning auditors
from EY to PwC following a comprehensive assessment process. PwC
will assume the role of the Company's auditor for the 2021
financial year. The transition process is progressing well.
INVESTMENT ENVIRONMENT AND OUTLOOK
-- The Company's portfolio of investments provides essential
infrastructure to over 13 million people, households and businesses
daily across the countries in which it invests.
-- Since the outbreak of Covid-19 in Q1 2020, there has been an
increased focus on ensuring resilience against future threats and
there is a broad recognition from governments of the pivotal role
that infrastructure will play in supporting a sustainable economic
recovery
-- While the full consequences of the pandemic and its long-term
effects, both economic and social, remain unclear, the Company
believes its business model and investment objectives continue to
offer a significant degree of protection for investors and there is
sustained appetite for long-term responsible investment into public
and social infrastructure across the geographies that the Company
invests in
-- The Company is monitoring the emerging requirements of The EU
Sustainable Finance Disclosure Regulation, and will support its
investors with relevant disclosures when required
-- The pipeline for the types of assets the Company invests in
remains strong and the Company continues to be confident in its
ability to continue to source and develop quality, high-performing
opportunities, across the Company's target geographies, that
deliver long-term, predictable cash flows with strong
inflation-linkage that meet the Company's risk-return profile
Notes to Editors:
While it is no longer a requirement under the Disclosure 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 quarterly updates in
addition to its half year reports.
1. Source: Bloomberg. Share price appreciation plus dividends assumed to be reinvested.
2. Cash dividend payments to investors are paid from net
operating cash flow before non-recurring operating costs.
3. This is based on the fair valuation of the Company's
investments as at 31 December 2020 calculated utilising a
discounted cash flow methodology.
4. This includes non-concession entities which have potentially
a perpetual life but are assumed to have finite lives.
5.
https://www.ofwat.gov.uk/wp-content/uploads/2021/04/Consultation-on-amending-Tideways-project-licence.pdf
6. In aggregate, the weighted average return of the portfolio
would be expected to increase by 0.78% per annum in response to a
1.00% per annum inflation increase over the currently assumed
inflation rates across the whole portfolio. Based on analysis as at
31 December 2020.
7. Dividend targets are targets and not profit forecasts and
there can be no guarantee they will be achieved. Projections are
based on the current individual asset financial models and may vary
in the future.
ENDS.
For further information:
Erica Sibree/Amy Edwards +44 (0)20 7939 0558/0587
Amber Fund Management Limited
Hugh Jonathan +44 (0)20 7260 1263
Numis Securities
Ed Berry/Mitch Barltrop +44 (0) 20 3727 1046/1039
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 130 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 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 150 staff who are responsible for the
management of, advice on and origination of infrastructure
investments.
Visit the INPP website at
www.internationalpublicpartnerships.com for more information.
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END
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