International Public Partnership Ld (LON:INPP) today announced Full Year Results for the 12 Months to 31 Dec 2018
· Current cash generation is strong and consistent with forecasts
· The Company has a sustained track record of stable and growing shareholder returns with c.2.5% annual dividend increase for 2018, and two-year forward dividend guidance for a further increase of c.2.5% p.a. for 2019 and 2020, respectively
· The Company’s primary origination capability resulted in c.£105 million of new or follow-on investments and commitments
· The Company’s continued focus on portfolio asset and risk management facilitated the effective transition of the projects impacted by Carillion plc’s liquidation to new facilities management providers at no material financial impact on the Company or its public sector clients
· There is ongoing engagement with Ofgem to achieve a satisfactory outcome to the current consultation on proposed price control measures (RIIO-2) which would govern, among other things, the revenue and incentives received by Cadent between 2021 and 2026. The Company has adopted a precautionary approach to the assumed outcome while this continues
· Total Shareholder Return since IPO is now 171.8%, which represents an annualised total shareholder return of 8.6% since IPO in 2006, in line with the long-term returns target of 8% or greater1
· Over 3,000 hours of scheduled management meetings took place in 2018 with public sector clients and the portfolio achieved 99.9% asset availability (for those investments whose performance is measured by availability)
· New capital totalling £116 million was raised in October 2018 from new and existing investors at a price of 152.5 pence per share
FINANCIAL HIGHLIGHTS3
· Net Asset Value (‘NAV’) growth of 7.9% to £2.2 billion (31 December 2017: £2.0 billion)
· NAV per share growth to 148.1 pence (31 December 2017: 145.0 pence)
· Full-year dividend increase of c.2.5% to 7.00 pence per share (31 December 2017: 6.82 pence per share)
· IFRS profit before tax of £138.1 million (31 December 2017: £106.4 million)
· Inflation-linkage with projected increase in return of 0.82% p.a. for each 1% p.a. increase in inflation (31 December 2017: 0.81%)3
· Target 2019 and 2020 full-year dividends of 7.18 and 7.36 pence per share, respectively
· 2018 cash dividend cover of 1.2×4
PORTFOLIO UPDATE
In 2018, the Company continued to pursue its proven long-term strategy of value-focused portfolio development, active asset management and effective financial management with respect to its portfolio of high quality, predictable, long-term projects and businesses which meet societal and environmental needs both now and in the future. These include:
· Selective exposure to stable, inflation-linked regulated assets
o An investment of £46.2 million into the Company’s seventh offshore transmission asset, Dudgeon OFTO, which provides the transmission cable connection to offshore wind power generation for c.410,000 U.K. homes
o Commitment of c.£35 – 40 million to acquire a further interest in Cadent which, together with its initial option, will see the Company invest a total of £150-155 million in Cadent by the end of June 2019 (subject to price adjustment per the terms of its option agreements).
o An additional £1.6 million commitment was made into Offenbach Police Centre, which is currently under construction and due to complete in mid-2021
· Early mover into emerging low-risk core infrastructure asset classes
o The Company continued to invest into digital infrastructure, with a focus on enhancing U.K. fibre broadband connections, via a £14.8 million investment as part of its £45 million commitment to invest alongside HM Government via the National Digital Infrastructure Fund (‘NDIF’)
· Strategic use of pre-emption rights to increase stakes in existing assets
o £1.7 million investment to acquire further interest in Hertfordshire Building Schools for Future (‘BSF’) project, increasing ownership level to 100%
o £0.6 million final investment into the second stage of the Gold Coast Light Rail PPP concession, Australia
· Measured exposure to construction assets for greater capital growth
o The Company had three projects totalling 11% of the Company’s portfolio (by value) under construction including Tideway, where the new 25km sewer under the River Thames is now 40% complete; minor works on the fourth batch of the Priority Schools Building Programme and groundworks on the Offenbach Police Headquarters, Germany
· Alignment of interest with public sector counterparties
o The Company completed three project refinancings during the period, comprising two education assets under the Building Schools for Future (‘BSF’) programme and the senior debt in Liverpool Central Library, all of which delivered significant shared financial benefits to the Company’s clients
ASSET STEWARDSHIP6
The Company’s investments continue to deliver sustained value to stakeholders including by supporting their public-sector partners and the wider communities in which they operate. Owing to the Investment Adviser’s active asset management approach, the Company helped deliver, among other things:
· 881 commissioned contract variations resulting in over c.£10.9 million of additional project work conducted on behalf of the commissioning body
· >150,000 additional hours of asset availability dedicated to community use
· >91% of the Company’s investments monitored their energy usage
Michael Gerrard, Chairman of International Public Partnerships Limited, commented: “The Company has once again delivered its target level dividend through a year of strong portfolio performance. The visibility of underlying cashflows, the quality of our portfolio and the active approach to asset management undertaken by the Company’s Investment Adviser gives the Board full confidence in delivering future returns for shareholders.
The Company’s focus will continue to be on a wide range of established and emerging asset classes where we believe private finance can deliver outstanding infrastructure and good value for money for our clients and end-users.
Our existing portfolio combined with a promising pipeline of global and diversified investment opportunities will support our ability to continue to deliver predictable, long-term, inflation linked returns to our shareholders with a consistently low correlation to the broader equity market.”
DIRECTORATE CHANGES
As previously announced on 4 September 2018, the Company appointed Mr. Michael Gerrard as an independent non-executive director, assuming the role of Chairman on 31 December 2018 following Mr. Rupert Dorey’s planned retirement. Mr. John Le Poidevin was appointed as Chairman of the Audit and Risk Committee with effect from 1 July 2018. His predecessor, Mr. John Whittle remains as Senior Independent Director of the Company’s Board of Directors. John Stares retired from his role as Chair of the Nomination and Remuneration Committee and also as the Chair of the Risk Sub-Committee on 1 February 2019. Julia Bond has been appointed as his replacement for both positions. John Stares remains a Director of the Company.
