HICL Infrastructure says PFIs alive and well

Infrastructure projects investor HICL said the value of its portfolio increased by just over a third in the year to the end of march.

The directors' valuation of the portfolio at the end of March stood at £902.0m, up 34% from the £673.1m valuation a year earlier. The company as a whole has a stock market valuation (as at May 22nd) of around £1,040m.

Net asset value (NAV) per share after the dividend distribution stood at 112.8p at the end of March, up 2.8% on a NAV per share of 109.7m at the end of March 2011.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The group announced a second interim dividend of 3.5p, making the total pay-out for the year 6.85p, up 2.2% on the previous year. The company is targeting a payment of 7.0p per share for the current financial year.

Total revenue in the year to March 31st on an investment basis was £48.1m, up from £37.4m the year before. Capital appreciation added a £24m boost, up from the previous year's capital gain of £18.8m, taking total revenue up to £72.1m from £56.2m the year before.

Profit before tax and valuation movements was £33.2m, versus £24.3m a year earlier. The company increased the fair value - what it considers the current market value - of its investments by £28.8m this time round, having booked a £20.9m fair value uplift the year before. Total profit before tax on an investment basis therefore increased to £62.0m from £45.2m the previous year.

After a minimal tax payment of £0.1m both this year and last that shifted earnings up to £61.9m versus £45.1m the year before. Earnings per share, on an investment basis, rose to 9.8p from 8.9p the year before.

On a consolidated international financial reporting standards (IFRS) basis, the group had net debt of £1,473.3m at March 31st 2012 (31 March 2011: £532.8m). This increase in net debt over the year reflects the nine new subsidiaries formed arising from the various acquisitions in the year.

Cash received from the portfolio by way of distributions, capital repayments and fees was £51.2m (2011: £45.6m). After group costs, net cash inflows of £41.0m adequately covered the distributions paid in the year, the group said, adding that the growth in cash generated was in line with its projections.

During the course of the year the company raised £325.9m before expenses through share issues.

"Opportunities in the UK secondary market for PFI [private finance initiative] assets remain good," claimed Graham Picken, HICL Infrastructure's Chairman. "We welcomed the UK government's new Infrastructure Plan and, although there is detail to be worked through, it is clear that the private sector has a crucial part to play in funding and managing the next generation of infrastructure projects," Picken added.

"Looking ahead, we remain confident that our investment portfolio is of sufficient quality to perform resiliently. Cash flows are generally predictable and, whilst it is acknowledged that the valuation of the portfolio is in part correlated to the rates that apply to long-dated government debt, we are not anticipating significant fluctuations as a consequence," Picken said.

JH