John Laing Infrastructure reports that its NAV at the end of December 2016 was 108.4p. In late February 2016, they announced a dividend of 3.41 pence per share for the second half of 2015, an increase of 1.04% on the previous dividend of 3.375 pence per share. This results in a total dividend payable in respect of 2015 of 6.785 pence per share. The share price declined over the year, ending the year at 116.7 pence, down from 122.8 pence.
In 2015, JLIF delivered underlying portfolio growth of 8.34%, representing an outperformance of 22 basis points versus that which would be expected based on the adjusted unwind of the discount rate. This outperformance was driven by the identification and delivery of value enhancements offset by the negative macroeconomic impact of actual inflation, and underperformance on some projects, such as the Newcastle and Peterborough Hospital projects, where disputes with the NHS Trust counterparties have resulted in increased costs.
Following a review of the valuation undertaken by the Board and an independent leading accountancy firm, they decided to reduce the weighted average discount rate used in the valuation of the portfolio by 12 basis points to 7.82%. This reflects a reduction in gilt rates (used as a proxy for the ‘risk free rate’) and the manager’s own experience of the market rates at which deals are transacting in the secondary market, particularly in the UK, where the majority of the portfolio is invested.
In 2015, they signed a new five-year £180m revolving credit facility. Attached to the facility is a £100m accordion capability giving JLIF greater firepower when targeting new investments. The fund continues to operate without any structural gearing. Given the significant opportunities available, at the forthcoming AGM in May 2016, the Board intends to seek shareholder approval which, if obtained, will increase the company’s gearing limit in its articles of association and investment policy from 25% to 35% of JLIF’s total assets.
JLIF : John Laing Infrastructure lowers its discount rate