HICL Infrastructure NAV ahead of target

HICL Infrastructure has announced results for the year ended 31 March 2016. The NAV per share was 142.2p at 31 March 2016 (2015: 136.7p), which was ahead of budget. Total shareholder return for the year was 9.6% on a net asset value (“NAV”) total return basis and 6.8% on a share price total return basis.  Since launch, the Company has delivered an annualised return of 9.7% and 10.7% on the same basis as above (respectively), ahead of the IPO long-term target of 7% to 8% per annum.

On 12 May 2016 the Board announced a fourth quarterly interim dividend for the year to 31 March 2016 of 1.87p per share, which will be paid on 30 June 2016.  This results in an aggregate dividend for the year of 7.45p per share, in line with the published target. In light of the Group’s overall performance, the Directors have increased the dividend target for the current financial year to March 2017 to 7.65p per share.  This represents a 2.7% growth in the aggregate dividend compared to the year ended 31 March 2016.  In addition, the Board looks to the future with confidence and has, as a result, also approved guidance of 7.85p per share for the year ending 31 March 2018.

HICL’s portfolio as at 31 March 2016, consisted of 104 social and transportation infrastructure projects including one conditional investment (31 March 2015: 101).  The return generated from the portfolio during the year (after rebasing for new investments, the disposals and investment distributions) was 7.9% (2015: 9.6%).  This return is in line with the discount rate used to value the portfolio at 31 March 2015, and they believe it represents a good return from the portfolio.  The return includes the adverse impact of actual inflation running lower than the 2.75% per annum valuation assumption which has been off-set by various cost savings and efficiencies, including one-off insurance savings recognised in the year.

The Group began the financial year with seven projects under construction, comprising 5% of the portfolio by value.  Three investments achieved successful construction completion while a further one was acquired during the year.  The five projects in construction at the end of the year represented 1% of the portfolio by value as at 31 March 2016.  The Board and Investment Adviser expect this percentage will increase again, as a function of the pipeline of opportunities that the Investment Adviser is seeing. They also say that good progress has been made during the year on projects which have suffered from operational challenges.  Of particular note, the Zaanstad Penitentiary project overcame the bankruptcy of one of the joint venture construction partners to reach construction completion in March, in line with its contracted delivery date. Proactive intervention by the Group, with the provision of EUR20m working capital on commercial terms (now repaid with interest), was a key component of this successful outcome.

As announced in February, the public sector client on one of the Group’s smaller school projects by value has informed the project company that it intends to serve a voluntary termination notice on the project.  Under the terms of the project agreement, the Group will receive market value compensation in lieu of ongoing investment returns.

HICL : HICL Infrastructure NAV ahead of target