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HICL Infrastructure Company Limited

HICL Infrastructure Company Limited Delivered strong performance over the period

HICL Infrastructure Company Limited (LON:HICL) today announced Interim Results for the six months ended 30 September 2018.

Highlights

For the six months ended 30 September 2018

· HICL has delivered strong performance over the period.

· NAV per share of 156.4p as at 30 September 2018 (March 2018: 149.6p).

· Annualised NAV total return of 15.0% based on interim dividends paid during the period plus uplift in NAV per share (six months to 30 September 2017: 8.9%).

· The Company is on target to deliver aggregate dividends of 8.05p per share1 for the current financial year and the Board reaffirms the 8.25p per share1 target for the next financial year ending 31 March 2020.

· New dividend guidance for the financial year ending 31 March 2021 of 8.45p per share1, reflecting the Board’s confidence in the portfolio’s forecast cash flows.

· Directors’ valuation of the portfolio of £2,905m as at 30 September 2018 (March 2018: £2,837m).

· Strategy of portfolio optimisation has delivered good results in the period, with accretion delivered through £146m of disposals and £91m of investments.

· Prudent utilisation of the Group’s Revolving Credit Facility, with drawings of approximately £70m at 20 November 2018, and a further £45m to be allocated to the near-term investment pipeline.

· Further asset disposals remain possible if they contribute to portfolio optimisation; accretive acquisitions will be considered to improve portfolio diversification and to generate value for HICL’s shareholders.

· The Board has announced today its proposal that the Company move its investment business from Guernsey to the UK.

1. This is a target only and not a profit forecast. There can be no assurance that this target will be met

Summary Financial Results

(on an Investment Basis)

for the six months to

30 September 2018

30 September 2017

Income

£211.0m

£108.1m

Profit before tax

£192.8m

£87.8m

Earnings per share

10.8p

5.1p

Net Asset Value

30 September 2018

31 March

2018

Net Asset Value (NAV) per share

156.4p

149.6p

Quarterly interim dividend declared

2.01p

1.97p

NAV per share after deducting quarterly interim dividend

154.4p

147.6p

Ian Russell,HICL Infrastructure Chairman of the Board , said:

“I am pleased that the Company has delivered further strong performance in the period, and a total return since IPO in 2006 of 9.5% per annum. Robust portfolio cash flow forecasts give the Board confidence to announce additional dividend guidance for the year to 31 March 2021 of 8.45p per share. We also reaffirm the existing targets of 8.05p per share for the current year and of 8.25p per share for the year to March 2020.

“Political uncertainty is currently heightened in the UK and remains a key risk faced by the Company. However, InfraRed’s proactive and professional approach to managing HICL’s portfolio demonstrates the benefits that responsible private investors bring to infrastructure stewardship. The value of private sector expertise, risk-taking and resources is all too often disregarded in the political debate on nationalisation and by regulators.

“The Board has announced today that it is proposing that the Company should move its investment business from Guernsey to the UK. We believe this is in the best interests of shareholders as a whole in light of the evolving cross-border taxation landscape. This proposal will require shareholder approval, which will be sought at an Extraordinary General Meeting in Q1 2019.

“InfraRed’s key strategic focus remains on delivering value enhancement from HICL’s existing portfolio and continued price discipline when evaluating new investment opportunities. Overall, the newly extended dividend guidance to 2021 reflects the Board’s continuing confidence in HICL’s business model.”

Harry Seekings, Co-Head of Infrastructure at InfraRed, the Company’s Investment Adviser, added:

“Active portfolio management remains at the heart of InfraRed’s activities for HICL. In addition to continuing to deliver on existing value enhancement programmes, we have completed the strategic disposals of the Highland Schools and AquaSure Desalination PPP projects, achieving pricing in excess of their carrying values. The proceeds have been used to make an accretive incremental investment in A63 Motorway and to prudently manage drawings on the Group’s Revolving Credit Facility.

“Responsible investment, to the benefit of all stakeholders, underpins our approach to asset management. InfraRed’s Asset Management team has continued to address the impact on HICL’s portfolio of the Carillion liquidation earlier in the year. We are pleased with the progress that has been made, with ex-Carillion employees transferred into new roles and replacement facilities management subcontractors appointed at most of the affected projects. Stakeholder engagement has been vital to the development of Affinity Water’s business plan, which offers a fine balance between manageable customer bills and additional investment in the network’s resilience.

“Recent secondary market transactions across HICL’s target markets have seen strong competitive tension, predominantly from unlisted capital, driving asset prices higher. Our commitment to pricing discipline therefore remains fundamentally important when assessing new opportunities.

“With few new PPP projects procured in the UK since 2013, HICL’s pipeline has been for some time predominantly drawn from outside UK PPPs. Following the recent UK Budget announcement, this trend looks set to continue, However, we passionately believe that responsible private investment plays a vital role in the delivery of critical infrastructure in the UK. We look forward to engaging with HM Treasury on the future role for long-term, private capital in financing the UK’s infrastructure needs.”