An update from International Public Partnerships

INPP buys BeNEX Rail stake

An update from International Public Partnerships – International Public Partnerships had intended to publish its results today but these have now been delayed. So, instead, it has published an update that contains much of the salient information that would have been in the results statement.

” 2019 was a good year for the company with a 10.3% increase in NAV to GBP2.4 billion (31 December 2018: GBP2.2 billion) and an increase in NAV per share to 150.6 pence (31 December 2018: 148.1 pence per share). The total NAV return of 6.3% was consistent with the company’s expectations for the year. The company expects to declare a dividend for the second half of 2019 in the amount previously targeted at the same time as it publishes its 2019 full year results.

The company is in a strong position with a GBP400 million revolving debt facility (maturing in July 2021) of which only c.GBP9.5 million is currently utilised. The company currently also has c.GBP70 million of cash available with additional cash reserves held within the underlying investments.

The covid-19 pandemic has, to date, had no material impact on the company’s cashflow from its investment portfolio. However, the company notes that the covid-19 pandemic is unprecedented and its full impact on the company over time cannot be ascertained at this time.

The company notes that there are a range of contingent risks stemming from the covid-19 pandemic. These include, but may not be limited to, staff shortages and supply chain breakdowns and similar risks. The company will continue to monitor and where possible take action to avoid or mitigate the consequence of any such impacts on its portfolio.”

The contracts that INPP has in place with customers and suppliers help protect the business but the current situation could have an impact on the timing of cash flows.

Looking at some investments:

  • Thames Tideway Tunnel (9.2% of NAV) Tideway announced on 25 March 2020 that, “based on the government’s direction, it has now temporarily reduced operational activities and is continuing only with essential and safety-critical works. As a result, the company believes that some degree of extra cost and delay is likely. The Tideway project documentation includes provisions to share additional costs between stakeholders (including INPP), up to a threshold beyond which they are borne by Government.”
  • The Diabolo rail link to Brussels airport (8.6% of NAV) has about three quarters of its revenues linked to either the usage of the link or the wider rail system in Belgium. There are some mitigating factors in the contract that cover the situation when usage is below the base case.
  • Schools are closed in the UK, Germany and maybe soon Australia. They say “We currently expect that the company will be in a no worse position as a result of these closures, given the portfolio is not exposed to usage risk.”

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