HICL Infrastructure returns to positive returns in first half

HICL Infrastructure reported a solid financial turnaround in its first half on Wednesday, with income rising sharply to £71.7m for the six months ended 30 September, compared to £10.9m in the same period last year, although its net asset value per share declined.

The FTSE 250 company posted a total return of £45m, reversing a £27.6 million loss in the prior year, while earnings per share swung to 2.2p from a 1.4p loss in the prior period.

It said its portfolio achieved an annualised underlying return of 5.5%, reflecting operational performance broadly in line with expectations.

However, results were tempered by increased forecast cost risks linked to the condition of certain UK public-private partnership (PPP) assets, which led to a discount rate adjustment on 36 assets, comprising 29% of the portfolio by value.

That adjustment contributed to a slight decline in the net asset value (NAV) per share to 156.5p, from 158.2p on 31 March.

Dividend cash cover improved to 1.07x, or 2.06x when including profits from disposals completed during the period.

The company reaffirmed its target dividend of 8.25p per share for the financial year ending March, and provided guidance for an increase to 8.35p per share for the following year, supported by inflation-linked cash flows and growth asset contributions.

Capital allocation efforts included enhancing balance sheet flexibility, with over £400m in liquidity now available.

Proceeds from asset disposals facilitated the full repayment of HICL’s £400m revolving credit facility and supported the launch of a £50m share buyback programme, of which £17.6m was completed by the end of September.

HICL also noted leadership changes, with chief financial officer Helen Price stepping down and a new CFO expected to join early next year.

Looking ahead, the company said it anticipated market conditions to offer opportunities for portfolio rotation and strategic growth, supported by long-term infrastructure development trends.

“This period has seen a concerted effort to enhance the company's balance sheet,” said chair Mike Bane.

“Proceeds received from completed asset sales have allowed full repayment of the RCF and the commencement of the company's first share buyback programme, which has substantially progressed.

“With a robust portfolio, strong yield and significant opportunity for capital growth, we believe HICL continues to offer compelling risk adjusted returns against the current market backdrop.”

Reporting by Josh White for Sharecast.com.