Returns up, profits down at HICL Infrastructure

Private finance initiative investor HICL Infrastructure described a “solid portfolio performance” in its full-year numbers on Wednesday, with net asset value per share improving 4% in the year to 31 March to 142.2p.

The FTSE 250 firm said total shareholder return for the year was 9.6%, on a net asset value per share basis.

Profit before tax was down significantly, however, to £157.4m from £231m.

HICL’s board said 2015’s higher profits benefited from certain one-off revaluations and a large disposal, which have not been repeated.

Its board declared four quarterly interim dividends during the 12 month period, totalling 7.45p per share, and on Wednesday revised its target dividend for 2017 to 7.65p per share - a year-on-year increase of 2.7%.

The company also issued new guidance on a target dividend per share of 7.85p for the year to March 2018.

HICL’s directors valued the portfolio at £2.03bn, up from £1.73bn on 31 March last year, with the weighted average discount rate reduced to 7.5% from 7.9%.

It made net investments of £231.2m during the year, comprising three new investments, one conditional investment and six incremental acquisitions for £240.1m, and two disposals for net consideration of £8.9m.

The company successfully raised £178.2m capital during the year, and refinanced its revolving credit facility.

“Overall the company's performance in the year was ahead of plan, with investment cash flows received in line with expectations, despite low inflation during the year,” said HICL Infrastructure chairman Ian Russell.

“The portfolio's valuation has again benefited from increased market valuations of infrastructure investments.”

Russell said company’s net investments during the year were funded by value accretive tap issues in July 2015, December 2015 and March this year, and the group's newly refinanced revolving credit facility.

The board said it remained confident of acquiring further attractive investments for the portfolio in spite of continued competition for infrastructure investments.

“Our disciplined pricing coupled with thorough due diligence is key to delivering our strategy and I am pleased to report that the investment adviser continues to deliver on both fronts,” Russell said.

“In light of our continued confidence in the company's portfolio, the board has increased the target dividend for the year to 31 March 2017 to 7.65p per share, and given new guidance on a target dividend of 7.85p per share for the year to 31 March 2018.”