Last checked at 
14 Aug 2008 07:00
14 August 2008
HSBC Infrastructure Company Limited
HSBC Infrastructure Company Limited - Interim Management Statement
HSBC Infrastructure Company Limited ('HICL' or the 'Company'), the listed infrastructure investment company, is issuing this Interim Management Statement in accordance with FSA Disclosure and Transparency Rule 4.3. This statement relates to the period from 1 April 2008 to 13 August 2008. References to the Group below refer to the Company and its 100% owned corporate subsidiaries.
The Group currently owns a portfolio of 27 infrastructure investments, of which 26 are PFI/PPP projects in the UK and Europe. All the projects are now fully operational and have long term concessions with public sector clients. The Group does not own any demand-based infrastructure investments where income can be affected by economic conditions.
Graham Picken, Chairman of HSBC Infrastructure Company Ltd said "The Board is pleased with the Company's ongoing performance. Our portfolio of investments is actively managed by the Investment Adviser to ensure that returns are maximised. The Company is well placed to make further acquisitions, as and when suitable opportunities arise."
1. Trading
All investments are trading as projected and there are no material matters to report. All of the Group's investments are now operational, after the successful completion of Phase 2 of the Colchester Garrison project in April 2008.
2. Capital Raising
The Company successfully raised £103.6m (before expenses) by way of a C-share issue in May. These new C-shares converted into Ordinary Shares on 4 June 2008 at a Conversion Ratio of 0.8143 Ordinary Shares for every one C Share, and commenced trading on 4 June 2008. There are currently 334,361,480 Ordinary Shares in issue, and they will be entitled to the distribution for the six months to 30 September 2008, when declared. The proceeds of the C-share issue were used to reduce the Group's debt. Our loan facility is available to be redrawn to fund further acquisitions in line with the Company's stated strategy.
3. Distributions
On 23 April 2008, the Board declared the second interim distribution for the year to 31 March 2008. This was paid on 23 May 2008. This brought the total distribution for the year to 31 March 2008 to 6.25p per share (2007: 6.10p per share). The Board has stated it wishes to grow the annual distribution progressively to 7.0p within 5 years. It is currently proposed that the interim distribution for the 6 months to 30 September 2008 will be announced on 18 November, with the Company's interim results, for payment in December.
At the Company's AGM on 28 July 2008, resolutions were passed amending the Company's Articles to allow a scrip dividend alternative and authorising the directors to allot scrip dividends. The Board and the Investment Adviser are now progressing with plans to offer shareholders scrip dividends as an alternative, commencing with the interim distribution for the six months to 30 September. Further details will be provided with the interim results.
4. New Investments
Since 31 March 2008, the Group has acquired additional stakes in three existing projects for a total consideration of £8.3m, taking the Group's economic interest in each project to 100%. These projects are: the Home Office, the Central Middlesex Hospital and the West Middlesex Hospital. Acquisitions of incremental stakes in existing projects within the portfolio form part of the Company's strategy.
5. The Board
On 10 June 2008, the Company announced the appointment of Sarah Evans to the Board of the Company, taking the number of Directors to four. Sarah is a Guernsey resident and is a chartered accountant. All four Directors of the Company are independent of the Investment Adviser. Further details on the directors can be found from the Company's website.
6. Outlook
The Company will continue to seek new investments with return to risk profiles similar to those in the current portfolio. The indications are that a number of suitable investments may come to market as holders of these assets seek to release capital.
The Company does not own any economic infrastructure investments known as "demand based" projects where income is wholly dependent on usage. It is therefore not exposed to changes in consumer habits which may result from factors such as higher oil prices. All of the Group's PFI/PPP investments have concessions where the contractual revenues are fixed in real terms and then increased annually with reference to specific inflation indices. In the case of UK projects, this is normally RPI (Retail Price Index) or RPIx (RPI excluding mortgage payments). In calculating the valuation of the Group's investments as at 31 March 2008, a long term assumption for inflation of 2.75% per annum was used for the UK projects.
Enquiries
M:Communications +44 (0)20 7153 1523
Ed Orlebar
Tilly von Twickel
Notes
HSBC Infrastructure Company Limited
The Company is a long term investor in infrastructure projects which are predominantly in their operating phase and yielding steady returns. It was the first infrastructure investment company to be listed on the London Stock Exchange. It currently owns a portfolio of 27 infrastructure projects, all operational, and is seeking further suitable investment opportunities which fit its Investment Policy.
Further details of the Company can be found from its web site www.hicl.hsbc.com
For further information including the definition of a demand based project and the inflation projection characteristics of the portfolio, please refer to pages 38 and 39 of the April 2008 C-Share prospectus (available from the Company's web site).
Investment Adviser
The Investment Adviser to the Company is HSBC Specialist Fund Management Limited, whose infrastructure investment team has successfully invested in infrastructure projects since 1997 and which is part of HSBC Specialist Investments, the infrastructure and real estate investment arm of the HSBC Group. HSBC Specialist Fund Management Limited is authorised and regulated by the Financial Services Authority.