HICL Infrastructure Company Limited - Interim Update Statement 1 October 2017 to 2 February 2018
The Board of HICL Infrastructure Company Limited ("HICL" or "the Company" or, together with its subsidiaries, "the Group"), the listed infrastructure investment company advised by InfraRed Capital Partners Limited ("InfraRed" or "the Investment Adviser"), is issuing this Interim Update Statement, which relates to the period from 1 October 2017 to 2 February 2018.
Ian Russell, Chairman of HICL Infrastructure Company Limited, said:
"The majority of the portfolio continued to perform in line with expectations during the period, however the compulsory liquidation of Carillion impacted a number of HICL's PPP projects. As an immediate priority, the Company and Investment Adviser activated contingency plans at the affected projects and are working closely with other stakeholders to ensure continued operations. This has been and will continue to be a period of intense activity and the Board would like to recognise and thank everyone involved in maintaining services and the process of transitioning to new providers.
"In parallel, the Investment Adviser's Asset Management Team is working with Carillion's liquidator to ensure funds continue to flow to staff and suppliers, and to pursue the twin objectives of enacting a smooth transition of services to interim arrangements and securing long-term replacement contractors.
"At the time of its Interim Results the Company took a provision against counterparty risk, although the abrupt compulsory liquidation of Carillion was not anticipated. The severity of this outcome necessitated a reassessment of the potential financial impact on the Company. A revised estimate was announced on 26 January 2018. This was the product of a thorough analysis by the Investment Adviser of the actual circumstances of the liquidation. It represents a prudent view of the likely outcome, informed by current information and the experience of both the Board and the Investment Adviser.
"The Board remains confident in the Company's investment proposition and the benefits of a large and diversified portfolio: 116 investments with, at 30 September 2017, a portfolio value of £2.8bn. The Board's confirmation of the dividend guidance to March 2020, in the context recent events, demonstrates the resilience of the portfolio's cash flows and hence the value to shareholders of diversification.
"The Board is also conscious of increased commentary around public-private partnerships, however the Directors continue to believe there is an important role for private investors, including HICL, to provide efficient and well-managed infrastructure assets. The Company takes its role as a responsible investor very seriously and has a long-term, sustainable approach that prioritises working closely with its public sector clients."