International Public Partnerships : Half Year Results - Six Months Ended 30 June 2018

RNS Number : 9218Z International Public Partnership Ld 06 September 2018

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL OR TO U.S. PERSONS. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION.

6 September 2018

INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED

("INPP" or the "Company")

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018

• ·Con nued robust por#olio performance with strong dividend yield and further growth in Net Asset Value ('NAV'), driven by active asset management and highly selective, accretive investments and commitments totalling c.£50.5 million.

• ·Strength of the Investment Adviser's ac ve asset management and por#olio risk management approach demonstrated by the prompt resolu on of Carillion plc-related ma8ers impac ng a small number of projects, at no material financial impact to the Company or its public-sector clients.

• ·Post-period end, successful renewal and extension of corporate debt facility to £400 million on improved terms.

• ·Sustained track record of delivering stable and growing shareholder returns with two-year forward dividend guidance for 2018 and 2019 projecting annual dividend increases of c.2.5%.

• ·Total Shareholder Return since IPO now 148.6% - an average compound annual growth rate of 8.1% since IPO in 2006, in line with the long-term returns target of 8-9%1.

• ·The Company's contribu on to the achievement of public sector value for money, customer sa sfac on and sustainability over the period includes the maintenance of strong public-sector rela onships with over 4002scheduled management mee ngs led by the Investment Adviser focussing on the smooth running of the assets and ensuring 99.6%2asset availability across our accommodation-based assets during the period.

FINANCIAL HIGHLIGHTS3

• ·Net Asset Value ('NAV') growth to £2.1 billion (31 December 2017: £2 billion)

• ·NAV per share growth to 146.3 pence (31 December 2017: 145.0 pence)

• ·Interim dividend increase to 3.50 pence per share (30 June 2017: 3.41 pence per share)

• ·IFRS profit before tax of £65.9 million (30 June 2017: £57.1 million)

• ·Enhanced infla on-linkage with projected increase in return of 0.81% p.a. for each 1% p.a. increase in infla on (31 December 2017: 0.79%)4

• ·Target 2018 and 2019 full-year dividends of 7.00 and 7.18 pence per share, respectively

• ·2018 cash dividend cover of 1.2x5

PORTFOLIO UPDATE

In the first half of 2018, the Company con nued to pursue its proven long-term strategy of value-focused por#olio development, active asset management and effective financial management in high quality, predictable, long-duration assets including:

• ·Selective exposure to stable, inflation-linked regulated assets

  • oc.£35-40 million investment commitment to acquire further interest in gas distribu on network, Cadent, as part of a consortium of leading long-term U.K. and international institutional investors.

• ·Early mover into emerging low-risk core infrastructure asset classes

  • oc.£17 million commitment to invest in two separate U.K. alterna ve network providers, including Community Fibre, during the period, and subsequently in Airband Community Internet Limited, as part of the £45 million commitment to invest alongside HM Government in U.K. digital infrastructure and fibre-to-the-home broadband connec ons via the Na onal Digital Infrastructure Fund ('NDIF').

• ·Strategic use of pre-emption rights to increase stakes in existing assets

  • o£1.7 million investment to acquire further interest in Her#ordshire Building Schools for Future ('BSF') project, increasing ownership level to 100%.

• ·Continued global portfolio diversification

  • o£0.6 million final investment into the second stage of the Gold Coast Light Rail PPP concession, Australia.

• ·Post period end

  • oRecent transactions and proposed transactions in the sector augur positively for future valuation increases.

STRONG ASSET STEWARDSHIP6

The Company's investments con nue to deliver sustained value to all stakeholders by suppor ng their public-sector partners and the wider communi es in which they operate. Owing to the Investment Adviser's ac ve asset management approach, the Company delivered, among other things:

• ·4152scheduled management meetings with project counterparties, equating to one meeting per month, per asset;

• ·99.6%2asset availability for those investments whose performance is measured by availability, equa ng to over 269,000 successful operating hours in the period;

• ·446 commissioned contract variations resulting in over c.£5.3 million of additional investment;

• ·83,000 additional hours of asset availability dedicated to community use provided;

• ·c.2,3002full me jobs provided across our accommoda on-based assets, with 72%2employed living within the local community in which they work (within an 8km radius).

DIRECTORATE CHANGES

As previously announced on 4 September 2018, the Company has appointed Mr. Michael Gerrard as an independent non-execu ve director with the expecta on that he will assume the role of Chairman following Mr. Rupert Dorey's planned re rement as Chairman on 31 December 2018. Mr. John Le Poidevin was also appointed as Chairman of the Audit and Risk Commi8ee with effect from 1 July 2018. His predecessor, Mr. John Whittle remains as Senior Independent Director of the Company's Board of Directors.

Rupert Dorey, Chairman of Interna:onal Public Partnerships Limited, commented:"As a result of the ongoing robust por#olio performance in a period in which we con nued to maintain full asset availability for our end-users, I am pleased to report sustained delivery of long-term infla on-linked returns to our shareholders. The market for the type of assets in which the Company invests remains buoyant and we remain confident in our ability to realise a long-term pipeline of harder-to-access opportuni es that meet our established risk-return profile."

ENDS.

INPP will be holding an analyst and investor presenta on and conference call at 9.30am on the day of announcement (6 September 2018).

For those analysts or investors who cannot a8end in person, a conference call facility will also be available by dialling +44 (0)330 336 9125 and using the confirma on code 3027905. Please note the conference call is not open to the media or third-party representatives thereof.

A copy of the results presentation can be downloaded from the Company's website:www.internationalpublicpartnerships.com

NOTES TO EDITORS

Amber InfrastructureErica Sibree / Amy Joslin +44 (0)20 7939 0558 / 0587

FTI Consulting

Ed Berry +44 (0)7703 330 199

FTI ConsultingMitch Barltrop +44 (0)7807 296 032

Important Information

This announcement contains informa on that is inside informa on for the purposes of the Market Abuse Regula on (EU) No. 596/2014.

This announcement is an adver sement. It does not cons tute a prospectus rela ng to the Company and does not cons tute, or form part of, any offer or invita on to sell or issue, or any solicita on of any offer to purchase or subscribe for, any shares in the Company in any jurisdic on nor shall it, or any part of it, or the fact of its distribu on, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor.

Forward-looking statements are subject to risks and uncertain es and accordingly the Company's actual future financial results and opera onal performance may differ materially from the results and performance expressed in, or implied by, the statements. These forward-looking statements speak only as at the date of this announcement. The Company, Amber and Numis Securi es expressly disclaim any obliga on or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assump ons, condi ons or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.

About International Public Partnerships:

Interna onal Public Partnerships ('INPP') is a listed infrastructure investment company which invests in global public infrastructure projects.

Listed in 2006, INPP is a long-term investor in 129 social and transport infrastructure projects, including schools, hospitals, courts, police headquarters, transport and u lity and transmission projects in the UK, Europe, Australia and North America. INPP seeks to provide its shareholders with both a long-term yield and capital growth through investment across both construc on and operational phases typically of 25-40 year concessions.

Amber Infrastructure Group ('Amber') is the Investment Adviser to INPP and has over 100 dedicated staff who manage, advise on and originate projects for INPP.

Visit the INPP website atwww.internationalpublicpartnerships.comfor more information.

Notes:

• 1. Bloomberg - share price appreciation plus dividends assumed to be reinvested - from IPO in November 2006 to 30 June 2018

• 2. Only applicable for projects where the Investment Adviser provides oversight of the management services. Where applicable, jobs referred to are employees of the Company's Facili es Management subcontractors and not of the Company of its subsidiaries

• 3. For the half-year ended 30 June 2018 unless otherwise stated

• 4. Projected increase in por#olio return for a 1.00% p.a. increase in the infla on rate assumed in the current valua on analysis for each asset in the portfolio

• 5. Cash dividend payments to investors are paid from net operating cash flow before non-recurring operating costs as detailed

6.

Please note all metrics exclude the digital infrastructure investments (held in a fund structure), Brescia Hospital, Italy (where we do not provide asset management services) and U.S. Military Housing (where only senior debt is held)

International Public Partnerships Limited

Interim Report and Financial Statements for the six months ended 30 June 2018

Registered number: 45241www.internationalpublicpartnerships.com

CONTENTS

HIGHLIGHTS 01

COMPANY OVERVIEW 02

TOP 10 INVESTMENTS 04

CHAIRMAN'S LETTER 05 FINANCIAL AND OPERATING REVIEW

- - - -

BUSINESS MODEL 08

PERFORMANCE AGAINST STRATEGIC PRIORITIES 10

OPERATING REVIEW 12

CORPORATE SOCIAL AND ENVIRONMENTAL RESPONSIBILITY 28

BOARD OF DIRECTORS 32

DIRECTORS' RESPONSIBILITIES STATEMENT 34

INDEPENDENT REVIEW REPORT TO INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED 35

FINANCIAL STATEMENTS 36

NOTES TO THE FINANCIAL STATEMENTS 40

CONTACTS 55

COMPANY FACTS

- - - - - -

London Stock Exchange trading code: INPP.L Member of the FTSE 250 and FTSE All-Share indices £2.0 billion market capitalisation at 30 June 2018 1.405 billion shares in issue at 30 June 2018 Eligible for ISA/PEPs and SIPPs

International Public Partnerships (the 'Company', 'INPP') shares are excluded from the Financial Conduct Authority's ('FCA') restrictions, which apply to non-mainstream investment products, and can be recommended by independent financial advisers to their clients

COVER IMAGE:

-Thames Tideway Tunnel Project, London U.K.

HIGHLIGHTS

We aim to provide our investors with sustainable, long-term and inflation-linked returns through responsible and sustainable investment in public infrastructure.

We aim to grow our dividend and create the potential for capital appreciation.

Our investments are made with the intent of creating robust and long-term investment cash flows.

DIVIDENDS

NET ASSET VALUE ('NAV')

£2.1bn NAV at 30 June 20184(31 Dec 2017: £2.0bn)

146.3p NAV per share at 30 June 20184(31 Dec 2017: 145.0p) 0.9% Increase in NAV

0.9% Increase in NAV per share

PORTFOLIO ACTIVITY

£50.5m Cash investments and commitments made during H1 2018

TOTAL SHAREHOLDER RETURN ('TSR')

148.6% TSR since inception5

8.1% Compound annual growth in TSR since inception5

PROFIT

£65.9m Profit before tax (1H 2017: £57.1m)

• 1 The forecast date for payment of the dividend relating to the half year ending 30 June 2018 is 8 November 2018.

• 2 Future profit projection and dividends cannot be guaranteed. Projections are based on current estimates and may vary in future.

• 3 Cash dividend payments to investors are paid from net operating cash flow before non-recurring operating costs as detailed on pages 18-19.

• 4 The methodology used to determine investment fair value is described in detail on pages 20-26.

• 5 Since inception November 2006. Source: Bloomberg. Share price plus dividends assumed to be reinvested.

COMPANY OVERVIEW

TRACK RECORD OF STABLE AND GROWING RETURNS TO INVESTORS

INPP Dividend Payments

[Chart can be found in PDF version of this document on the Company's website.]

Compound annual growth rate in TSR of 8.1% p.a.1

Since listing, INPP has grown from £300m market capitalisation to £2.0bn (June 2018)

Annual dividend growth has averaged 2.5% since inception2

High degree of inflation linkage

A WELL DIVERSIFIED PORTFOLIO

Sector Breakdown

Tr a n s p o r t

Education

Energy transmission

21% 20% 19%

Gas Distribution

14%

W a s te W a ter

11%

Health

4%

Courts

3%

Military Housing

3%

Other

5%

129 investments in infrastructure projects across a variety of sectors

Geographic Split

U.K.

71%

Bel gi um

10%

Au s tr a l i a

10%

U.S.

3%

Germa ny

3%

Canada

2%

I r el a n d

1%

I ta l y

<1%

Invested in selected global regions that meet INPP's specific risk and return requirements

Investment Type

Investments with third party senior debt

91%

Investments with no third party senior debt4

9%

Invested across the capital structure, taking into account appropriate risks to returns

Mode of Acquisition/Asset Status

Construction

Operational

Early Stage Investor5

11% 89% 73%

Later Stage Investor6

27%

Early stage investment gives first mover advantage and maximises primary capital growth opportunities

Project Ownership100%

50%-100% <50%

47% 7% 46%

Preference to hold majority positions/control or an alternative position of influence e.g. board representation

Investment Life

<20 years 20 - 30 years >30 years

44% 28% 28%

Weighted average portfolio life of 36 years7

• 1Since inception November 2006. Source Bloomberg. Share price plus dividends assumed to be reinvested.

• 2Future dividends cannot be guaranteed. Projections based on current estimates and may vary in the future.

• 3There are many factors that may influence the actual achievement of long-term cash flows to the Company. These include both internal as well as external factors and investors should not treat the chart above as being more than an indicative profile and not a projection, estimate or profit forecast. The actual achieved profile will almost certainly be different and may be higher or lower than indicated.

• 4Investments were the Company holds the Risk Capital and the senior debt or the senior debt has been repaid.

• 5'Early Stage Investor' - asset developed or originated by the Investment Advisor or predecessor team in primary or early phase investments.

• 6'Later Stage Investor' - asset acquired from a third party investor in the secondary market.

• 7Includes non-concession entities which have potentially a perpetual life but assume to have finite lives for this illustration.

International Public Partnerships invests in high quality, predictable, long-duration infrastructure projects.

HIGH PREDICTABLE, LONG DURATION CASH FLOWS

• ·Robust: long-dated, contractual, predictable cash flows

• ·Secure: from regulated or government backed counterparties

• ·Investments focused on high-quality, OECD countries

INPP Projected Cash Flow Profile and Relationship with the Investment Advisor and its Group

[Charts can be found in PDF version of this document on the Company's website.]

TOP 10 INVESTMENTS

INPP's top ten investments by fair value at 30 June 2018 are summarised below. Further information about investments in the Group's portfolio is available on the Group's website (www.internationalpublicpartnerships.com).

NAME OF INVESTMENTLOCATIONSECTOR

STATUS AT

% HOLDING

%

%

30 JUNE 2018

AT

INVESTMENT

INVESTMENT

30 JUNE 2018

FAIR VALUE 30 JUNE 2018

Cadent Gas D i s tr i b u ti o n Network1Thames Tideway Tu n n el1Diabolo Rail Link1

Various, United Kingdom

Gas

Operational

D i s tr i b u ti o n

4% Risk 13.9% C a p i ta l2

FAIR VALUE 31 DECEMBER 2017 14.0%London, United Kingdom

W a s te W a terUnder Construction

16% Risk 10.9%

10.8%

C a p i ta l2

Lincs Offshore Tr a n s mi s s i o n1

Ormonde Offshore

Tr a n s mi s s i o n1

Brus s el s , Bel gi um Lincolnshire, Un i ted Kingdom Cumbria, Un i ted Kingdom

Tr a n s p o r t

Operational

100% Risk 10.0%

10.0%

C a p i ta l2

Energy

Operational

100% Risk 9.1%

9.0%

Tr a n s mi s s i o n

C a p i ta l2

Energy

Operational

Tr a n s mi s s i o n

100% Risk 6.3% Capital2and 100% senior debt

6.5%Reliance RailSydney, Au s tr a l i aTr a n s p o r tOperational

33% Risk 4.3%

4.4

C a p i ta l2

Angel Trains1

Various, United Kingdom

Tr a n s p o r t

Operational

5% Risk 3.5%

3.4%

C a p i ta l2

U.S. Military Housing1,3

Various, United S ta tes

Military Housing

Operational

100% Risk 3.0%

3.0%

C a p i ta l2

BeNEX Rail1

Royal Children's Hos pi ta l1

Various, Germa ny Victoria, Au s tr a l i a

Tr a n s p o r t

Operational

49% Risk 2.1%

2.0%

C a p i ta l2

Health

Operational

100% Risk 1.9%

2.0%

• C a p i ta l2

• 1 These investments contain revenues that are not solely dependent on availability but also include an element of linkage to other factors such as passenger numbers, rolling stock releasing assumptions, occupancy and/or have regulatory periodic reviews. Certain of these investments also include a residual value assumption.

• 2 Risk Capital includes both project level equity and subordinated shareholder debt.