HSBC Infrastructure in £22m loss(2)

The infrastructure investor has posted a loss for the full year after marking down its portfolio value. It has nevertheless increased its annual dividend by 2.4 percent, claiming operational performance remains strong.

HSBC Infrastructure Company Ltd (HICL) has made a loss for the full year on the back of a writedown of its investment portfolio.

The London-listed infrastructure investor said today that for the year ending March 31 it experienced a loss before tax of £22 million (€25 million; $35 million) as the result of a £42.4 million capital loss which it attributed to lower valuations of its holdings. HICL put the decline in its net asset value on an investment basis down to revised economic assumptions which affect its long-term forecasts, in addition to a softening of the discount rates applied to its operational PPP assets.

However, the operational profit of the portfolio grew by 35 percent to £20.4 million. Thanks to this HICL will pay a dividend of 6.4p for the full year, up 2.4 percent on 2008’s payout.

HICL chairman Graham Picken praised the portfolio’s operational performance, saying: “Given the economic and financial climate, this is testament to the quality and robustness of the underlying assets, coupled with the hard work and expertise of the team managing our investments.”

Graham Picken

Over the past year HICL has made £51.2 million of UK investments, which included a 50 percent stake in the Oxford John Radcliffe Hospital Company for £18 million in August last year. The company also increased its stake to 100 percent in existing projects the Home Office PFI, the Central Middlesex Hospital and the West Middlesex Hospital for a combined £8.3 million.

HICL said its portfolio, which comprises 27 PPP projects in the UK and the Netherlands and a mezzanine debt loan behind the Thames Water acquisition, has performed in line with its expectations, with all the projects up and running. The company added that although six of its projects have been affected by downgrades of monoline insurers, only one scheme – Blackburn Hospital – was materially impacted in terms of a marginally more expensive senior funding package.

The company’s directors’ valuation of the portfolio at March 31 was £445.7 million, up 1.8 percent on the prior corresponding period.

Going forward, HICL said it will continue to seek PPP assets both in the UK and abroad, with five targets currently under consideration. It added that it is unlikely to seek investments in toll roads, airports or ports owing to the current difficulties in valuing such assets.