20th Nov 2013 09:02
LONDON (Alliance News) - HICL Infrastructure Company Ltd Wednesday said its half-year pretax profit declined significantly after taking losses on UK long-term gilts.
The infrastructure investment company said it made a GBP18.9 million pretax profit in the six months to September 30, compared with GBP87.4 million for the corresponding period last year.
"Profit before tax has been adversely affected by significant losses on finance receivables caused by a 0.5% increase in UK long-term gilt rates over the six months to September which has only partly been offset by positive interest rate and inflation rate swap mark-to-market movements," Chairman Graham Picken said in a statement.
UK bond yields have risen in recent months, as the market anticipates the Bank of England raising interest rates sooner than once had been expected.
The investment company lost GBP79.2 million on finance receivables in the period, compared with a GBP109.9 million gain last for the corresponding period last year, which was the reason for reporting GBP102.6 million in total income, under half of last year's GBP222.9 million.
Meanwhile, the acquisition of Bradford Schools BSF has been delayed because of the signed purchase agreement is conditional on the conclusion of a settlement agreement between the key project participants HICL said, adding it is still uncertain when the investment will be made.
Building Schools for the Future was a UK government school building programme.
"With more investors seeking these types of investments, we have been unsuccessful in a number of auctions in the period, losing mainly on price and in two instances by a clear margin," Picken said.
HICL said it is continuing to evaluate other potential investments in the UK and other developed markets and said it expects some diversification in the next year, though it won't make much of a mark on its overall portfolio.
HICL paid a 3.5 pence interim dividend, slightly above last year's 3.425 pence interim dividend.
The company said it expects to meet the 7.1 pence dividend target for the year to March 31, 2014, while it is targeting a 7.25 pence dividend for the 2015 financial year.
"The profile of the expected future cashflows from the group's current portfolio, coupled with the accretive acquisitions made, provides the board with confidence that the company can deliver an attractive dividend and overall return to shareholders," Picken added.
Net asset value per share, after deducting the interim dividend, was 115.4 pence on September 30, compared to 114.3 pence on March 31.
HICL shares were Wednesday quoted down 1.2% at 132.86 pence.
By Samuel Agini; [email protected]; @samuelagini
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