Interim / Quarterly Report • Mar 7, 2018
Interim / Quarterly Report
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Manu Vandenbulcke, CEO TINC: "TINC looks back at a successful first half year with strong investment activity. The proceeds of the December 2016 capital increase have been entirely used and allocated for investments in existing and additional portfolio companies. This further diversifies our portfolio, which now includes 17 participationsin Belgium, the Netherlands and Ireland, and grows the total fair value of the portfolio. TINC continues to seek additional investment opportunities in a buoyant infrastructure market, and is analysing funding options to fuel this growth. Based on this interim result, TINC can confidently confirm its dividend policy with a projected dividend for the current financial year of € 0.49 per share."
TINC is an investment company holding participations in companies that realize and operate infrastructure. TINC adopts a diversified investment policy, holding participations in public and private infrastructure and through both equity and debt investments.
As at December 31, 2017 the diversified portfolio of TINC includes 17 participations with a FMV of € 217.6 million.
The portfolio generates cash flows of a long-term sustainable nature, which form the basis for TINC's dividend policy.
TINC's objective is to grow its portfolio through new investments in infrastructure companies. TINC aimsto further develop its activities in the geographical markets where it is already present (Belgium, the Netherlands and Ireland) and will seek additionally to expand in neighbouring countries.
At the day of publication of these interim results, the portfolio of TINC includes the following 17 participations:
| Participation | Activity | Geography |
|---|---|---|
| Berlare Wind | Onshore windfarm | Belgium |
| Bioversneller | Business service centre | Belgium |
| Brabo I | Light rail infrastructure | Belgium |
| Eemplein | Car park facility | the Netherlands |
| Glasdraad | Digital infrastructure | the Netherlands |
| Kreekraksluis | Onshore windfarm | the Netherlands |
| L'Hourgnette | Detention facility | Belgium |
| Lowtide | Solar energy | Belgium |
| Nobelwind | Offshore windfarm | Belgium |
| Northwind | Offshore windfarm | Belgium |
| Princess Beatrix Lock | Lock complex | the Netherlands |
| Réseau Eqso | Care facilities | Belgium |
| Solar Finance | Solar energy | Belgium |
| Storm Flanders | Onshore windfarm | Belgium |
| Storm Ireland | Onshore windfarm Ireland |
|
| Via A11 | Road infrastructure Belgium |
|
| Via R4 Gent | Road infrastructure | Belgium |
The portfolio includes participations located in Belgium, the Netherlands and Ireland and consists of Public Private Partnerships (PPP), Energy and Demand Based infrastructure, as shown in the pie charts below.
The portfolio breakdown below is based on the FMV of the participations on 31 December 2017, excluding outstanding offbalance contractual investment commitments.
The portfolio breakdown below is based on the FMV of the participations on 31 December 2017, adjusted to include the nominal value of the off-balance contractual investment commitments to both existing and additional portfolio companies on 31 December 2017 (€ 75.9 million).
TINC committed circa € 17.2 million to acquire a participation in two portfolio companies by way of forward purchase agreements.
| Contracted participations | Description | Geography |
|---|---|---|
| A15 | Road PPP | the Netherlands |
| Princess Beatrix lock | Lock PPP | the Netherlands |
The operational performance of the portfolio was in line with expectations.
TINC continues to manage risk in view of creating and protecting shareholder value. Risk is inherent in the activities of TINC, but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. TINC is through its portfolio companies exposed to market risk, credit risk and liquidity risk.
There have been no major changes to the risks and uncertainties set forth in the annual accounts per June 30, 2017.
During the reporting period, TINC committed circa € 75 million for investments in both existing and additional portfolio companies.
Following the end of the reporting period the following events occurred:
On February 19, 2018, TINC completed the acquisition of a participation in Réseau Eqso following approval by the Belgian competition authority. TINC invested € 27 million of a total commitment of € 34 million. The balance is available to fund future growth initiatives of Réseau Eqso. TINC funded the acquisition with cash at hand and a € 6 million drawdown under its credit facilities;
As a consequence of her appointment as COO of Belfius Insurance, a principal shareholder of TINC, Mrs. Blaton resigned as independent director of TINC Manager as per February 26, 2018. TINC has started the search for a new independent director. On the same date Mr. Kristof Vande Capelle, CFO Gimv, was appointed as director upon nomination by Gimv, filling a board position which was vacant since the summer of 2016;
The evolution of the fair market value (FMV) of the portfolio is set forth in the table below (in k€):
| Period ending at: | 31/12/2017 | 30/06/2017 |
|---|---|---|
| (k€) | (Unaudited) | (Audited) |
| Opening balance | 177 204,0 | 128 031,2 |
| + Investments | 31 433,3 | 47 515,9 |
| - Repayments from investments | (1 086,3) | (1 428,9) |
| +/- Unrealised gains and losses | 9 129,6 | 2 931,5 |
| +/- Other | 939,6 | 154,2 |
| Closing balance* | 217 620,2 | 177 204,0 |
| Net unrealised gains/losses recorded through P&L over the period |
9 129,6 | 2 931,5 |
*Including Shareholder loans for a nominal amount of m€ 92.0 (31/12/2017) and m€ 76.8 (30/06/2017)
The FMV of the portfolio increased with € 40.4 million to € 217.6 million or a 22.8% increase compared to June 30, 2017. This increase is largely the result of € 31.4 million of investments in and € 1.1 million of repayments from portfolio companies.
The net unrealized result (unrealized gains minus unrealized losses) amounts to € 9.1 million, including a one-off positive effect of the implementation of changes to the corporate tax system in Belgium, which enhances the projected cash flows (dividends) from the Belgian portfolio companies to TINC. The remaining amount of € 0.9 million is mainly the result of an increase in the short-term receivables resulting from realized income that is to be received shortly.
On December 31, 2017, the weighted average discount rate, which is used for portfolio valuation purposes, stands at 8.19% (compared to 8.25% on June 30, 2017). The slight decrease of the weighted average discount rate is the result of a shift in the portfolio composition resulting from the investment activity. No changes were made to the individual discount rates applied by TINC to portfolio companies.
The statement of income for the period is as follows:
| Period: | 01/07/17-31/12/17 | 01/07/16-31/12/16 |
|---|---|---|
| Result (k€) | (Unaudited) | (Unaudited) |
| Portfolio Result | 13 421,7 | 6 327,8 |
| Interest income | 3 612,4 | 2 840,8 |
| Dividend income | 145,1 | 1 402,2 |
| Fees | 534,7 | 225,6 |
| Unrealised gains/losses on financial assets | 9 129,6 | 1 859,2 |
| Operating expenses | (1 448,7) | (957,4) |
| Operating result, profit (loss) | 11 973,0 | 5 370,4 |
| Financial result | (1,0) | (15,9) |
| Tax expenses | - | (0,0) |
| Net profit (loss) for the period | 11 972,1 | 5 354,4 |
| Earnings per share (€)* | 0,59 | 0,38 |
*Calculated on the basis of the weighted average number of ordinary shares
The portfolio result amounts to € 13.4 million, an increase of € 7.1 million compared to the same period last year. The portfolio result consists of two components.
The operating expenses of € 1.4 million are deducted from the portfolio result and are expenses in relation to the ordinary business operations. The increase in operating expenses as compared to the same period last year is explained by the growth of the investment portfolio of TINC.
The operating result of the first semester amounts to € 12.0 million. This translates into a net result for the period of six months until December 31, 2017 of € 12.0 million, taking into account net financial costs of € 0.001 million. This amount corresponds to earnings per share of € 0.59 based on the weighted average number of outstanding shares (compared to earnings per share of € 0.38 for the same period last year).
The balance sheet at the end of the reporting period is as follows:
| Period ending at: | 31/12/2017 | 30/06/2017 |
|---|---|---|
| Balance sheet (k€) | (Unaudited) | (Audited) |
| Fair Market Value of portfolio companies (FMV) | 217 620,2 | 177 204,0 |
| Deferred tax asset | 1 384,7 | 1 876,6 |
| Net cash | 21 443,0 | 58 670,4 |
| Other working capital* | 1 540,6 | 1 041,5 |
| Net Asset Value (NAV) | 241 988,5 | 238 792,4 |
| Net Asset Value per share (€ )** | 11,83 | 11,67 |
* Other working capital = Trade and Other receivables (-) Current Liabilities
** Based on the total number of shares outstanding on the end of the reporting period
The net asset value (NAV) amounts to € 242.0 million or € 11.83 per share compared to € 238.8 million or € 11.67 per share on June 30, 2017. The NAV of € 242.0 million is net of the dividend payment € 8.3 million on October 25, 2017. The NAV is the sum of the FMV of portfolio companies of € 217.6 million (see portfolio valuation), a € 1.4 million deferred tax asset, € 21.4 million net cash and € 1.5 million other working capital.
The BGAAP amortization of certain capitalized costs (e.g. related to the IPO and the capital increase on 19 December 2016), has resulted in a deferred tax asset of € 1.4 million on the IFRS balance.
The table below provides an overview of the evolution of NAV between June 30, 2017 and December 31, 2017.
| Period ending at: | 31/12/2017 | 30/06/2017 |
|---|---|---|
| Evolution NAV (k€) | (Unaudited) | (Audited) |
| NAV at the beginning of the period | 238 792,4 | 157 718,1 |
| + Capital increase | - | 76 704,5 |
| - Costs related to capital increase | - | (1 649,4) |
| + Increase/decrease in deferred tax assets | (491,9) | 72,3 |
| + Net profit of the financial year | 11 972,1 | 10 685,5 |
| - Dividends to shareholders | (8 284,1) | (4 738,6) |
| NAV at the end of the period | 241 988,5 | 238 792,4 |
The increase of NAV of € 3.2 million is the result of the net profit of the reporting period (€ 12.0 million) minus the dividend payment over the previous financial year (€ 8.3 million) and the decrease in deferred tax assets (€ 0.5 million).
The cash flows over the reporting period are set out in the following chart:
Cash flow from investment activities includes investments of € 31.4 million in existing and additional portfolio companies, € 1.1 million of repayments and € 3.4 million of cash income from portfolio companies (i.e. dividend income, interest income, fees and VAT).
During the reporting period, TINC paid € 2.0 million of operating costs. This includes costs related to and charged in the previous year which were only paid during the reporting period.
On October 25, 2017 a dividend for the previous financial year (ended June 30, 2017) was paid in the amount of € 8.3 or 78% of the Net Profit of the previous financial year. This amount corresponds to € 0.48 per share (and € 0.255 per share for the newly issued shares in December 2016).
| Date | Event |
|---|---|
| September 12, 2018 | Publication of the annual report and annual results for FY 2017-2018 |
| October 17, 2018 | General Shareholders' Meeting |
| October 22, 2018 | Ex-date dividend |
| October 23, 2018 | Record date dividend |
| October 24, 2018 | Payment date dividend |
This financial report comprises the unaudited interim condensed consolidated financial statements of TINC for the first semester of 2017 (for the period ended on December 31, 2017) of the financial year ending June 30, 2018, and contains particularly the following items:
| Period: | 01/07/17-31/12/17 | 01/07/16-31/12/16 | |
|---|---|---|---|
| (€) | Notes | (Unaudited) | (Unaudited) |
| Operating income | 13 647 131 | 6 886 921 | |
| Dividend income | 145 052 | 1 402 193 | |
| Interest income | 3 612 350 | 2 840 823 | |
| Gain on disposal of investments | - | - | |
| Unrealised gains on investments | 6.6 | 9 355 000 | 2 418 347 |
| Revenue | 534 729 | 225 558 | |
| Operating expenses (-) | (1 674 111) | (1 516 551) | |
| Unrealised losses on investments | 6.6 | (225 419) | (559 124) |
| Selling, General & Administrative Expenses | 6.5 | (1 406 388) | (921 701) |
| Other operating expenses | (42 304) | (35 726) | |
| Operating result, profit (loss) | 11 973 020 | 5 370 369 | |
| Finance income | 3 235 | 4 109 | |
| Finance costs (-) | (4 199) | (20 039) | |
| Result before tax, profit (loss) | 11 972 056 | 5 354 439 | |
| Tax expenses (-) | - | - | |
| Total comprehensive income | 4 | 11 972 056 | 5 354 439 |
| Earnings per share (€) | ||
|---|---|---|
| 1. Basic earnings per share (*) | 0,59 | 0,38 |
| 2. Diluted earnings per share (**) | 0,59 | 0,38 |
| Weighted average number of ordinary shares | 20 454 546 | 14 118 083 |
(*) Calculated on the basis of the weighted average number of ordinary shares
(**) Assumed that all stock options warrants which were in the money as at the end of the period would be exercised. The Company has no options / warrants outstanding throughout the reporting period.
| Period ending at: | 31/12/2017 | 30/06/2017 | |
|---|---|---|---|
| (€) | Notes | (Unaudited) | (Audited) |
| I. NON-CURRENT ASSETS | 219 004 900 | 179 080 558 | |
| Investments at fair value through profit and loss | 6.6 | 217 620 190 | 177 203 967 |
| Deferred taxes | 1 384 710 | 1 876 591 | |
| II. CURRENT ASSETS | 23 430 697 | 60 290 045 | |
| Trade and other receivables | 1 987 703 | 1 619 686 | |
| Cash and short-term deposits | 5 | 21 442 995 | 58 670 359 |
| Other current assets | - | - | |
| TOTAL ASSETS | 242 435 597 | 239 370 603 |
| Period ending at: | 31/12/2017 | 30/06/2017 | |
|---|---|---|---|
| (€) | Notes | (Unaudited) | (Audited) |
| I. EQUITY | 241 988 505 | 238 792 421 | |
| Issued capital | 4 | 122 622 636 | 122 622 636 |
| Share premium | 4 | 71 334 673 | 71 334 673 |
| Reserves | 4 | 1 721 393 | 1 884 907 |
| Retained earnings | 4 | 46 309 803 | 42 950 204 |
| II. LIABILITIES | 447 093 | 578 182 | |
| A. Non-current liabilities | - | - | |
| B. Current liabilities | 447 093 | 578 182 | |
| Financial liabilities | - | - | |
| Trade and other payables | 256 028 | 387 117 | |
| Income tax payables | 191 065 | 191 065 | |
| Other liabilities | - | (0) | |
| TOTAL EQUITY AND LIABILITIES | 242 435 597 | 239 370 603 |
| Notes | Issued capital |
Share premium |
Reserves | Retained earnings |
Equity | |
|---|---|---|---|---|---|---|
| As per 30 June 2017 (audited) |
3 | 122 622 636 | 71 334 673 | 1 884 907 | 42 950 204 | 238 792 421 |
| Total comprehensive income |
2 | - | - | - | 11 972 056 | 11 972 056 |
| Capital increase | - | - | - | - | - | |
| Dividends to shareholders | - | - | - | (8 284 091) | (8 284 091) | |
| Other changes | - | - | (163 515) | (328 366) | (491 881) | |
| As per 31 December 2017 (Unaudited) |
3 | 122 622 636 | 71 334 673 | 1 721 393 | 46 309 803 | 241 988 505 |
The Belgian GAAP capitalisation and amortization of certain capitalized costs (related to the IPO and the capital increase on 19 December 2016), has resulted in a deferred tax asset of € 1,384,710 on the IFRS balance. This amount is € 491,881 lower than as per 30 June 2017. The decrease of the deferred tax asset relates to the amortization for an amount of € 295,013 and a one-off decreasing impact of the corporate tax reform in Belgium for an amount of € 196,868. This one-off decreasing impact is due to the gradual decrease of the corporate tax to 25% in 2020 resulting in a lower tax benefit related to the amortization of the capitalized costs.
The reserves have decreased (in relation to 30 June 2017) with an amount of € 163,515 (due to the decrease of the deferred tax asset for an amount of € 491,881, compensated by an addition to the legal reserves for an amount of € 328,366).
Compared to 30 June 2017, retained earnings increased by an amount of € 3,359,599, which is a combination of retained earnings of the reporting period for an amount of € 11,643,690 (€ 11,972,056 total comprehensive income minus the addition to the legal reserves for an amount of € 328,366) and the final dividend related to the past financial year for an amount of € 8,284,091.
The table below provides the changes in Equity of the previous financial year.
| Notes | Issued capital |
Share premium |
Reserves | Retained earnings |
Equity | |
|---|---|---|---|---|---|---|
| As per 30 June 2016 (audited) |
3 | 81 748 317 | 35 504 445 | 2 994 415 | 37 470 914 | 157 718 092 |
| Total comprehensive income |
2 | - | - | - | 10 685 539 | 10 685 539 |
| Capital increase | 40 874 319 | 35 830 228 | - | - | 76 704 548 | |
| Dividends to shareholders | - | - | - | (4 738 636) | (4 738 636) | |
| Other changes | - | - | (1 109 508) | (467 614) | (1 577 122) | |
| As per 30 June 2017 (Unaudited) |
3 | 122 622 636 | 71 334 673 | 1 884 907 | 42 950 204 | 238 792 421 |
| Period: | 01/07/17-31/12/17 | 01/07/16-31/12/16 | |
|---|---|---|---|
| (€) | Notes | (Unaudited) | (Unaudited) |
| Cash at beginning of period | 3 | 58 670 359 | 28 327 665 |
| Cash Flow from Financing Activities | (8 284 091) | 70 518 471 | |
| Proceeds from capital increase | - | 76 704 548 | |
| Capital repayment / decrease | - | - | |
| Proceeds from borrowings | - | - | |
| Repayment of borrowings | - | - | |
| Interest paid | - | (8 500) | |
| Dividends to shareholders | (8 284 091) | (4 602 065) | |
| Other cash flow from financing activities | - | (1 575 512) | |
| Cash Flow from Investing Activities | (26 947 532) | (8 714 903) | |
| Investments | (31 433 339) | (13 832 660) | |
| Repayment of investments | 1 086 250 | 663 318 | |
| Interest received | 2 872 797 | 2 659 625 | |
| Dividend received | 145 058 | 1 539 698 | |
| Other cash flow from investing activities | 381 702 | 255 116 | |
| Cash Flow from Operational Activities | (1 995 742) | (1 444 849) | |
| Management Fee | (1 671 541) | (1 267 030) | |
| Expenses | (324 201) | (177 819) | |
| - | - | ||
| Cash at end of period | 3 | 21 442 995 | 88 686 384 |
The Interim Condensed Consolidated Financial Statements of TINC (hereafter the "Company") for the six month reporting period ended on 31 December 2017 were approved by resolution of the statutory manager dated 5 March 2018.
The Company is a limited liability company ("commanditaire vennootschap op aandelen/société en commandite par actions") incorporated and located in Belgium. The Company's registered office is located in Karel Oomsstraat 37, 2018 Antwerp, Belgium. TINC is an investment company holding participations in companies that realize and operate infrastructure.
The Interim Condensed Consolidated Financial Statements of the Company have been prepared in accordance with IAS 34 "Interim Financial Reporting".
The accounting principles and presentation and computation methods that have been used to draw up these Interim Condensed Consolidated Financial Statements are consistent with those stated in the financial statements per 30 June 2017.
In preparing the Interim Condensed Consolidated Financial Statements, TINC continued to apply, as it did with respect to the financial statements as per 30 June 2017, the amendments to IFRS 10 (Consolidated Financial Statements) regarding investment entities since TINC still meets the definition of an investment entity. As a consequence TINC measures all investments at fair value through profit or loss in accordance with IAS 39 (Financial Instruments: recognition and measurement). The new investment in (i) Réseau Eqso has a remaining life of 20 years on the basis of contractual arrangements with co-investors aimed at and stimulating the repurchase of the care facilities in 20 years time and (ii) Glasdraad has a remaining life of over 25 years, i.e. TINC's assumption of the useful life of the scheduled fiberoptic networks.
The preparation of the Interim Condensed Consolidated Financial Statements is made on the basis of judgments, estimates and assumptions that are consistent with those stated in the financial statements as per 30 June 2017, but are reviewed on an ongoing basis.
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the TINC's financial statements are disclosed below. TINC considered to only list and address the ones expected to have an impact on the Group's financial position, performance, and/or disclosures. The Group intends to adopt these standards, if applicable, when they become effective.
recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts, IFRIC 18 Transfers of Assets from Customers and IFRIC 13 Customer Loyalty Programmes. TINC has elected to apply the new standard through modified retrospective application the revenues that are in scope of IFRS 15 represent the management fees. The standard requires that only management fees that are reasonably certain can be recognised as revenues. TINC concluded that this requirement is fully aligned with the current accounting. Hence, the amendments will not have a significant impact on TINC.
The changes are not expected to have a significant impact on TINC.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 30 June 2017, except for the adoption of new standards effective as of 1 July 2017 that are disclosed below. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The changes did not have an impact on the Company.
The Portfolio Result of the company is defined as the Operating income (Dividend income, Interest income, Revenue and (Un)realised gains from the portfolio) corrected for the (Un)realised losses on the portfolio. The table below sets out the Portfolio Result categorized by Type, Size, Geography and Investment Instrument.
| Period: | 01/07/17-31/12/17 | 1/07/16-30/06/17 | 1/01/15 - 30/06/16 |
|---|---|---|---|
| 6 months | 12 months | 18 months | |
| Portfolio Result Overview (€) | (Unaudited) | (Audited) | (Audited) |
| Type: | |||
| PPP | 6 643 062 | 4 211 613 | 8 337 023 |
| Energy | 5 108 970 | 5 404 559 | 7 538 188 |
| Demand Based | 1 669 680 | 3 099 709 | 1 025 508 |
| Total | 13 421 712 | 12 715 880 | 16 900 718 |
| Size: | |||
| top 1 - 3 | 5 240 522 | 2 475 198 | 7 718 139 |
| top 4 - 7 | 4 558 004 | 4 594 310 | 6 471 935 |
| top 8 - 17 | 3 623 186 | 5 646 372 | 2 710 644 |
| Total | 13 421 712 | 12 715 880 | 16 900 718 |
| Geography: | |||
| Belgium | 11 713 611 | 10 733 976 | 15 170 088 |
| the Netherlands | 1 304 129 | 1 844 414 | 1 730 629 |
| Ireland | 403 972 | 137 491 | - |
| Total | 13 421 712 | 12 715 880 | 16 900 718 |
| Investment Instrument: | |||
| Equity | 13 147 071 | 11 760 407 | 14 743 154 |
| Loans | 274 642 | 955 474 | 2 157 564 |
| Total | 13 421 712 | 12 715 880 | 16 900 718 |
The Selling, General and Administrative expenses for the six month period ending 31 December 2017 amount to € 1,406,388.
The evolution of the FMV of the investment portfolio over the period is explained as follows:
| Period ending at: | 31/12/2017 | 30/06/2017 |
|---|---|---|
| (€) | (Unaudited) | (Audited) |
| Opening balance | 177 203 967 | 128 031 244 |
| + Investments | 31 433 339 | 47 515 921 |
| - Repayments from investments | (1 086 250) | (1 428 905) |
| +/- Unrealised gains and losses | 9 129 581 | 2 931 459 |
| +/- Other | 939 553 | 154 248 |
| Closing balance * | 217 620 190 | 177 203 967 |
| Net unrealised gains/losses recorded through P&L over the period |
9 129 581 | 2 931 459 |
* Including Shareholder Loans for a nominal value of: € 92 008 143 (31/12/2017) and € 76 795 027 (30/06/2017)
As at 31 December 2017 the FMV of the investment portfolio amounted to € 217,620,190.
During the reporting period € 31,433,339 was invested in new and existing participations: Storm Flanders, Storm Ireland, Nobelwind, Via A11 and Glasdraad. The acquisition price for TINC's additional participation in Via A11 amounts to circa € 20 million. As a result, the participation in the Via A11 highway increases to approximately 39%. The investment in Glasdraad amounts to circa € 1.5 million and relates to the first cluster project. The total investment commitment for Glasdraad amounts to € 20 million and will be invested in the coming years related to the roll-out of additional cluster projects and through additional capital increases.
The divestments, for an amount of € 1,086,250 are related to repayments of the invested capital. During the reporting period no divestments were made at a profit or a loss.
The remaining amount of € 939,553 is mainly an increase in the short-term receivables resulting from realized income that was due but not yet received at the end of the reporting period.
| participation | Activity | Geography | Voting Rights | Change to 30 June 2017 |
|---|---|---|---|---|
| Berlare Wind | Onshore windfarm | Belgium | 49,00% | 0,00% |
| Bioversneller | Business service centre | Belgium | 50,00% | 0,00% |
| Brabo I | Light rail infrastructure | Belgium | 52,00% | 0,00% |
| Eemplein | Car park facility | the Netherlands | 100,00% | 0,00% |
| Glasdraad | Digital infrastructure | the Netherlands | 100,00% | 100,00% |
| Kreekraksluis | Onshore windfarm | the Netherlands | 43,65% | 0,00% |
| L'Hourgnette | Detention facility | Belgium | 81,00% | 0,00% |
| Lowtide | Solar energy | Belgium | 99,99% | 0,00% |
| Nobelwind | Offshore windfarm | Belgium | 0,00% | 0,00% |
| Northwind | Offshore windfarm | Belgium | 0,00% | 0,00% |
| Princess Beatrix Lock | Lock complex | the Netherlands | 3,75% | 0,00% |
| Réseau Eqso | Care facilities | Belgium | n/a | n/a |
| Solar Finance | Solar energy | Belgium | 87,43% | 0,00% |
| Storm Flanders | Onshore windfarm | Belgium | 39,47% | 0,00% |
| Storm Ireland | Onshore windfarm | Ireland | 99,99% | 0,00% |
| Via A11 | Road infrastructure | Belgium | 39,06% | 15,39% |
| Via R4 Gent | Road infrastructure | Belgium | 74,99% | 0,00% |
Remark that the closing of Réseau Eqso has occurred after 31 December, 2017. Hence, there were no voting rights yet at the end of the reporting period.
TINC applies the following hierarchy for determining and disclosing the fair value of financial instruments, by valuation technique.
All participations of TINC are considered level 3 in the fair value hierarchy. All participations in level 3, with the exception of Glasdraad and Réseau Eqso, are valued using a discounted cash flow methodology whereby future cash flows which are expected to be received by TINC from its participations are discounted at a market discount rate. This valuation technique has been consistently applied to every investment. In case of Glasdraad, the investment is valued at the transaction value. As at 31 December 2017 Réseau Eqso was signed but not yet closed and therefore not valued in the portfolio as per 31 December 2017.
Projected future cash flows to TINC from each participation are generated through detailed project-specific financial models, including long-term projections of gross revenues, operating expenses, debt service obligations and taxes. The expected cash flows to TINC are often sustainable as the gross revenues within the participations are often based on long term contracts, a regulated environment or a strategic position of the infrastructure. The expected cash flows to TINC are partially based on management estimation, relating to both general assumptions applied across all participations and to specific assumptions applicable for a single participation or a limited group of participations.
TINC defines the following classes of investments:
Revenues in PPP participations are availability based. Revenues in Energy participations are based on production, applicable support regimes and electricity prices in the market. Revenues in Demand based participations are mainly demand driven. Loans to Energy companies, with production based revenues, are less impacted by variations in revenues as there is an equity buffer.
For PPP Infrastructure the effective project term is used, usually between 25 and 35 years. Upon expiration of the project term, the infrastructure reverts to the concession grantor(s)/public partner(s).
For Energy participations typically a life span of 20 to 25 years is assumed. This corresponds to the average term of the usage rights regarding the land on which the infrastructure is erected. Upon expiration of the term, the Energy infrastructure is removed or reverts to the land owner(s).
For Demand Based infrastructure the infrastructure-specific term is used.
The fair market value measurement of the participations of TINC is based on the following key significant 'unobservable inputs' at portfolio level:
The following chart provides an overview of the sum of the cash flows from the participations expected to be received by the Issuer per type of infrastructure over the expected life time of the participations, calculated on December 31, 2017 and June 30, 2017. It does not include the investments in Glasdraad and Réseau Eqso, the Contracted Growth participations (A15 and Princess Beatrix lock), nor any other potential (additional) participation. The higher expected cash flows are
related to new investments (Via A11 and additional Windfarms within the Storm Flanders framework) and to adjusted assumptions (see below); a.o. the adjustments related to the changes in the Belgian tax regime which result in higher expected dividends going forward. The increased cash flow expected in the financial year ending 30 June 2019 (previously 30 June 2018), is mainly related to the bank refinancing of Storm Ireland and the partial repayment of the initial investment amount as a result thereof. The delay is related to the timing needed to effectively upstream the refinanced amount to TINC.
The higher cash flow amount expected in the financial year ending 30 June 2019, is mainly related to the bank refinancing of Storm Ireland which was initially 100% equity funded. The refinancing enables a capital decrease and a partial repayment of the initial investment amount as a result thereof.
Projected future cash flows for each participation are generated through detailed project-specific financial models. The expected cash flows are based on long term contracts, a regulated environment and/or a strategic position. The following assumptions are used, amongst others:
The charts below represent the projected electricity prices calculated on an average basis, weighted by capacity at portfolio level, as used as assumptions in the valuation of 31/12/2017 and 30/06/2017.
Further a balancing discount of 15% is taken into account. The balancing discount is a discount deducted from the market electricity price by the buyer of electricity generated from renewable energy. This discount reflects the uncertain wind and irradiation levels at any given time and therefore the uncertain volume of electricity generated at any time. The buyer has to ensure that the electricity network is balanced at all times, which has a cost.
For solar participations in Flanders the price levels of green certificates range from € 230 to € 450 per green certificate depending on the year of construction of the installation. For the installations within TINC's participations a projected average price of € 309 is used, weighted by capacity and the remaining lifetime of the installations. For onshore wind participations in Belgium the price levels of green certificates range from € 90 to € 93 per green certificate with a weighted average of € 91.9 weighted on capacity.
than the REFIT-price, the government pays to the producer the difference between the sales price and the 'REFIT'-price. This ensures the producer to receive at least the projected price. If the sales price in the market is higher than the REFIT-price, then the producer will receive the higher sales price.
The discount rate is used for discounting the projected future cash flows to calculate the fair market value of the participations. This discount rate reflects the risk inherent to the investment instrument, investment interest, the stage in the life cycle of infrastructure and other relevant risk factors. In determining the discount rate, recent transactions between market participants may give an indication of market conformity.
On 31 December 2017, the weighted average discount rate amounts to 8.19% (as of 30 June 2017: 8.25%). The individual discount rates of the participations vary from 6.82% up to 10.00%.
The evolution of the discount rate is due to a shift in the composition of the Portfolio as a result of investments in both existing and additional participations and divestments and repayments. This changes the weighting of individual participations in the Portfolio. The individual discount rates of the participations were not changed during the reporting period.
The table below sets out the fair market value (FMV) of the portfolio broken down by infrastructure type on 31/12/2017 and 30/06/2017.
| FMV as at 31/12/2017 (€) | PPP | Energy | Demand Based | Total |
|---|---|---|---|---|
| Equity investments (*) | 101 540 305 | 82 262 418 | 22 320 541 | 206 123 263 |
| Weighted average discount rate | 8,01% | 8,25% | 9,02% | 8,20% |
| Investments in loans | - | 11 496 926 | - | 11 496 926 |
| Weighted average discount rate | - | 7,27% | - | 7,27% |
| Fair value with changes processed through profit and loss |
101 540 305 | 93 759 344 | 22 320 541 | 217 620 190 |
| Weighted average discount rate | 8,01% | 8,20% | 9,02% | 8,19% |
| (*) Including Shareholder Loans for a nominal amount outstanding of: |
60 094 317 | 27 075 532 | 4 838 294 | 92 008 143 |
| MV as at 30/06/2017 (€) | PPP | Energy | Demand Based | Total |
|---|---|---|---|---|
| Equity investments (*) | 77 049 076 | 68 896 836 | 19 319 053 | 165 264 965 |
| Weighted average discount rate | 8,01% | 8,25% | 9,01% | 8,29% |
| Investments in loans | 11 939 002 | 11 939 002 | ||
| Weighted average discount rate | 7,68% | 7,68% | ||
| Fair value with changes processed through profit and loss |
77 049 076 | 80 835 837 | 19 319 053 | 177 203 967 |
| Weighted average discount rate | 8,01% | 8,19% | 9,01% | 8,25% |
| (*) Including shareholder loans for a nominal amount outstanding of: |
45 917 175 | 26 303 868 | 4 573 984 | 76 795 027 |
The tables below set out the evolution of the fair market value of the portfolio during the reporting period broken down by infrastructure Type and Investment Instrument.
| Evolution FMV (31/12/17) (€) | PPP | Energy | Demand Based | Total |
|---|---|---|---|---|
| Equity investments | ||||
| Opening balance (30/06/2017) | 77 049 077 | 68 896 836 | 19 319 053 | 165 264 966 |
| + Investments | 19 439 886 | 10 443 848 | 1 426 185 | 31 309 919 |
| - Divestments | (142 327) | (616 379) | - | (758 706) |
| +/- Unrealised gains and losses | 4 641 395 | 3 402 613 | 1 310 992 | 9 355 000 |
| +/- Other | 552 274 | 135 500 | 264 311 | 952 085 |
| Closing balance (31/12/2017) | 101 540 305 | 82 262 418 | 22 320 541 | 206 123 264 |
| Investments in loans | ||||
| Opening balance (30/06/2017) | - | 11 939 001 | - | 11 939 001 |
| + Investments | - | 123 420 | - | 123 420 |
| - Divestments | - | (327 545) | - | (327 545) |
| +/- Unrealised gains and losses | - | (225 419) | - | (225 419) |
| +/- Other | - | (12 532) | - | (12 532) |
| Closing balance (31/12/2017) | - | 11 496 926 | - | 11 496 926 |
| Portfolio | ||||
| Opening balance (30/06/2017) | 77 049 077 | 80 835 837 | 19 319 053 | 177 203 967 |
| + Investments | 19 439 886 | 10 567 268 | 1 426 185 | 31 433 339 |
| - Divestments | (142 327) | (943 924) | - | (1 086 250) |
| +/- Unrealised gains and losses | 4 641 395 | 3 177 194 | 1 310 992 | 9 129 581 |
| +/- Other | 552 274 | 122 968 | 264 311 | 939 553 |
| Closing balance (31/12/2017) | 101 540 305 | 93 759 344 | 22 320 541 | 217 620 190 |
| Evolution FMV (30/06/17) (€) | PPP | Energy | Demand Based | Total |
|---|---|---|---|---|
| Equity investments | ||||
| Opening balance (30/06/2016) | 48 601 709 | 48 889 312 | 17 961 451 | 115 452 472 |
| + Investments | 27 635 587 | 19 650 275 | - | 47 285 862 |
| - Divestments | (73 096) | (450 719) | (250 000) | (773 816) |
| +/- Unrealised gains and losses | 888 724 | 371 778 | 1 745 455 | 3 005 956 |
| +/- Other | (3 848) | 436 190 | (137 853) | 294 489 |
| Closing balance (30/06/2017) | 77 049 076 | 68 896 836 | 19 319 053 | 165 264 965 |
| Investments in loans | ||||
| Opening balance (30/06/2016) | 12 578 772 | 12 578 772 | ||
| + Investments | 230 059 230 059 |
|||
| - Divestments | (655 090) | (655 090) | ||
| +/- Unrealised gains and losses | (74 499) | (74 499) | ||
| +/- Other | (140 241) | (140 241) | ||
| Closing balance (30/06/2017) | 11 939 002 | 11 939 002 | ||
| Portfolio | ||||
| Opening balance (30/06/2016) | 48 601 709 | 61 468 083 | 17 961 451 | 128 031 244 |
| + Investments | 27 635 587 | 19 880 334 | - | 47 515 921 |
| - Divestments | (73 096) | (1 105 809) | (250 000) | (1 428 905) |
| +/- Unrealised gains and losses | 888 724 | 297 279 | 1 745 455 | 2 931 458 |
| +/- Other | (3 848) | 295 949 | (137 853) | 154 248 |
| Closing balance (30/06/2017) | 77 049 076 | 80 835 838 | 19 319 053 | 177 203 967 |
During the reporting period TINC invested a total amount of € 31,433,339 both in additional participations (Glasdraad) and in existing participations (Via A11, Storm Flanders and Storm Ireland). For the same period TINC received € 1,086,250 of repayments from its participations (Northwind, Storm Flanders, Via R4 Gent, L'hourgnette).
The fair market value of the portfolio has increased by € 40,416,222, or 22.8% compared to 30 June 2017, to € 217,620,190. This increase is the result of investments amounting to € 31,433,339 and repayments amounting to € 1,086,250. The portfolio also increased in value by an amount of 9,129,581. The remaining amount of € 939,553 is mainly an increase in the short-term receivables resulting from realized income that was due but not yet received at the end of the reporting period.
Additional information regarding subordinated loans in the investment portfolio
| Situation as per 31 December 2017 (€) | ||||
|---|---|---|---|---|
| Duration | <1 Year | 1 - 5 Year | > 5 Year | Total |
| 6 899 755 | 8 116 461 | 88 488 853 | 103 505 069 | |
| Applied interest rate | Variable interest |
Fixed interest | Total | |
| - | 103 505 069 | 103 505 069 | ||
| Weighted average interest rate | 8,70% | 8,70% |
| Situation as per 30 June 2017 (€) | ||||
|---|---|---|---|---|
| Duration | <1 Year | 1 - 5 Year | > 5 Year | Total |
| 4.000.678 | 5.049.035 | 79.684.316 | 88.734.029 | |
| Applied interest rate | Variable interest |
Fixed interest |
Total | |
| - | 88.734.029 | 88.734.029 | ||
The subordinated loans outstanding at 31 December 2017 have fixed interest rates and consist of a combination of shareholder loans and loans (not linked to equity).
The interest payments and principal repayments of the subordinated loans are subject to restrictions in the senior loan contracts. Interests are paid periodically. If the available cash flows from the participations are not sufficient, then the agreements foresee a payment in kind (roll up).
Shareholder loans are typically flexible with respect to the principal repayments, but all shareholder loans must be repaid before the expected end of the operational life of the infrastructure.
The loans, which are no shareholder loans, are repaid by applying a fixed repayment schedule. If the available cash flows from the participations are not sufficient, then overdue repayments need to be repaid as soon as possible. The agreed maturity date of a loan is typically several years prior to the expected operational life of the infrastructure in the company that has issued the loan.
The following chart and table show the sensitivity of the fair market value of the portfolio to changes in the Energy prices, Energy production, Inflation and Discount rate. This analysis gives an indication on the sensitivity of the fair market value, while all other variables remain equal. These sensitivities are assumed to be independent of each other. Combined sensitivities are not shown here.
| Sensitivity FMV 31/12/2017 (€) | PPP | Energy | Demand Based | Loans | Total |
|---|---|---|---|---|---|
| Discount Rate | |||||
| Discount rate: -0,5% | ▲ 5 681 543 | ▲ 2 711 874 | ▲ 1 070 645 | ▲ 138 742 | ▲ 9 602 804 |
| Discount rate: +0,5% | ▼ 5 181 102 | ▼ 2 556 424 | ▼ 979 623 | ▼ 134 313 | ▼ 8 851 462 |
| Inflation | |||||
| Inflation: -0,5% | ▼ 565 228 | ▼ 94 161 | ▼ 1 124 044 | - | ▼ 1 783 432 |
| Inflation: +0,5% | ▲ 590 134 | ▲ 60 986 | ▲ 1 208 440 | - | ▲ 1 859 560 |
| Energy Prices | |||||
| Energy Prices: -10% | - | ▼ 2 859 564 | - | - | ▼ 2 859 564 |
| Energy Prices: +10% | - | ▲ 2 318 199 | - | - | ▲ 2 318 199 |
| Energy Production | |||||
| Energy Production: -5% | - | ▼ 6 986 644 | - | - | ▼ 6 986 644 |
| Energy Production: +5% | - | ▲ 6 645 456 | - | - | ▲ 6 645 456 |
Positive, Negative
The net asset value and earnings per share attributable to the shareholders of TINC are as follows:
| Period ending at: | 31/12/2017 | 30/06/2017 | 30/06/2016 |
|---|---|---|---|
| 6 months | 12 months | 18 months | |
| (€) | (Unaudited) | (Audited) | (Audited) |
| Number of outstanding shares | 20 454 546 | 20 454 546 | 13 636 364 |
| Net Asset Value (NAV) | 241 988 505 | 238 792 421 | 157 718 091 |
| NAV per share* | 11,83 | 11,67 | 11,57 |
| Fair Market Value (FMV) | 217 620 190 | 177 203 967 | 128 031 244 |
| FMV per share* | 10,64 | 8,66 | 9,39 |
| Net cash | 21 442 995 | 58 670 359 | 28 327 665 |
| Net cash per share* | 1,05 | 2,87 | 2,08 |
| Deferred taxes | 1 384 710 | 1 876 591 | 1 804 319 |
| Deferred taxes per share* | 0,07 | 0,09 | 0,13 |
| Other amounts receivable & payable | 1 540 610 | 1 041 504 | 78 169 |
| Other amounts receivable & payable per share* | 0,08 | 0,05 | 0,01 |
| Net profit/Profit | 11 972 056 | 10 685 539 | 11 771 588 |
| Earnings per share* | 0,59 | 0,52 | 0,86 |
* Calculated on the basis of outstanding shares at the end of the relevant period
The net profit per share for the period between 1/7/17 - 31/12/17 amounts to € 0.59. This amount is calculated on the basis of the total shares outstanding on December 31, 2017.
On 25 October 2017 a dividend related to the past financial year (ended 30 June 2017) was paid in the amount of € 8,284,091 or 78% of Net Profit of the year ended 30 June 2017. This amount corresponds to € 0.48 per share for the 13,636,364 shares that were outstanding during the entire financial year (a total amount of € 6,375,000) and € 0.255 per share for the 6,818,182 newly issued shares in December 2016.
Commitments to participations (Storm Flanders, Storm Ireland, Via A11, Princess Beatrix Lock, Glasdraad, Réseau Eqso) and related funding obligations of the Issuer to participations, will be invested in accordance with contractual provisions. These commitments have increased during the reporting period mainly as a result of the investment commitments to Glasdraad and Réseau Eqso.
Commitments to contracted participations (being the Contracted Growth Investments) and related funding obligations will be invested in accordance with the future acquisition of contracted new additional participations (A15 and an additional participation in Princess Beatrix lock).
On 31 December 2017, the total cash commitment to participations and Contracted Growth Investments of € 75,630,337 consists of € 61,552,371 equity and € 14,307,966 shareholder loans.
| Period ending at (€): | 31/12/2017 | 30/06/2017 |
|---|---|---|
| 1. Cash commitments to participations | 58 630 170 | 16 117 953 |
| 2. Cash commitments to contracted participations | 17 230 167 | 17 230 167 |
| Total | 75 860 337 | 33 348 120 |
| 1. Cash commitments equity | 61 552 371 | 17 504 856 |
| 2. Cash commitments shareholder loans | 14 307 966 | 15 719 844 |
| 3. Cash commitments loans | - | 123 420 |
| Total | 75 860 337 | 33 348 120 |
Except for transactions in execution of the core activity of TINC as an investment entity (i.e. providing equity and debt financing), no new transactions with related parties have taken place during the reporting period which have a material impact on the results of TINC. Also no changes have occurred to the transactions with related parties as set forth in the Annual report which have a material impact on the financial position or results of TINC.
After the end of the reporting period, the Issuer invested € 27.8 million in existing participation Via A11 and for the acquisition of the participation in Réseau Eqso. The Issuer funded these investments through a combination of available cash and a € 6 million draw-down under the existing credit facilities provided by KBC and Belfius.
Report of the statutory auditor to the shareholders of TINC Comm. VA on the review of the interim condensed consolidated financial statements as of 31 December 2017 and for the 6 month period then ended
We have reviewed the accompanying interim condensed consolidated statement of financial position of TINC Comm. VA (the "Company"), and its subsidiaries as at 31 December 2017 and the related interim condensed consolidated statements of income, comprehensive income, changes in equity and cash flows for the 6 month period then ended, and explanatory notes, collectively, the "Interim Condensed Consolidated Financial Statements". The board of directors is responsible for the preparation and presentation of these Interim Condensed Consolidated Financial Statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting as adopted by the European Union. Our responsibility is to express a conclusion on these Interim Condensed Consolidated Financial Statements based on our review.
We conducted our review in accordance the International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying Interim Condensed Consolidated Financial Statements are not prepared, in all material aspects, in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union.
Antwerp, 6 March 2018
Ernst & Young Bedrijfsrevisoren BCVBA Statutory auditor represented by
Ömer Turna Partner*
* Acting on behalf of a BVBA/SPRL
Ref: 18OT0151
To the best of our knowledge:
On behalf of the company The Board
Contact: Manu Vandenbulcke, CEO TINC T +32 3 290 21 73 – [email protected] Bruno Laforce, Investor Relations TINC T +32 3 290 21 73 – [email protected]
TINC is a listed investment company that participates in companies that realise and operate infrastructure. TINC holds a diversified investment portfolio of participations in public private partnerships, energy and demand based infrastructure, located in Belgium, the Netherlands and Ireland. This investment portfolio generates cash flows of a long term sustainable nature, which form the basis for TINC's dividend policy.
For more information please visit www.tincinvest.com.
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