Interim Management Statement

RNS Number : 2604X

BBGI SICAV S.A.

18 November 2014

 



18 November 2014

BBGI SICAV S.A.

Interim Management Statement

BBGI SICAV S.A. ('BBGI' or the 'Company'), the listed global infrastructure investment company, is issuing this Interim Management Statement ('IMS') in accordance with the Law of 11 January 2008 on transparency requirements for issuers of securities (the Transparency Law), Article 5. Any reference to the Company or BBGI below refers also to its subsidiaries (where applicable). This statement relates to the period from 1 July 2014 to 17 November 2014.

Highlights

·      Portfolio performance and cash receipts slightly in excess of the business plan and underlying financial models.

·      In July 2014, the Company completed a follow-on acquisition of a minority interest in the Mersey Care Mental Health Hospital project ("Mersey Care") in the UK.

·      BBGI is part of a consortium which, in October 2014, was shortlisted through to the Request for Proposals stage of the North Commuter Parkway and Traffic Bridge Project, a primary P3 development in the city of Saskatoon, Canada.

·      On 29 August 2014, the Company declared an interim dividend for the financial period ended 30 June 2014 of 2.88 pence per share, representing a revised target of 5.76 pence per share p.a. or an increase of 4.7% on the previous target dividend payment of 5.5 pence per share p.a.

·      The net effect of foreign exchange movements on Investment Basis NAV ("NAV") from 1 July to 17 November 2014 was an increase of approximately £4.7 million.

·      The Company's shares continue to trade at a premium to 30 June 2014 NAV (ex-dividend), and as at 14 November 2014, the premium was 21.14%.

·      Total Shareholder return since listing in December 2011 to 14 November 2014 of 42.95%.

·      The Company has received authorisation as an internally managed alternative investment fund ("AIF") from the Commission de Surveillance du Secteur Financier ("CSSF"), taking effect from 7 October 2014.

Portfolio

BBGI's existing portfolio comprises 35 projects spread across roads, education, healthcare and justice. All the projects in BBGI's portfolio are supported by contracted, government-backed revenue streams, with inflation protection characteristics. The portfolio analysis below is based on the existing portfolio value as at 30 June 2014 adjusted for the purchase price of subsequent acquisitions and foreign exchange movements. 

The portfolio currently has the following estimated sector, geographical and project status split:

·  sector split: 45% Roads, 15% Justice, 21% Health, 16% Education and 3% other assets

·  geographical split: 39% UK, 30% Canada, 16% Australia, 11% Continental Europe and 4% USA

·  status split: 84% operational, 9% early stage construction, 7% late stage construction¹

Dividends

On 28 August 2014, the Company approved an interim dividend of 2.88 pence per share which was paid on 2 October 2014.  Payment of this interim dividend is consistent with the Company's revised target dividend payment of at least 5.76 pence per share p.a. This revised target represents an increase of 4.7% on the previous target dividend payment of 5.5 pence per share p.a.

Asset Performance

The existing portfolio of projects continues to perform well with no notable exceptions. Cash flows generated from the projects in the period are slightly in excess of project budgets and management's expectations.

Valuation of the Portfolio

The Company reports its NAV semi-annually when it publishes results for the half and full year periods ending in June and December. The Company, in its Interim Management Statement, also provides guidance in terms of the impact of foreign exchange movements in the period on the NAV.

Over the period from 1 July 2014 to 17 November 2014 there has been an appreciation in the value of GBP against the EUR and NOK, and a depreciation against AUD, CAD and USD. The overall impact on the NAV is an increase of approximately £4.7 million.

Acquisitions

In July 2014, BBGI announced that it had completed the acquisition of a further 12.5% of the equity and 10% of the sub-debt interest in Mersey Care in the UK from GB Partnerships Investments Limited. BBGI now owns 76.2% of the equity and 80.0% of the sub-debt in Mersey Care.

Balance Sheet

As at 17 November 2014, the Company has approximately £21.9 million of cash available for acquisitions, debt servicing, working capital and the payment of distributions, representing approximately 4.7% of the net assets of the Company at 30 June 2014 adjusted for foreign exchange movements in the period.

Debt Facility

The Company has in place a £35 million corporate debt facility from RBS, NAB and KfW. The facility will expire in July 2015. The credit facility can be used to finance acquisitions, to provide guarantees to support future subscription obligations and for working capital purposes. As at 17 November 2014, £7.8 million was available to be drawn down.

The Management Board is currently in advanced negotiations with banks regarding a refinancing and increase of the Company's £35 million corporate debt facility to up to £80 million with a corresponding extension of the final maturity by 3 years. The refinancing is expected to conclude in Q4 2014.

Compliance

In October 2014, the CSSF granted the Company authorisation as an internally managed AIF. With effect from 7 October 2014, the Company is now authorised to act as its own AIF manager. The Company complies with the Luxembourg law of 12 July 2013 on AIF managers which implements the EU Alternative Investment Fund Managers Directive (the "AIFMD") into Luxembourg law.

Outlook and Investment Opportunities

The Supervisory Board and Management Board are pleased to report that the portfolio of assets continues to perform well, and are confident of the Company's ability to deliver predictable dividends to shareholders.

BBGI is part of a consortium that was shortlisted for the North Commuter Parkway and Traffic Bridge Project, a primary P3 development in the city of Saskatoon, Canada. Three teams have been shortlisted from seven applicants. This represents an exciting opportunity for BBGI and could provide an attractive alternative to only acquiring assets in the secondary market. BBGI intends to pursue the strategy further and will selectively consider development opportunities so long as, in aggregate, construction assets remain below 25% of the portfolio and they do not compromise the Company's ability to satisfy its dividend targets.

The secondary market for social and transport infrastructure has continued to remain very competitive with continued upward pressure on pricing evidenced by the trend in secondary market transactions. As a result, discount rates are expected to continue to tighten in the sector with an expected corresponding positive effect on the valuation of our existing assets.

BBGI will continue to follow a path of disciplined growth, will be selective and surgical in its approach and may buy assets on an opportunistic basis.  Following this principle, BBGI has declined to bid on several secondary market transactions as they were not expected to be accretive for shareholders. We believe that this approach is in the best interest of shareholders and ultimately the Company avoids incurring costs related to unsuccessful bids. Due to the internal management structure, the interests of the management of BBGI and its shareholders are aligned and management is not incentivised to grow the Company to the detriment of its return targets.

Note

Cautionary statement:

This IMS aims to give an indication of material events and transactions that have taken place during the period from 1 July 2014 to 17 November 2014 and their impact on the financial position of the Company. These indications reflect BBGI's current views and are subject to a number of risks and uncertainties and could change. Factors which could cause or contribute to such differences include, but are not limited to, general economic and market conditions and specific factors affecting the financial prospects or performance of individual investments within the portfolio of BBGI.

This IMS contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and BBGI's actions to differ materially from those expressed or implied in the forward-looking statements.

This IMS has been prepared solely to provide additional information to shareholders as a body to meet the requirements of the Law of 11 January 2008 on transparency requirements for issuers of securities (the Transparency Law), Article 5 and this IMS should not be relied on by any other party or for any other purpose.

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¹ Construction scheduled to complete in 2014

 

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