TIDMBBGI
RNS Number : 3658P
BBGI SICAV S.A.
31 August 2017
31 August 2017
BBGI SICAV S.A.
('BBGI' or the 'Company')
Interim Results for six months ended 30 June 2017
The information contained within this Announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (Regulation 596/2014). Upon the
publication of this Announcement via a Regulatory Information
Service this inside information is now considered to be in the
public domain.
COMPANY OVERVIEW
BBGI SICAV S.A.
BBGI SICAV S.A. ("BBGI", or the "Company" or, together with its
consolidated subsidiaries, the "Group") is an investment company
incorporated in Luxembourg. The Company was admitted to the London
Stock Exchange ("LSE") in December 2011. BBGI invests in Private
Finance Initiative ("PFI") / Public Private Partnership ("PPP")
infrastructure assets. BBGI's portfolio currently consists of 39
PFI / PPP infrastructure assets diversified by geography and sector
across availability-based road projects and a range of social
infrastructure projects in the UK, Continental Europe, Canada,
Australia and the USA. The Company is the only internally managed
London-listed PPP Investment Company.
The Company is incorporated in Luxembourg in the form of a
public limited company (société anonyme) with variable share
capital (société d'investissement à capital variable, or "SICAV")
and regulated by the Commission de Surveillance du Secteur
Financier ("CSSF") under Part II of the Luxembourg Law of 17
December 2010 on undertakings for collective investments with an
indefinite life. The Company was admitted to the official list of
the UK Listing Authority (premium listing, closed-ended investment
fund) and to trading on the main market of the London Stock
Exchange on 21 December 2011.
BBGI AT A GLANCE
-- Market capitalisation of GBP688.6(1) million at 30 June 2017.
-- Global, geographically diversified portfolio of 39 high-quality availability-based(2) PPP/PFI infrastructure assets with strong yield characteristics, contracted government-backed revenue streams, inflation-linked returns and long-term contracts.
-- 97% of the assets by value are operational assets with a
focus on availability-based roads and bridges and social
infrastructure.
-- 100% low risk availability-based PPP/PFI infrastructure
assets. No demand-based assets and no regulated assets.
-- 42% of the assets by value are located in the UK, 27% in
Canada, 18% in Australia, 8% in Continental Europe and 5% in the
United States.
-- 42% of assets by value are availability-based roads and
bridges, while the remainder are social infrastructure assets,
principally schools, hospitals and prisons.
-- Stable cash flows with inflation protection characteristics.
-- Potential value upside from active management of the portfolio.
-- A revised dividend target of 6.50 pence per share for the year ending 31 December 2017(3) .
-- 7%-8% target IRR on the GBP1.00 IPO issue price.
-- Internally managed fund with an experienced PPP/PFI in-house management team.
-- Strong governance model and alignment of interests between
the management team and shareholders. In addition to a base
remuneration, the management team is remunerated by long and
short-term incentive plans that prioritise total shareholder
returns and net asset value per share growth, and is not
compensated based on assets under management.
-- The ordinary shares are eligible for inclusion in PEPs and
ISAs (subject to applicable subscription limits), provided they
have been acquired by purchase in the market. The ordinary shares
are also permissible assets for SIPPs.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
For the six months ended 30 June 2017
-- Investment Basis NAV per share of 128.7 pence as at 30 June
2017 (126.1 pence - 31 December 2016), which represents an increase
of 2.1%.
-- An increase in Net Asset Value ("NAV") on an investment basis
("Investment Basis NAV") to GBP614.4 million as at 30 June 2017
(GBP545.0 million as at 31 December 2016).
-- In April 2017, the Company raised GBP58.5 million through a
placing of new ordinary shares at a price of 136.0 pence per
placing Share, representing a 2.9% discount to the closing
mid-market price on 28 March 2017 of 140.0 pence.
-- The Company signed a strategic agreement with a subsidiary of
SNC-Lavalin Group Inc. to invest in five operational
availability-based PPP assets in Canada with a value of up to
CAD189 million(4) . Furthermore, as part of the transaction BBGI
will benefit from a pipeline agreement which provides a right of
first offer for a robust pipeline of Canadian availability-based
PPP projects currently under construction.
-- The Company paid a 2016 final dividend of 3.125 pence per
share on 28 June 2017, resulting in a total dividend payment of
6.25 pence per share for the year ended 31 December 2016, which was
in line with target.
-- The Board is pleased to announce that it has increased its
2017 dividend target from 6.25 pence per share to 6.50 pence per
share, which represents an increase of 4.0%. The Company declared
today a 2017 interim dividend of 3.25 pence per share, which will
be paid on 25 October 2017.
-- Total Shareholder Return ("TSR") in the period from 31
December 2016 to 30 June 2017 was 7.2% whilst TSR since listing in
December 2011 to 30 June 2017 was 83.1%(5) , equating to a compound
annual growth rate ("CAGR")(6) of 11.6%.
-- An annualised Ongoing Charge Percentage(7) of 0.98% (0.98% at
31 December 2016), which we believe continues to be the lowest in
the UK listed infrastructure sector.
-- Portfolio performance and cash receipts were ahead of the
business plan and underlying financial models.
-- At 30 June 2017, the Group had a total cash balance of
GBP29.4 million on an Investment Basis and had no cash
borrowings(8) . The Company increased the total commitment under
the corporate credit facility from GBP110 million to GBP180 million
with effect from 16 June 2017 by utilising the accordion provision.
The credit facility terms remain unchanged.
-- International Financial Reporting Standards ("IFRS") NAV of
GBP610.1 million as at 30 June 2017 (GBP538.8 million - 31 December
2016).
-- Net profit under IFRS of GBP25.3 million for the period ended
30 June 2017 (GBP46.1 million - 30 June 2016).
-- The Company continues to build an attractive pipeline of
primary investment opportunities in new PPP developments and
currently has live bids underway in Australia, North America and
Europe. Primary opportunities continue to be relatively attractive
as there are greater barriers to entry for new market entrants and
BBGI can benefit from its development credentials and
portfolio.
CHAIRMAN'S STATEMENT
Dear Shareholder,
I am pleased to present the Interim Report for the half year to
30 June 2017. Your Company has, again, performed very solidly
during this period with good financial performance from the 39
project assets that we owned at the end of last year as well as
signing agreements for further investment in the second half of
this year and beyond.
The financial performance is set out in detail in the Management
Report but I would draw your attention to a further increase of 2.6
pence (2.1%) in the NAV per share as well as the dividend paid in
June of 3.125 pence per share. Your Company has also resolved to
increase the target dividend for the current year by 4.0% to 6.5
pence per share and will pay an interim dividend of 3.25 pence per
share in October 2017.
The secondary market for infrastructure assets has remained
highly competitive with investors continuing to be attracted to its
fundamental characteristic of asset-backed income secured by strong
counter-parties. This is especially true in the infrastructure sub
sector of PPP/PFI in which the Company operates. Nonetheless the
Company's global focus as well as providing strong diversification
also allows us to look across multiple countries, and we were
delighted to secure a strategic partnership with SNC-Lavalin Group
Inc. in Canada in June. This partnership not only provides us with
an investment opportunity of up to CAD189 million (approx. GBP112
million) in high quality operational infrastructure assets but also
access to a strong pipeline of further investments on a first offer
basis. All of the existing and new assets are availability-based
with the Company avoiding a style drift towards the riskier
demand-based and/or regulated assets. BBGI is now the only listed
infrastructure investment company with a portfolio of assets that
are 100% availability-based.
In April your Company successfully raised an additional GBP58.5
million of new capital through the placing of new ordinary shares.
We now have cash balances of GBP29.4 million which, together with
the revolving credit facility, will enable full settlement with
SNC-Lavalin and leave sufficient capacity available for further
acquisitions and investment, particularly in the primary market
where we continue to see attractive opportunities.
Management has worked diligently to bring about these results
and the Supervisory Board was pleased that our shareholders
recognised this by unanimously supporting the continuation
vote.
The outlook for the world both politically and economically
remains volatile. Nonetheless, your Company has consistently
invested in availability-based infrastructure projects where the
counterparty is a government or a government supported
organisation. The resultant predictable and assured cash flows give
us confidence in the future performance of the portfolio.
David Richardson
Chairman
BBGI SICAV S.A.
31 August 2017
INVESTMENT PORTFOLIO
Portfolio Summary
Equity Equity
Stake Stake
Roads and bridges Education
E18 Motorway, (Norway) 100.00% Bedford Schools, (UK) 100.00%
Golden Ears Bridge, 100.00% Belfast Metropolitan 100.00%
(Canada) College, (UK)
Clackmannanshire Schools, 100.00%
(UK)
Kicking Horse Canyon,
(Canada) 50.00% Cologne Schools, (Germany) 50.00%
Cologne-Rodenkirchen
M1 Westlink, (UK) 100.00% School, (Germany) 50.00%
Coventry Schools,
M80 Motorway, (UK) 50.00% (UK) 100.00%
Mersey Gateway Bridge, East Down Colleges,
(UK) 37.50% (UK) 66.67%
North Commuter Parkway,
(Canada) 50.00%
Northeast Stoney Trail, Frankfurt Schools,
(Canada) 100.00% (Germany) 50.00%
Northwest Anthony
Henday Drive, (Canada) 50.00% Kent Schools, (UK) 50.00%
Ohio River Bridges/East
End Crossing, (USA) 33.33% Lagan College, (UK) 100.00%
Lisburn College, (UK) 100.00%
North West Regional
College, (UK) 100.00%
Scottish Borders Schools,
Healthcare (UK) 100.00%
Barking & Havering
Clinics, (UK) 60.00% Tor Bank School, (UK) 100.00%
North London Estates
Partnerships, (UK)(9) 53.33%
Gloucester Royal Hospital, 50.00% Justice
(UK)
Kelowna & Vernon Hospitals,
(Canada) 50.00% Burg Prison, (Germany) 90.00%
Northern Territory
Liverpool & Sefton Secure Facilities,
Clinics (LIFT), (UK)(10) 53.33% (Australia) 100.00%
Mersey Care Mental Victoria Prisons,
Health Hospital, (UK)(11) 76.20% (Australia) 100.00%
Royal Women's Hospital, Avon & Somerset Police
(Australia) 100.00% Headquarters, (UK) 100.00%
Women's College Hospital,
(Canada) 100.00%
Other
Fürst Wrede Military
Base, (Germany) 50.00%
Stoke-on-Trent & Staffordshire
Fire and Rescue Service,
(UK) 85.00%
Unna Administrative
Centre, (Germany)(12) 44.10%
============================= ======== =============================== =========
As at 30 June 2017, BBGI's assets consisted of interests in 39
high-quality, availability-based, PPP/PFI infrastructure assets.
The assets, in the roads and bridges, healthcare, education,
justice and other services sectors, are located in Australia,
Canada, Continental Europe, the UK and the U.S.; 97% of the assets
by value are operational, 0% are in early-stage construction(13) ,
3% are in late-stage construction and expected to become
operational before the end of 2017.
BBGI has equity and subordinated debt subscription obligations
in Mersey Gateway Bridge ("MGB") and in North Commuter Parkway
("NCP"), collectively amounting to approximately GBP24 million. The
Company paid the subscription obligations for MGB into a cash
collateral account during the period, which resulted in the
cancellation of the supporting letter of credit. The NCP
subscription obligations, which continue to be supported by a
letter of credit, are due for payment upon the scheduled
construction completion in H2 2018.
The concessions to project entities in the portfolio are granted
predominantly by a variety of public sector clients or entities,
which are government backed. All project entities in the portfolio
are located in countries which are highly rated (Aa1/AA for the UK;
Aaa/AAA for Australia, Canada, Germany and Norway; Aaa/AA+ for the
U.S.) by Moody's and Standard & Poor's, respectively.
PORTFOLIO BREAKDOWN at 30 June 2017
Geography 30-Jun-17
-------------- ---------
UK 42%
Canada 27%
Australia 18%
Cont. Europe 8%
USA 5%
Total 100%
-------------- ---------
Global portfolio with 39 assets; all located in AAA and AA rated
countries
Sector 30-Jun-17
----------------- ---------
Roads & Bridges 42%
Justice 21%
Health 20%
Education 15%
Other 2%
Total 100%
----------------- ---------
Diversified sector exposure with a bias towards availability
roads and bridges
Project Status 30-Jun-17
-------------------------- ---------
Operational 97%
Late-stage construction 3%
Early-stage construction 0%
Total 100%
-------------------------- ---------
Modest construction exposure provides opportunity for NAV growth
as projects become operational. Construction assets are scheduled
to become operational in H2 2017 and H2 2018
Concession length 30-Jun-17
-------------------------- ---------
>10 years and <=20 years 34%
>20 years and <=25 years 33%
>25 years 33%
Total 100%
-------------------------- ---------
Weighted average concession life is 22.3 years and weighted
average debt life is 18.8 years
Revenue type 30-Jun-17
-------------------------- ---------
Availability 100%
-------------------------- ---------
Total 100%
-------------------------- ---------
100% availability-based income; no
demand or regulated asset risk
Top 5 projects 30-Jun-17
-------------------------- ---------
Golden Ears Bridge 12%
Northern Territory 11%
Victoria Prisons 6%
M80 Motorway 6%
Women's College Hospital 5%
Other projects 60%
Total 100%
-------------------------- ---------
Well-diversified portfolio with no major single asset
exposure
30-Jun-17
Project stake
---------------- ---------
>=75% 62%
>=50% and <75% 30%
<50% 8%
Total 100%
---------------- ---------
92% of portfolio owned 50% or more
PRO FORMA PORTFOLIO BREAKDOWN (assuming completion of the
SNC-Lavalin acquisition)(14)
Geography 30-Jun-17
-------------- ---------
Canada 38%
UK 35%
Australia 16%
Cont. Europe 7%
USA 4%
Total 100%
-------------- ---------
Global portfolio with 44 assets; all located in AAA and AA rated
countries
Sector 30-Jun-17
----------- ---------
Transport 43%
Health 24%
Justice 18%
Education 13%
Other 2%
Total 100%
----------- ---------
Diversified sector exposure with a bias towards availability
transport assets
Project Status 30-Jun-17
-------------------------- ---------
Operational 98%
Late-stage construction 2%
Early-stage construction 0%
Total 100%
-------------------------- ---------
Modest construction exposure provides opportunity for NAV growth
as projects become operational. Construction assets are scheduled
to become operational in H2 2017 and H2 2018
Revenue type 30-Jun-17
---------------------- -------------
Availability 100%
---------------------- -------------
Total 100%
---------------------- -------------
100% availability based income; no
demand or regulated asset risk
Concession length 30-Jun-17
-------------------------- ---------
>10 years and <=20 years 32%
>20 years and <=25 years 32%
>25 years 36%
Total 100%
-------------------------- ---------
Weighted average concession life is 22.5 years and weighted
average debt life is 19.3 years
Project stake 30-Jun-17
---------------- ---------
>=75% 57%
>=50% and <75% 25%
<50% 18%
Total 100%
---------------- ---------
82% of portfolio owned 50% or more
REPORT OF THE MANAGEMENT BOARD
BUSINESS REVIEW
We are pleased to report another successful six months for the
Company in the period to 30 June 2017. The Company's portfolio of
investments has performed well in the first half of the year, with
cash flows ahead of the business plan. During the period, the
investment portfolio has enjoyed an up-lift in valuation because of
continued active management, disciplined cost control and the
continued strong market demand for PPP/PFI infrastructure assets.
Furthermore the Company has been particularly active in pursuing
opportunities in both the primary and secondary markets.
In light of the continued strong portfolio performance, the
Board is pleased to announce that it has resolved to increase its
2017 dividend target from 6.25 pence per share to 6.50 pence per
share, which represents an increase of 4.0% and aligns with the
Company's aim to increase progressively the dividend target over
the longer term. As a result, the Company will pay an interim
dividend of 3.25 pence per share on 25 October 2017.
Key Performance Indicators ("KPIs")
31 Dec 31 31 31 Dec 30 June Target
13 Dec Dec 16 17
14 15
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Dividends declared 5.50 5.76 6.00 6.25 3.25 Declared:
for the year pence pence pence pence pence 2013: 5.50 pence
/ half year per per per per per 2014: 5.76 pence
share share share share share 2015: 6.00 pence
interim 2016: 6.25 pence
dividend Target:
2017: 6.50 pence
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Investment GBP449.25m GBP465.29m GBP479.84m GBP545.0m GBP614.4m Stable growth
Basis NAV
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Growth in Investment
Basis NAV per Stable and consistent
share in reporting NAV per share
period 2.04% 3.49% 2.05% 13.10% 2.07% growth
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Total Shareholder
return in year
/ period to
date
(share price 7% to 8% on the
plus dividends GBP1 IPO issue
per share) 15.7% 10.79% 8.69% 11.20% 7.2%(15) price
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Total Shareholder
return since
listing in
December 2011(16)
(share price 7% to 8% per annum
plus dividends on the GBP1 IPO
per share) 29.0% 41.25% 53.53% 70.70% 83.1% issue price
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Seek to minimise
Ongoing Charges ongoing charge
Percentage 1.11% 0.98% 0.96% 0.98% 0.98%(17) over time
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
To reflect the
risk associated
Weighted average with the underlying
discount rate 8.39% 8.21% 7.86% 7.56% 7.48% investments
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Weighted average 24.6 24.2 23.7 22.6 22.3 Maintain / renew
PPP/PFI concession years years years years years the longevity
life of the portfolio
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Weighted average 23.2 21.3 19.2 19.2 18.8 Maintain long-term
portfolio debt years years years years years financing of the
maturity portfolio
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Five largest
investments
as a percentage
of the portfolio Maintain portfolio
by value 51% 40% 41% 42% 40% diversification
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Largest investment 17% 13% 12% 13% 12% To be less than
as a percentage (Golden (Golden (Northern (Golden (Golden 20% at time of
of the portfolio Ears Ears Territory Ears Ears acquisition
by value Bridge) Bridge) Secure Bridge) Bridge)
Facilities)
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Inflation correlation Not Not Approx. Approx. Approx. To maintain a
of the portfolio reported reported 0.50% 0.50% 0.45% strong correlation
(+/- 1%)
----------------------- ----------- ----------- ------------- ---------- ---------- ----------------------
Investment Performance
The infrastructure sector's safe haven status, together with the
attractive yield offered, continues to help maintain the premium to
NAV in the current markets. A key benefit of the BBGI portfolio is
the high-quality cash flows derived from long-term
government-backed availability based contracts. As a result, the
portfolio performance is largely uncorrelated with GDP and other
economic factors that may cause market volatility in other
sectors.
The share price closed at 144.25 pence on 30 June 2017, which
represents a TSR of 7.2% in the reporting period and 83.1% since
listing on 21 December 2011 to 30 June 2017, equating to a CAGR of
11.6% since IPO.
The shares traded strongly throughout the six-month period in a
range from GBP1.36 to GBP1.48, and closed on 30 June 2017 at a
premium to NAV of 12.1%. The Investment Basis NAV per share at 30
June 2017 was 128.7 pence.
Dividends
A final dividend for 2016 was paid on 28 June 2017. Together
with the 2016 interim dividend, which was paid in October 2016, the
total dividend for the year ended 31 December 2016 amounted to 6.25
pence per share.
The Board has today declared a 2017 interim dividend of 3.25
pence per share, which is in line with its increased target of 6.50
pence per share, to be paid on 25 October 2017.
Foreign Exchange
Exchange rates remained relatively stable in the period showing
only minor movements across the currencies to which BBGI is
exposed.
The decrease in portfolio value resulting from foreign exchange
losses during the period ended 30 June 2017 was GBP(3.2) million or
(0.56)% of the 31 December 2016 portfolio value. Refer to the
Valuation section of the Interim Report for further foreign
exchange sensitivity analysis.
Hedging
BBGI is exposed to foreign exchange movements on future
portfolio distributions with major exposures denominated in
Australian dollars (AUD) 18% and Canadian dollars (CAD) 27%. At 30
June 2017, 55% of the portfolio by value had cash flows denominated
in currencies other than Sterling.
The Company seeks to provide foreign exchange protection for
Sterling dividends that it targets to pay on the ordinary shares
over the next four years. In order to reduce the risk of currency
fluctuations and the volatility of returns that may result from
such currency exposure, the Company has implemented a policy of
using forward contracts to hedge a portion of its anticipated
foreign currency cash flows.
While the Company tries to mitigate the impacts of foreign
currency movements on the NAV by hedging a portion of the expected
distributions coming from the portfolio over the next four years,
it would not be economical to seek to immunise in full the
portfolio value against adverse foreign exchange movements.
The Management Board reviews the Company's hedging strategy on
an annual basis. During the reporting period, the Board considered
the possibility of hedging a larger portion of forecast portfolio
distributions within the four-year hedging period. Prior to this
review the Company had been hedging forecast portfolio
distributions on a sliding scale of 100% Year 1, 75% Year 2, 50%
Year 3 and 25% Year 4. Increasing the percentage of forecast
distributions hedged would provide further protection against
adverse exchange rate movements. After a detailed review, the Board
decided to change the hedge coverage to 100% Year 1, 100% Year 2,
100% Year 3 and 75% Year 4. The Board also considered extending the
hedging period out to five or six years. The result of this review
however was that the cost of hedging beyond four years became
progressively more expensive with the Board concluding that the
costs exceeded the benefits.
In July 2017 (post the balance sheet date), the Company entered
into a number of currency forwards, in accordance with its revised
hedging policy. The 30 June 2017 portfolio valuation reflects these
post balance sheet date hedge contracts.
It is the Company's policy not to hedge Euro denominated
portfolio distributions, as it currently forecasts that these cash
flows will continue to be used to cover the Group's running costs
which are largely Euro denominated, thereby creating a natural
hedge.
Acquisitions
In June 2017, the Company signed a strategic agreement with a
subsidiary of SNC-Lavalin Group Inc. (TSX ticker: SNC)
("SNC-Lavalin") to acquire substantial equity interests in five PPP
projects in Canada. All assets are operational and classified as
availability-based under the investment policy of the Company. The
agreed total cash consideration payable for the five initial
project interests is expected to be up to CAD189 million(4) , which
will be funded from existing cash resources and drawings under its
increased credit facility.
SNC-Lavalin, with a market capitalisation of approximately CS$8
billion (approximately GBP4.75 billion), is the largest engineering
company in Canada and is also a leader in the Canadian PPP market
with an extensive portfolio of PPP assets.
Furthermore, as part of the transaction, BBGI will benefit from
a pipeline agreement that provides a right of first offer with
respect to the potential future acquisition of defined interests in
SNC-Lavalin's robust pipeline of Canadian availability-based PPP
projects currently under construction, which is expected to create
additional investment opportunities over the coming years once
these assets become operational.
The acquisition of the equity interests will be implemented via
a partnership structure where SNC-Lavalin will control the general
partner. BBGI expect the acquisition of the interests in the first
four operational assets described below to occur in H2 2017. The
interest in McGill University Health Centre, which is subject to a
number of project-specific conditions precedent being satisfied, is
expected to occur at a later date.
William R. Bennett Bridge is a 2 km corridor that straddles
Okanagan Lake to connect two communities, Kelowna and West Kelowna,
in the interior of British Columbia. The project became operational
in 2008 and the concession runs until 2035. Availability payments
are received from the Province of BC (AAA rated by S&P). BBGI's
interest will be 80% of the project equity.
Canada Line is a 19.5 km automated rail-based rapid transit
service connecting downtown Vancouver with Richmond and the
Vancouver International Airport. The project became operational in
2009 and the concession runs until 2040. Availability payments are
received from Translink (Aa2 rated by Moody's). BBGI's interest
will be 26.7% of the project equity.
Southeast Stoney Trail is a 25 km highway that is part of the
Calgary Ring Road network. The project became operational in 2013
and the concession runs until 2043. Availability payments are
received from the Province of Alberta (AA+ rated by S&P).
BBGI's interest will be 40% of the project equity.
Restigouche Hospital Centre is a 33,500 m(2) hospital with 140
beds located in Campbellton, New Brunswick. The project became
operational in 2013 and the concession runs until 2044.
Availability payments are received from the Province of New
Brunswick (A+ rated by S&P). BBGI's interests will be 80% of
the project equity.
McGill University Health Centre ("MUHC") is a 214,000 m(2)
hospital with 500 private patient rooms located in Montreal,
Quebec. The project became operational in 2014 and the concession
runs until 2044. Availability payments are received from MUHC,
which is rated A (high) by the ratings agency DBRS. BBGI's interest
will be 40% of the project equity.
Following the acquisition Canada will represent 38% of the
Portfolio, the UK 35% and others 27%. Management remain focused on
maintaining a geographically diversified portfolio.
In addition to the above noted transaction, the Company has an
attractive pipeline of potential acquisition opportunities in a
variety of geographies. The Management Board intends to continue to
follow its established principles when pursuing new investment
opportunities, in line with the Company's investment policy.
Financing
At 30 June 2017, the Group had a consolidated cash balance of
GBP29.4 million on an Investment Basis or 4.8% of NAV with no
amounts drawn under the credit facility.
Credit Facility
The Company has a multi-currency Revolving Credit Facility
("RCF") with ING Bank and KfW IPEX-Bank, and in June 2017 increased
the commitment under the accordion tranche provision from GBP110
million to GBP180 million.
The Company uses the RCF primarily to fund acquisitions and to
provide letters of credit for investment obligations with the
intention to repay from time to time through equity fundraisings.
The Company does not use long-term structural gearing. The
borrowing margin is 185 bps over LIBOR. In April, the Company used
approx. GBP45.3 million of placing proceeds to repay the entire
amount drawn under the RCF. At 30 June 2017, the Company had
utilised GBP5.6 million of the RCF to cover letters of credit
leaving GBP174.4 million available for borrowing.
By repaying the RCF, the Company now has additional financial
flexibility to pursue suitable new primary and secondary investment
opportunities as and when they become available.
The term of the RCF is three years, expiring in January 2018.
Management commenced the refinancing process during the reporting
period and are looking to conclude in H2 2017.
Tap Issue
The Company has the ability, without the expense of issuing a
prospectus or holding an EGM, to raise new equity by allotting up
to 10% of its issued share capital in order to finance further
acquisitions(18) .
In April, the Company raised GBP58.5 million through a placing
of 43,039,300 new ordinary shares of no par value. The placing
price was at 136.0 pence per placing Share, representing a 2.9%
discount to the closing mid-market price per Ordinary Share on 28
March 2017 of 140.0 pence. The proceeds of the placing were used to
repay the amounts drawn on the RCF and to part finance the MGB cash
collateral account.
At the Company's EGM in April 2016, the shareholders voted
unanimously in favour of amending the Company's articles in order
to remove the NAV +5% premium limitation imposed when setting the
price of secondary issuances of the same class of shares. This
amendment continues to be subject to the enactment of a new bill
into Luxembourg law. This bill is still going through the
Luxembourg Parliamentary legislative process. While the proposed
legislation is not seen as controversial, it was included as part
of a larger bill which includes more controversial elements. We are
currently working to see if the legislation dealing with the +5%
premium limitation can be considered separately.
Project Financing
The refinancing process for the Royal Women's Hospital ("RWH")
in Melbourne, which commenced in Q3 2016, successfully closed on 3
August 2017. The process offered BBGI an opportunity to further
de-risk the portfolio by opting for a long-term bank financing
solution thereby removing any future refinancing risk. The
increased coverage ratios under this long-term financing solution
required a further equity injection by BBGI of approximately
GBP11.7 million in July 2017. The valuation at 30 June 2017
reflects the new RWH financing terms.
During the reporting period, Management also began the process
of refinancing the long-term amortising debt of the Women's College
Hospital project in Canada. We expect this process to conclude
during H2 2017. Although a refinancing is not obligatory the terms
of the existing debt are such that if it is not refinanced before
July 2019 then under the contractual documents there would be an
increase in the lending margin and a cash sweep in favour of the
lenders, both of which act as an incentive to refinance. Current
expectations are that the refinancing will result in a refinancing
gain which is expected be recognised during the second half of
2017.
Subject to a successful conclusion of the Women's College
Hospital refinancing, then the Northern Territory Secure Facilities
project will be the only remaining project in the BBGI portfolio
with short-term debt in place. All other PPP/PFI projects have
long-term amortising debt in place, which will not require
refinancing.
Management will also actively seek to refinance projects on an
opportunistic basis where there is a possibility that it will
result in an uplift in the project value.
As at 30 June 2017, the weighted average PPP project concession
length remaining was 22.3 years and the weighted average portfolio
debt maturity was 18.8 years. Debt financing at the project level
is structured in a way that does not provide any recourse to the
Company.
Internally Managed
The Company has an experienced internal management team.
Management are incentivised, to maintain and grow the returns to
shareholders. As BBGI has no external manager, there are no fees
paid based on the size of the portfolio and no acquisition
fees.
The ongoing charge percentage is a figure that shows the drag on
performance caused by operational expenses. This figure is expected
to continue to decrease due to economies of scale as the portfolio
increases in size, i.e. the growth in the average net assets is
expected to outpace the growth in the cost of administering those
assets, thereby resulting in a reduction in the ongoing charge
percentage. The annualised Ongoing Charge for the year ending 31
December 2017 is forecast to be 0.98%(19) .
Market Developments
A key theme among investors remains the search for high-quality
income, particularly from asset classes uncorrelated to general
equity market volatility and economic cycles. This has made PPP
infrastructure a very desirable asset class.
In the current market environment, yields on many asset classes,
such as gilts, government bonds and cash deposits, remain at very
low levels. Interest rates have started to increase slightly from
historic lows, with this impacting on infrastructure valuations via
the discount rates used in the discounted cash flow valuation
methodologies, however there continues to be a very strong demand
from both established and new investors in the infrastructure
sector, who are bidding aggressively for PPP assets because of the
attractive risk adjusted returns they generate. Demand for
infrastructure investments continues to exceed supply and is
resulting in continued pressure on pricing. While this continues to
be positive for BBGI's portfolio valuation, it does make it more
challenging to source accretive transactions in the secondary
market.
North America
Canada
The Canadian market continues to deliver an impressive and
transparent pipeline of primary development opportunities within an
environment of strong political support. It also contains an
emerging secondary market. BBGI's recently announced transaction
with SNC-Lavalin is one of the largest secondary transactions in
Canada and is consistent with our previously mentioned theme of
tier 1 contractors wanting to recycle their equity to deploy into
new PPP investment opportunities.
The use of the PPP delivery model is well established throughout
Canada, with over 250 deals reaching financial close. The vast
majority (over 240) have closed since 2004, and the current
pipeline indicates this is poised to increase. The enhancement of
infrastructure through the utilisation of private capital is a
concept that has the firm backing of the Canadian government. The
five most active regions of the country are Ontario, Saskatchewan,
Alberta, British Columbia and Quebec with a number of future
projects announced or planned in a variety of sectors.
BBGI currently has seven PPP projects in Canada. This number is
expected to increase to 12 projects once the aforementioned
transaction with SNC-Lavalin completes. In addition to securing
secondary opportunities, BBGI has been active during the period in
pursuing primary development opportunities in this market and is in
advanced discussions with consortia for a number of PPP projects in
the Canadian market.
We expect to see further activity in the Canadian secondary
market in the coming years as a number of projects come into
operation. Many of the projects developed over the last 3-5 years
had prohibitions on re-sales until after construction completion.
The expectation is that the equity interest in some of these
projects may soon start to trade. BBGI's strong presence in Canada
will ensure we have good exposure to the potential deal flow. BBGI
will also benefit from a pipeline agreement with SNC-Lavalin that
provides a right of first offer with respect to the potential
future acquisition of defined interests in SNC-Lavalin's robust
pipeline of Canadian availability-based PPP projects currently
under construction.
U.S.
The U.S. is one of the largest infrastructure markets globally
in terms of potential, with a substantial requirement for private
investment. Current estimates are that over US$4 trillion in
infrastructure spending will be required in the U.S. by 2020.
The scale of this infrastructure investment requires the
government to look to the private sector to play an increasingly
important role in delivering its critical projects. In response,
most jurisdictions have now introduced specific legislation to
enable PPP investment, with a primary focus on the transport
sector.
Despite its promise, in the past 24 months only about 11 deals
reached financial close with just over US$800 million of equity
invested. We continue to be cautiously optimistic that future
infrastructure spending may exceed recent levels, especially given
that increased infrastructure investment has been a key policy
platform of the Trump administration. In his "America's
Infrastructure First" policy, President Trump pledged to use
"public-private partnerships, and other prudent funding
opportunities" to deliver economic and jobs growth.
BBGI's investment in the Ohio River Bridges ("ORB") PPP project
gives it a very important beachhead in the evolving U.S. market. To
date this is one of a handful of availability-based transport
projects to be delivered in the U.S. using PPP and one of only a
few to reach substantial completion on time and on budget. The
Company is hopeful that the knowledge and exposure gained from the
ORB transaction will help position it favourably for more
opportunities in this developing but important market.
Europe
2016 was a reasonable year for the European PPP market and
current indications suggest that 2017 will be more of the same.
During 2016, the aggregate value of PPP transactions, which reached
financial close in the European market, totalled EUR12 billion; 69
PPP transactions closed, including six large transactions (i.e.
transactions in excess of EUR500 million).
The UK remained the most active market in Europe by number of
projects, with 28 transactions closed in 2016 (compared to 15 in
2015). The UK had a total deal value in excess of GBP3.3
billion.
The UK, post the Brexit referendum, is now in what could be a
prolonged period of political and economic uncertainty. It is
difficult to assess with certainty the impact this environment may
have on the future of UK PPP infrastructure investment. The
recently established National Infrastructure Commission, an
independent body headed by Lord Adonis, provides at least some
comfort that there is long-term public sector thinking as to the
needs of the UK infrastructure sector. Much of the UK pipeline will
focus on the transportation sector.
In second place was France with a value of PPP transactions
closed equal to EUR2.4 billion where two large transactions with
toll or technology risk accounted for almost half of the French PPP
market. Seven countries closed at least two deals and 10 countries
closed at least one PPP transaction in 2016.
In Europe, the transportation sector remained by far the largest
in terms of value. Education is the second most active sector,
followed by Healthcare.
Looking to the future, Germany and the Netherlands are two of
the more promising PPP markets in Europe with primarily new road
projects planned under the PPP model. BBGI currently has six PPP
assets in Germany and is excited about the potential prospects
offered by this market. We believe that synergies from our existing
assets in Germany, and our German and Dutch language skills, will
help us grow in both Germany and the Netherlands.
Another promising PPP market where BBGI is well positioned to
participate in an attractive deal flow is Norway. The Norwegian
Public Road administration has provided information on two road
PPPs it is planning to launch in 2018/19. These are the NOK 9
billion Rv555 motorway and the NOK 7 billion E10/RV 85. We are
watching this market closely and as at the date of this
announcement only three highway projects have been constructed as
PPPs, of which BBGI is the sole owner of the E18 Motorway. There
are other markets within Europe that are showing promise and may
provide potential investment opportunities. BBGI will continue to
monitor these markets and consider opportunities on a selective
basis with a focus on clearly defined infrastructure market
segments at the lower end of the risk spectrum.
Australia & New Zealand
With a mature and continuing PPP market, Australian PPP deal
flow has remained consistent. The need for significant private
investment in the nation's infrastructure is anticipated to result
in the emergence of a variety of innovative funding and financing
models.
Infrastructure Partnerships Australia and BIS Oxford Economics'
latest Australian Infrastructure Metric report, is forecasting an
AUD2.6 billion rise in construction in the transport sector in
2017. Much of the new PPP work will be in New South Wales and the
State of Victoria.
Another promising market is New Zealand. In May 2017, the New
Zealand government released a budget announcing a doubling of its
spending on infrastructure from just over NZ$2 billion (GBP1.1
billion) in 2016-17 to more than NZ$4 billion in 2017-18, with
NZ$11 billion in total to be spent over the next four years.
Market Opportunities
BBGI's investment policy is to invest in infrastructure projects
developed predominantly under PPP or similar procurement
models.
Although BBGI mainly invests in secondary investment
opportunities at the operational phase the Company also considers
secondary investments in construction stage assets. In addition,
the Company participates in PPP projects in the bidding and
development phase (primary investments) and continues to look
proactively for further investment opportunities that meet its
investment criteria and its stated return objectives.
Secondary Investment Activity
As previously mentioned in this report, in June BBGI announced
that the Company signed a strategic agreement with SNC-Lavalin to
acquire substantial equity interests in five PPP projects in
Canada. Furthermore, as part of the transaction, BBGI will benefit
from a pipeline agreement that provides a right of first offer with
respect to the potential future acquisition of defined interests in
SNC-Lavalin's robust pipeline of Canadian availability-based PPP
projects currently under construction. This pipeline is expected to
create additional investment opportunities over the coming years
once the assets become operational.
This transaction is noteworthy for several reasons. BBGI entered
into this transaction on accretive terms. Furthermore, we believe
there are strategic benefits for both parties. SNC-Lavalin will be
able to recycle capital and re-deploy it into new development
assets and BBGI has secured an opportunity to invest in attractive,
de-risked operational assets and has gained access to an attractive
pipeline of future investment and growth opportunities.
Since IPO we have avoided "strategy drift" and have not altered
our investment metrics or relaxed our acquisition criteria in order
to grow. This means that we remain a pure-play PPP investment
company with a specific focus on the area where we as a management
team have deep expertise and understanding. We have not moved up
the risk curve by pursuing demand-based assets, regulated utilities
or economic infrastructure, all of which typically have a higher
risk profile compared to availability-based PPP projects.
Despite a competitive acquisition environment, the Company has
demonstrated it can still grow its PPP portfolio on accretive
terms.
Primary Investment Activity - bidding on new PPP projects
As our portfolio grows, and projects currently in construction
move into their operational phase, we will continue to add
construction exposure to maintain an appropriate mix. As a number
of senior members of our team have extensive experience managing
PPP bids and seeing assets through the construction phase, we
believe some exposure (less than 25%) can be attractive. We see
this as an opportunity to grow the NAV organically over time and
will continue to ensure that the dividend target is not
compromised. The substantial construction completion of the Ohio
River Bridges project in the US in December 2016 once again
demonstrated the value that can be generated by successfully taking
a project from construction to operational phase.
We are continuing to actively build our pipeline of primary
investments to replace those projects that have become
operational.
Primary investment activities involve sourcing and originating,
bidding for and winning new infrastructure development projects,
typically as part of a consortium for PPP projects. Often these
primary PPP bids are led by construction companies that are keen to
secure the opportunity to construct the asset, but may be keen to
have a partner like BBGI for a number of reasons:
-- Consortia are attracted to BBGI because of our extensive
project credentials that can assist with the shortlisting
process;
-- Having a financial partner is a pre-requisite for some
construction companies so they can avoid consolidating the project
company debt onto the balance sheet of the parent company;
-- BBGI's cost of capital is often lower than construction
companies, so involving BBGI can make the bid more competitive;
-- BBGI is a long-term investor which is attractive to
government and government-backed counterparties;
-- BBGI is considered a reliable source of liquidity should a
construction partner decide to sell in the future.
BBGI is currently a short-listed bidder on the following
projects in North America, Australia and Europe:
Gordie Howe International Bridge (Canada/USA): BBGI is a member
of one of three consortia shortlisted to develop proposals for the
Gordie Howe International Bridge with an expected cost in excess of
CAD2 billion. The bridge is a high-profile project that will
connect Michigan and Ontario and will be paid for by the Canadian
federal government. Bid submission is expected in H2 2017.
Outer Suburban Arterial Roads (Australia): BBGI is member of one
of three consortia shortlisted for an AUD1.8 billion PPP project to
upgrade and maintain eight arterial roads in the western suburbs of
Melbourne, Australia. The project is the first of its kind in
Australia and calls for duplication and widening as well as
maintaining 700 km of road lanes between the suburbs of Werribee
and Footscray. It is the first part of the Outer Suburban Arterial
Roads program, and a larger package of motorway and suburban road
upgrades worth AUD6.2 billion (GBP3.8 billion). A bid was submitted
in early August and a decision is expected towards the end of Q3
2017.
MarKaz Marine Barracks (Netherlands): BBGI is a member of one of
three consortia shortlisted for the MarKaz Marine Barrack project
in the Netherlands. The facilities, which will accommodate over
3,000 Marines, will cover a total area of 180,000 m(2) . The
project will include the construction of office spaces, weapon
storage areas, sports facilities, shooting ranges, a helipad,
parking spaces and medical buildings. The naval barracks is
expected to be operational in 2019.
In addition, BBGI is in advanced discussions on various other
transport projects, and is supporting consortia to pursue social
infrastructure projects.
This primary investment activity demonstrates BBGI's ability to
grow the portfolio of infrastructure investments not only by
acquiring operational projects but also by partnering with
construction companies in consortium bids on new PPP projects.
These primary investment opportunities are considered attractive to
the Management Board because they are typically well priced on a
risk-adjusted basis. Nevertheless, each opportunity will be subject
to detailed due diligence on a case-by-case basis. BBGI will
continue to selectively pursue further growth opportunities in both
new and existing assets. Further information on construction risk
can be obtained from the Company's prospectus which is available on
the Company's website.
Although there is no certainty that BBGI and its consortia
partners will be selected as the preferred bidder on any of the
above-mentioned projects, the pipeline is attractive and we aim to
develop it further.
Risks and Uncertainties
The principal risks faced by the Company, and the controls and
strategies used to mitigate those risks, have not materially
changed since those set out in detail in the 31 December 2016
annual report and in the Company's latest prospectus dated 26
November 2013. We expect these risks to remain relevant to the
Company for the next six months of the financial year.
Macroeconomic assumptions
The Management Board uses certain macroeconomic assumptions when
forecasting future cash flows as part of the portfolio valuation
exercise. The Management Board appreciates that such assumptions,
although reviewed by a third-party valuation expert and based on
sound methodologies and latest available market data, are estimates
and as such are not necessarily representative of future economic
outcomes. As a result, the Management Board carries out sensitivity
analysis on these assumptions in order to assess the impact on the
NAV.
Foreign Exchange
Foreign exchange exposure, although an inherent risk of holding
a global portfolio of assets, continues to be closely monitored by
the Management Board. We continue to carry out various stress tests
to assess the Company's ability to pay its target dividend under a
range of scenarios. Refer to the Valuation Section of this report
for further detail and the outcome of these tests. The Group uses
forward currency contracts to partially mitigate this risk. Refer
to the Business Review for more information on the Group's hedging
strategy.
Taxation
BBGI continues to assess the impact, if any, which could result
from the implementation of various national and global tax
developments. In this context the Company is currently assessing
the potential impact that certain tax measures could have on Group
cash flows, most notably: (i) BEPS Action 2: neutralising the
effect of hybrid mismatch arrangements; (ii) the impact of the
latest Luxembourg taxation circular on intra-group financing
activities; and (iii) the expanded Canadian back-to-back loan rules
and their impact on non-resident withholding tax.
BBGI and its advisors will continue to review these developments
and others to assess whether any structural changes are required in
order to minimise the impact, if any, on Group cashflows.
Fire Safety
Immediately following the Grenfell Tower fire tragedy in London
on 14 June 2017, BBGI initiated a survey on its UK portfolio in
order to identify if any of the buildings incorporate the
'Aluminium Composite Material' cladding (ACM) that was used at
Grenfell Tower.
The initial focus was to (i) identify any buildings that met the
trigger heights for investigation as outlined in a letter from the
UK Government's Department for Communities and Local Government to
public sector bodies, and (ii) survey these buildings to ensure
there was no presence of ACM cladding. The initial review
identified one hospital project which meets the trigger height
requirement for investigation. We subsequently engaged an external
fire safety specialist to perform an independent external review of
the hospital and obtained confirmation that the building is
compliant with the applicable Building Regulations and no ACM
cladding was identified.
As a second step, BBGI has also voluntarily initiated a desktop
study in order to identify what cladding materials are used on all
remaining buildings in its UK portfolio. This study is ongoing but
to date we have not identified any instance where ACM cladding is
used.
Counterparty Exposure (Facility Management)
Management continually reviews the potential concentration risk
in respect of facility management contractors. Management has not
identified a concentration risk and therefore remains comfortable
with the current contract allocation.
VALUATION
The Management Board is responsible for carrying out the
fair-market valuation of the Company's investments, which it then
presents to the Supervisory Board. The valuation is carried out on
a six-month basis at 30 June and 31 December each year. An
independent third party reviews the valuation.
The valuation is determined using the discounted cash flow
methodology. The cash flows forecast to be received by the Company
or its subsidiaries, generated by each of the underlying assets and
adjusted as appropriate to reflect the risk and opportunities, are
discounted using project specific discount rates. The valuation
methodology is the same one used for the valuation of the portfolio
in previous reporting periods.
The Company uses the following macroeconomic assumptions for the
cash flows:
Macroeconomic assumptions
End of period 2017 2018-2020 2021 onwards
------------------ --------------- --------------- ---------------
UK
Indexation (%)
(1) 1.75 2.75 2.75
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Corporate
Tax (%) (9) 19.0 19.0 17.0
Canada
Indexation (%) 1.00/1.35 2.00/2.35 2.00/2.35
(1,2)
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Corporate 27.0/26.0/26.5 27.0/26.0/26.5 27.0/26.0/26.5
Tax (%) (3)
GBP/CAD as at
30 June 2017
(4) 1.688 1.688 1.688
Australia
Indexation (%)
(1,5) 1.50 2.50 2.50
Deposit Interest 3.50/4.50 3.50/4.50 3.50/4.50
Rate (%) (6)
SPC Corporate
Tax (%) 30.0 30.0 30.0
GBP/AUD as at
30 June 2017
(4) 1.692 1.692 1.692
Germany
Indexation (%)
(1) 1.00 2.00 2.00
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Corporate
Tax (%) (7) 15.8 15.8 15.8
GBP/EUR as at
30 June 2017
(4) 1.138 1.138 1.138
Norway
Indexation (%)
(1,8) 1.94 2.94 2.94
Deposit Interest
Rate (%) 1.8 1.8 3.5
SPC Corporate
Tax (%) 24.0 24.0 24.0
GBP/NOK as at
30 June 2017
(4) 10.893 10.893 10.893
USA
Indexation (%)
(1,10) 1.50 2.50 2.50
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Federal
Tax (%) 35.0 35.0 35.0
GBP/USD as at
30 June 2017
(4) 1.300 1.300 1.300
(1) The lower 2017 inflation rate is applicable for projects for
which the documentation does not prescribe the actual published
rate, if available, to be used for the next 12 months from the date
of the index being published
(2) All Canadian projects have a long-term 2.0% indexation
factor with the exception of Northeast Stoney Trail and Northwest
Anthony Henday Drive, each of which have a slightly different
indexation factor derived from a basket of regional labour, CPI and
commodity indices
(3) The tax rate is 27% in Alberta and Saskatchewan, 26% in
British Columbia and 26.5% in Ontario
(4) As published on www.oanda.com
(5) Long-term Consumer Price Index 2.50% and Long-term Labour
Price Index 3.50%
(6) Cash on Debt Service Reserve Accounts and Maintenance
Service Reserve Accounts can be invested on a six-month basis. All
other funds are assumed to be deposited on a shorter term
(7) Including Solidarity charge and excluding Trade tax that
varies between communities
(8) Indexation of revenue based on basket of four specific
indices
(9) UK Corporate tax rate to decrease from 19% to 17% in
2020
(10) 80% of ORB indexation factor for revenue is contractually
fixed and is not tied to CPI
Other key inputs and assumptions include:
-- Any deductions or abatements during the operations period are
passed down to subcontractors under contractual arrangements.
-- Cash flows to and from the project companies are received at
the times anticipated.
-- Where the operating costs of the Company or its project
portfolio are fixed by contract, such contracts are performed, and
where such costs are not fixed, they are in line with the
budget.
-- Contractual payments to the project companies remain on track
and are not terminated before their contractual expiry date.
Over the six-month period from 31 December 2016 to 30 June 2017,
the Company's Investment Basis NAV increased from GBP545.0 million
to GBP614.4 million . The increase in NAV per share from 126.1
pence to 128.7 pence or 2.07% is primarily a result of the key
drivers listed below.
Investment Basis NAV movement 31 December 2016 to 30 June
2017
Investment Basis NAV movement GBP million
31 December 2016 to 30 June
2017
------------------------------------------------- -----------------------
Net Asset Value at 31 December
2016 545.0
------------------------------------------------- -----------------------
Add back: other net liabilities
at 31 December 2016 (1) 24.9
------------------------------------------------- -----------------------
Portfolio value at 31 December
2016 569.9
------------------------------------------------- -----------------------
Change in foreign exchange (3.2)
------------------------------------------------- -----------------------
Change in market discount
rate 5.2
------------------------------------------------- -----------------------
Change in macro-economic assumptions
(2) 0.3
------------------------------------------------- -----------------------
Acquisitions/follow-on investments
(3) 17.5
------------------------------------------------- -----------------------
Distributions from projects
(4) (29.6)
------------------------------------------------- -----------------------
Rebased opening value at 1
January 2017 560.1
------------------------------------------------- -----------------------
Unwinding of discount and
value enhancements (5) 30.1
------------------------------------------------- -----------------------
Portfolio value at 30 June
2017 590.2
------------------------------------------------- -----------------------
Other net assets at 30 June
2017 (1) 24.2
------------------------------------------------- -----------------------
Net asset value at 30 June
2017 614.4
------------------------------------------------- -----------------------
(1) These figures represent the assets and liabilities of the
Group; after excluding the portfolio of project investments and
include, amongst other items, the Group's consolidated cash
balances and borrowings (where applicable). The closing cash
balance is net of the 2016 final dividend paid on 28 June 2017.
(2) Norwegian Corporate tax rate decreased from 25% to 24% in
2017.
(3) MGB equity subscription letter of credit was replaced by a
payment to a trustee cash collateral account.
(4) While distributions from projects reduce the portfolio
value, they do not have an impact on the Company's NAV. This
reduction in the portfolio value is offset by the receipt of a
corresponding cash amount at the Group level. The Group cash
balance at 30 June 2017 is reflected in graph above under Other net
assets.
(5) The value enhancements include the valuation uplift
resulting from the Ohio River Bridges (USA) project moving closer
to the stable operational phase, and the reduced construction risk
of Mersey Gateway Bridge (UK) as it nears construction completion,
which is expected in H2 2017.
Key drivers for NAV growth
Growth based on rebased valuation
During the period ended 30 June 2017, the Company recognised
GBP30.1 million from both the "unwinding of discounts" and value
enhancements. As the Company moves closer to forecast project
distribution dates, the time value of those cash flows increases on
a net present value basis, which gives rise to the "unwinding of
discount" effect. The portfolio value growth from the unwinding of
discount during the period was approximately GBP22.2 million or
3.7% on a NAV per share basis.
The difference, GBP7.9 million, or 1.3% on a NAV per share basis
above the anticipated growth from the unwinding of discount,
represents both:
(i) the net effect from higher actual inflation against modelled
assumptions and the consequences of an accelerated tax payment on
one project against modelled assumptions; and
(ii) the value enhancement through active management, including inter alia:
-- a valuation uplift resulting from the Ohio River Bridges
(USA) project moving closer to the stable operational phase, and
the reduced construction risk of Mersey Gateway Bridge (UK) which
is expected to complete in H2 2017;
-- lower costs achieved on some projects;
-- the net effect of earlier than forecast extraction of cash;
-- additional income on variation orders;
-- the loss realised on the refinancing of Royal Women's Hospital.
The Company also completed an accretive share issue in
April.
Discount rates and sensitivity
The discount rates used for individual assets range between
7.20% and 10.10%. The value weighted average discount rate at 30
June 2017 is approximately 7.48% (7.56% at 31 December 2016). This
methodology calculates the weighted average based on the value of
each project in proportion to the total portfolio value, i.e. based
on the net present value of their respective future cash flows.
The decrease in the weighted average discount rate reflects: (i)
the net effect of the moderate reduction of discounts rates
generally due to the ongoing competitive pressure on secondary
market prices as more investment capital, both in the listed and
unlisted infrastructure secondary market, is pursuing a limited
number of PPP/PFI assets; (ii) the reduction in the Mersey Gateway
Bridge project discount rates as construction nears completion; and
(iii) the reduction in the Ohio River Bridge project discount rates
as the project moves closer to the fully operational phase.
The discount rates used for individual project entities are
based on BBGI's knowledge of the market, discussions with advisors
and publicly available information on relevant transactions.
We have differentiated the asset classes with respect to
discount rates. For stable operational projects, such as typical
roads, schools and hospitals, we have applied discount rates at the
lower end of the range mentioned above. Further adjustments have
been applied to acute hospitals in the UK where a risk premium of
50bps continues to be applied. This reflects the special situation
in the UK where public health clients are under cost pressure and
are actively looking for savings which has resulted in some large
deductions on UK acute hospitals and, consequently, distribution
lock ups. BBGI has to date not been affected and the only acute
hospital in the BBGI portfolio is the Gloucester Royal Hospital.
BBGI also applied a modest-risk premium for complex prison projects
to reflect the higher complexity of such projects and has also
applied a risk premium on a limited number of other projects to
reflect the individual situation.
The following table shows the sensitivity of the Net Asset Value
to a change in the discount rate.
Discount Rate Sensitivity(1) Change in Net Asset
Value
30 June 2017
---------------------------------------- --------------------
Increase by 1% to 8.48% GBP(53.7) million,
i.e. (8.7)%
---------------------------------------- --------------------
Decrease by 1% to 6.48% GBP62.5 million,
i.e. 10.2%
---------------------------------------- --------------------
(1) Based on the weighted average discount rate of 7.48%
Foreign exchange and sensitivity
BBGI values its portfolio of assets by discounting anticipated
future cash flows. The present value of these cash flows are
converted to Sterling at either the hedged rate, for a
predetermined percentage of cash flows forecast to be received over
the next four years, or at the reporting period closing rate for
unhedged future cash flows. Although the closing rate is the
required conversion rate to use, it is not necessarily
representative of future exchange rates as it reflects an exchange
rate at a specific point in time.
The table below shows those closing rates which were used to
convert unhedged future cash flows into the reporting currency at
30 June 2017.
F/X rates F/X rates
as of 30 June as of 31 December
2017 2016
-------------------- ------------------ -------------------
GBP/AUD 1.692 1.714
-------------------- ------------------ -------------------
GBP/CAD 1.688 1.659
-------------------- ------------------ -------------------
GBP/EUR 1.138 1.173
-------------------- ------------------ -------------------
GBP/NOK 10.893 10.665
-------------------- ------------------ -------------------
GBP/USD 1.300 1.234
-------------------- ------------------ -------------------
A significant proportion of the Company's underlying investments
are denominated in currencies other than Sterling. The Company
maintains its accounts, prepares the valuation and pays
distributions in Sterling. Accordingly, fluctuations in exchange
rates between Sterling and the relevant local currencies will
affect the valuation of the Company's underlying investments.
During the period ended 30 June 2017 the net effect of a moderate
appreciation of Sterling against the CAD, NOK and USD and a
moderate depreciation against the AUD and EUR resulted in a
decrease in the portfolio valuation of GBP3.2 million. Since
listing in December 2011, the net cumulative effect of foreign
exchange movement on the portfolio value has been an uplift of
GBP3.4 million or 0.6% of NAV at 30 June 2017.
The following table shows the sensitivity of the NAV to a change
in foreign exchange rates.
Foreign Exchange Sensitivity Change in Net Asset
Value
30 June 2017
---------------------------------------- --------------------
Increase by 10%(1) GBP(23.7) million,
i.e. (3.9)%
---------------------------------------- --------------------
Decrease by 10%(1) GBP29.0 million,
i.e. 4.7%
---------------------------------------- --------------------
(1) Sensitivity applied against the foreign exchange rates at 30
June 2017. This sensitivity only applies to unhedged cash
flows.
Inflation sensitivity
The project cash flows are positively correlated with inflation
(e.g. RPI or CPI). The table below demonstrates the effect of a
change in inflation rates compared to the macroeconomic assumptions
in the table above.
Inflation Sensitivity Change in Net Asset
Value
30 June 2017
--------------------------------- --------------------
Inflation + 1%(1) GBP35.0 million,
i.e. 5.7%
--------------------------------- --------------------
Inflation - 1%(1) GBP(28.7) million,
i.e. (4.7)%
--------------------------------- --------------------
(1) Sensitivity applied against those inflation rates as set out
in the macroeconomic assumptions table above.
Deposit rate sensitivity
The project cash flows are positively correlated with the
deposit rates. The table below demonstrates the effect of a change
in long-term deposit rates compared to the macroeconomic
assumptions above.
Deposit Rate Sensitivity Change in Net Asset
Value
30 June 2017
------------------------------------ --------------------
Long-term deposit rate GBP12.4 million,
+ 1%(1) i.e. 2.0%
------------------------------------ --------------------
Long-term deposit rate GBP(12.4) million,
- 1%(1) i.e.(2.0)%
------------------------------------ --------------------
(1) Sensitivity applied against those deposit rates as set out
in the macroeconomic assumptions table above.
Lifecycle costs sensitivity
Of the 39 projects in the portfolio, 13 project companies retain
the lifecycle obligations. The remaining 26 projects have this
obligation passed down to the sub-contractor. Management review
project lifecycle budgets on a periodic basis. The table below
demonstrates the impact of a change in lifecycle costs.
Lifecycle costs Sensitivity Change in Net Asset
Value
30 June 2017
--------------------------------------- --------------------
Increase by 10%(1) GBP(12.2) million,
i.e. (2.0)%
--------------------------------------- --------------------
Decrease by 10%(1) GBP12.2 million,
i.e. 2.0%
--------------------------------------- --------------------
(1) The sensitivity is applied to the 13 projects within the
portfolio which retain the lifecycle obligation, i.e. the
obligation is not passed down to the sub-contractor. These projects
represent approximately 50% of the total portfolio value as at 30
June 2017.
Corporate tax rate sensitivity
The table below demonstrates the effect of a change in the
project level corporate tax rates.
Inflation Sensitivity Change in Net Asset
Value
30 June 2017
--------------------------------- --------------------
Corporate tax rate GBP(21.7) million,
+ 5%(1) i.e. (3.5)%
--------------------------------- --------------------
Corporate tax rate GBP21.1 million,
- 5%(1) i.e. 3.4%
--------------------------------- --------------------
(1) Sensitivity applied against those SPC corporate tax rates as
set out in the macroeconomic assumptions table above
The Management and Supervisory Boards have approved the NAV
calculation on an Investment Basis as at 30 June 2017.
FINANCIAL RESULTS
Basis of Accounting
The Company has prepared its financial statements under IFRS. In
accordance with IFRS 10, IFRS 12 and IAS 27, the Company (an
Investment Entity) does not consolidate certain subsidiaries, in a
similar manner to the Company's pro forma investment basis data,
which continue to be included in this section of the Report of the
Management Board. As an Investment Entity, the Company does not
consolidate its investments in PPP/PFI assets that are subsidiaries
on a line-by-line basis, but instead recognises them as investments
at fair value through profit or loss.
Income and Costs
Pro forma Income Statement
Six months Six months
to to
30 June
30 June 2017 2016
GBP million GBP million
----------------------------------- ------------- ------------
Income from investments
at fair value through profit
or loss(1) 31.8 56.5
Other operating income 0.5 (6.8)
----------------------------------- ------------- ------------
Operating income 32.3 49.7
Administration expenses
and net finance result(2) (4.3) (3.6)
Other operating expenses(3) (0.8) 6.9
----------------------------------- ------------- ------------
Profit before tax 27.2 46.5
Tax expense (income tax) (1.9) (0.4)
-------------
Profit from continuing operations 25.3 46.1
Basic earnings per share
(pence) 5.30 10.66
----------------------------------- ------------- ------------
(1) The income from investments at fair value
results from the unwinding of the discount and
value enhancements through active asset management.
(2) Includes non-recoverable VAT. Refer to the
Corporate cost analysis below for further details
on the composition.
(3) Other operating expenses for the period ended
30 June 2017 include acquisition related costs
of approximately GBP0.8 million. Refer to note
5 of the Financial Statements for further detail.
Group Level Corporate Cost Analysis
The table below is prepared on an accrual basis.
Six months to Six months to
30 June 2017 30 June 2016
Corporate costs GBP million GBP million
---------------------------------------------------------- --------------------- ---------------------
Net finance result 1.1 1.1
Staff costs(1) 1.8 1.5
Fees to non-executive directors 0.1 0.1
Professional fees(2) 0.4 0.3
Office and administration 0.9 0.6
Acquisition-related costs(3) 0.8 0.1
Taxes (including non-recoverable VAT) 1.9 0.4
---------------------------------------------------------- --------------------- ---------------------
Total corporate costs 7.0 4.1
---------------------------------------------------------- --------------------- ---------------------
(1) The Company is an internally managed AIF with no fees payable to external managers.
(2) The professional fees include audit fees amounting to GBP0.07 million. There are no non-audit
fees incurred during the six-month period in the condensed consolidated interim income statement.
Non-audit fees incurred by controlled entities that are not consolidated, thus not included
in the condensed consolidated interim income statement, amounted to GBP0.07 million.
(3) Acquisition costs means those costs incurred as part of the secondary investment acquisition
process and primary investment bid submissions. These acquisition-related costs are made up
of third-party due diligence, legal and other costs directly related to secondary and primary
investment activity during the period to date. The figure includes the acquisition cost related
to the SNC-Lavalin acquisition and also unsuccessful bid costs of approximately GBP0.04 million
in the period (period ended 30 June 2016: GBP0.07 million). Refer also to Note 5 of the Financial
Statements.
Ongoing Charges
The "Ongoing Charges" ratio was prepared in accordance with the
Association of Investment Companies ("AIC") recommended
methodology. The ratio represents the annualised reduction or drag
in shareholder returns as a result of recurring operational
expenses incurred in managing the BBGI Group entities.
The Company is internally managed and as such is not subject to
performance fees or acquisition-related fees.
Annualised 2016
2017
Ongoing charges GBP million GBP million
----------------------------- ------------ ------------
Ongoing charges 5.8 5.1
Average undiluted net asset
value 593.3 515.6
----------------------------- ------------ ------------
Ongoing charges (%) 0.98% 0.98%
----------------------------- ------------ ------------
The ongoing charges of GBP5.8 million in the table above
represents the annualised recurring operational expenses(20)
incurred in managing the BBGI Group entities. The ongoing charges
ratio was calculated using the AIC methodology and excludes all
non-recurring costs, i.e. costs of acquisition/disposal of
investments, financing charges and gains/losses arising from
investments. The ongoing charges includes an accrual for the
Short-Term Incentive Plan ("STIP")/bonuses and the Long-Term
Incentive Plan ("LTIP"). BBGI uses some or all of its
Euro-denominated distributions from the Group's portfolio of assets
to cover a significant portion of the Group's running costs, which
are largely Euro-denominated, thereby creating a form of natural
hedge.
Balance Sheet
Pro forma Balance Sheet
30 June 2017 31 December 2016
--------------------------------------- -------------------------------------
Investment Consolidated Investment Consolidated
Basis(1) Adjust IFRS Basis Adjust IFRS
GBP GBP GBP GBP
million million GBP million million million GBP million
-------------------------- ------------- --------- ------------- ----------- --------- -------------
Portfolio value
/ FVPL investments(2) 590.2 (19.7) 570.5 569.9 - 569.9
Adjustments to
investments - - - - 1.7 1.7
Other assets
and liabilities
(net)(2,3) (5.2) 27.4 22.2 (3.5) 0.6 (2.9)
Net cash/(borrowings)(4) 29.4 (6.8) 22.6 (21.4) (1.3) (22.7)
Fair value of
derivative financial
instruments(5) - (5.2) (5.2) - (7.2) (7.2)
------------- --------- ------------- -----------
Net assets attributable
to ordinary shares 614.4 (4.3) 610.1 545.0 (6.2) 538.8
-------------------------- ------------- --------- ------------- ----------- --------- -------------
(1) Under the Investment Basis the Group recognises project
distributions once the associated cash flow has been excluded from
the portfolio value. Under IFRS a distribution is recognised when
the proceeds are received by one of the consolidated Group
companies. Management believe that Investment Basis approach
provides a clearer measurement of the performance of the underlying
project portfolio.
(2) Under IFRS the cash placed on the MGB cash collateral
account is accounted for as an Other receivable.
(3) The GBP27.4 million adjustment is composed mainly of: (i)
the GBP19.7 million MGB cash collateral; and (ii) a GBP5.1 million
ORB project distribution that was made in the period but where the
cash was held at the project holding company level at 30 June 2017,
a company that is outside of the Group consolidation.
(4) The GBP6.8 million adjustment is composed mainly of (i) the
GBP5.1million ORB distribution referred to above and (ii) other
cash balances not included in the consolidation and also outside of
the project valuation.
(5) Under IFRS, the forward currency contracts are presented at
fair value. The fair valuation of derivative financial instruments
is excluded from the Investment Basis NAV calculation as the
investments at fair value already considers the contracted forward
rate of the derivative financial instruments. Management believe
that this approach provides a clearer measurement of portfolio
performance.
Summary Net Corporate Cash Flow
The table below summarises the cash received by the consolidated
Group from the underlying investments net of the cash outflows for
the Group level corporate costs. During the period ended 30 June
2017, the Company received, on a consolidated IFRS basis, GBP26.2
million of distributions from investments at fair value through
profit or loss ("FVPL investments"), which was ahead of business
plan and the underlying financial models. These distributions were
recorded as dividends, interest payments, capital and subordinated
debt principal repayments.
Period ended Period ended
30 June 30 June
2017 2016
GBP million GBP million
--------------------------------- -------------- --------------
Distributions received from
FVPL investments(1) 26.2 29.3
Net cash outflow from operating
activities before finance
costs(2) (5.6) (3.0)
Cash outflow from finance
costs (net) (0.8) (0.9)
--------------------------------- -------------- --------------
Net cash flow (19.8) 25.4
--------------------------------- -------------- --------------
(1) Portfolio performance and cash receipts were ahead of the
business plan and underlying financial models.
(2) Cash outflow resulting from all Group level corporate costs
paid in the period ending 30 June 2017 which includes the impact of
foreign currency exchange gain/(loss) on cash and cash
equivalents.
MANAGEMENT BOARD RESPONSIBILITIES STATEMENT
The Management Board of the Company is responsible for preparing
this half-yearly financial report in accordance with applicable law
and regulations. The Management Board confirms that to the best of
its knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the European Union; and
-- The Chairman's Statement and the Report of the Management
Board meet the requirements of an interim management report and
include a fair review of the information required by:
o DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events during the first six months and
description of the principal risks and uncertainties for the
remaining six months of the year; and
o DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Luxembourg, 30 August 2017
Signatures
Duncan Ball, Co-CEO Frank Schramm, Co-CEO Michael Denny, CFO
To the Shareholders of
BBGI SICAV S.A.
6E, route de Trèves
L-2633 Senningerberg
Report of the Réviseur d'Entreprises agréé
on the review of the condensed consolidated interim financial
information
Introduction
We have reviewed the accompanying condensed consolidated interim
statement of financial position of BBGI SICAV S.A. ("the Company")
as at 30 June 2017, the condensed consolidated interim income
statement, the condensed consolidated interim statements of
comprehensive income, of changes in equity and of cash flows for
the six month period then ended, and notes to the condensed
consolidated interim financial information ("the condensed
consolidated interim financial information"). Management is
responsible for the preparation and presentation of this condensed
consolidated interim financial information in accordance with IAS
34, "Interim Financial Reporting" as adopted by the European Union.
Our responsibility is to express a conclusion on this condensed
consolidated interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the International
Standard on Review
Engagements 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" as adopted, for
Luxembourg, by the Institut des Réviseurs d'Entreprises. 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 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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying condensed consolidated
interim financial information as at 30 June 2017 is not prepared,
in all material respects, in accordance with IAS 34, "Interim
Financial Reporting" as adopted by the European Union.
Luxembourg, 30 August 2017 KPMG Luxembourg
Société coopérative
Cabinet de révision agréé
Emmanuelle Ramponi
Condensed Consolidated interim Income statement
(UNAUDITED)
-----------------------------------------------------------------
Six months Six months
ended ended
Note 30 June 2017 30 June 2016
In thousands of Pounds
Sterling
---------------------------- ----- ------------- -------------
Continuing operations
Income from investments
at fair value through
profit or loss 7 31,790 56,513
Other operating income 6 481 472
Operating income 32,271 56,985
---------------------------- ----- ------------- -------------
Administration expenses 4 (3,182) (2,520)
Other operating expenses 5 (815) (6,915)
---------------------------- ----- ------------- -------------
Operating expenses (3,997) (9,435)
---------------------------- ----- ------------- -------------
Results from operating
activities 28,274 47,550
---------------------------- ----- ------------- -------------
Finance cost 11 (1,057) (1,053)
Finance income 3 8
Net finance result (1,054) (1,045)
---------------------------- ----- ------------- -------------
Profit before tax 27,220 46,505
Tax expense 8 (1,942) (425)
---------------------------- ----- ------------- -------------
Profit from continuing
operations 25,278 46,080
---------------------------- ----- ------------- -------------
Profit from continuing
operations attributable
to
owners of the Company 25,278 46,080
---------------------------- ----- ------------- -------------
Earnings per share
Basic earnings per share
(pence) 10 5.30 10.66
Diluted earnings per
share (pence) 10 5.30 10.66
---------------------------- ----- ------------- -------------
The accompanying notes form an integral part of the condensed
consolidated interim financial statements.
Condensed Consolidated interim statement of comprehensive
income (UNAUDITED)
------------------------------------------------------------------
Six months Six months
ended ended
Note 30 June 2017 30 June 2016
In thousands of Pounds
Sterling
-------------------------- ------- -------------- -------------
Profit for the period 25,278 46,080
Other comprehensive -
income for the period -
-------------------------- ------- -------------- -------------
Total comprehensive
income for the period
attributable to the
owners of the Company 25,278 46,080
----------------------------------- -------------- -------------
The accompanying notes form an integral part of the condensed
consolidated interim financial statements.
Condensed consolidated interim statement of financial
position (UNAudited)
---------------------------------------------------------------------
Note 30 June 2017 31 December
2016
In thousands of Pounds (Audited)
Sterling
------------------------------ ----- ------------- ---------------
Assets
Property plant and equipment 54 68
Investments at fair
value through profit
or loss 7 570,518 569,926
Non-current assets 570,572 569,994
------------------------------ ----- ------------- ---------------
Trade and other receivables 15 26,534 1,897
Other current assets 685 62
Cash and cash equivalents 22,626 22,113
Current assets 49,845 24,072
------------------------------ ----- ------------- ---------------
Total assets 620,417 594,066
------------------------------ ----- ------------- ---------------
Equity
Share capital 9 503,426 442,680
Additional paid-in capital 15 475 304
Translation reserves 9 (597) (597)
Retained earnings 106,823 96,397
------------------------------ ----- ------------- ---------------
Equity attributable
to owners of the Company 610,127 538,784
------------------------------ ----- ------------- ---------------
Liabilities
Loans and borrowings 11 - 44,755
Derivative financial
instruments 13 2,576 4,327
Non-current liabilities 2,576 49,082
------------------------------ ----- ------------- ---------------
Loans and borrowings 11 - 45
Trade payables 104 145
Derivative financial
instruments 13 2,558 2,868
Other payables 12 3,144 2,956
Tax liabilities 8 1,908 186
------------------------------ ----- ------------- ---------------
Current liabilities 7,714 6,200
------------------------------ ----- ------------- ---------------
Total liabilities 10,290 55,282
------------------------------ ----- ------------- ---------------
Total equity and liabilities 620,417 594,066
------------------------------ ----- ------------- ---------------
Net asset value attributable
to the owners of the
Company 9 610,127 538,784
Net asset value per
ordinary share (pence) 9 127.82 124.66
------------------------------ ----- ------------- ---------------
The accompanying notes form an integral part of the condensed
consolidated interim financial statements.
Condensed Consolidated interim statement of
changes in equity (UNAUDITED)
----------------------------------------------------------------------------------------------------------------
Additional
Share Paid-in Translation Retained Total
capital capital reserves earnings equity
In thousands of Pounds Note
Sterling
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
Balance at 1 January
2017 (Audited) 9,15 442,680 304 (597) 96,397 538,784
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
Total comprehensive
income for the six months
ended
30 June 2017
Profit for the period - - - 25,278 25,278
------------------------------
Total comprehensive
income for the period - - - 25,278 25,278
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
Transactions with owners
of the Company, recognised
directly in equity
Issuance of shares through
placing of ordinary
shares -
net of issuance cost 57,745 - - - 57,745
Cash dividend 9 - - - (11,851) (11,851)
Scrip dividend 9 3,001 - - (3,001) -
Share-based payment 15 - 171 - - 171
Balance at 30 June 2017 503,426 475 (597) 106,823 610,127
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
Additional
Share Paid-in Translation Retained Total
capital capital reserves earnings equity
In thousands of Pounds Note
Sterling
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
Balance at 1 January
2016 (Audited) 9,15 440,259 98 (597) 42,610 482,370
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
Total comprehensive
income for the six months
ended
30 June 2016
Profit for the period - - - 46,080 46,080
------------------------------
Total comprehensive
income for the period - - - 46,080 46,080
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
Transactions with owners
of the Company, recognised
directly in equity
Cash dividend 9 - - - (10,667) (10,667)
Scrip dividend 9 2,245 - - (2,245) -
Share-based payment 15 - 103 - - 103
Balance at 30 June 2016 442,504 201 (597) 75,778 517,886
------------------------------ ----- ---------------- ----------- ----------------- ------------ ----------
The accompanying notes form an integral part of the condensed
consolidated interim financial statements.
condensed consolidated interim statement of cash
flows (UNAUDITED)
--------------------------------------------------------------------------
Six months Six months
ended ended
30 June 2017 30 June 2016
In thousands of Pounds Note
Sterling
------------------------------------- ----- ------------- -------------
Cash flows from operating
activities
Profit for the period 25,278 46,080
Adjustments for:
Depreciation 16 12
Net finance cost (income) 1,054 1,045
Income from investments
at fair value through profit
or loss 7 (31,790) (56,513)
Change in fair value of
derivative financial instruments 5 (62) 6,767
Share-based compensation 15 171 103
Income tax expense 1,942 425
Foreign currency exchange
loss/(gain) 5 60 (472)
------------------------------------- ----- ------------- -------------
(3,331) (2,553)
Changes in:
- Trade and other receivables 77 (81)
- Other assets (244) (37)
- Trade and other payables 82 (521)
------------------------------------- ----- ------------- -------------
Cash generated from operating
activities (3,416) (3,192)
Finance cost paid (823) (866)
Interest received 3 8
Realised gain/(loss) on
derivative financial instruments 13 (1,999) (105)
Taxes paid (220) (328)
Net cash flows from operating
activities (6,455) (4,483)
------------------------------------- ----- ------------- -------------
Cash flows from investing
activities
Acquisition of /additional
investments in investments
at fair value
through profit or loss 7 - (9,525)
Distributions received
from investments at fair
value
through profit or loss 7 26,168 29,286
Deposits made on cash collateral
account of a project 15 (19,684) -
Acquisition of other equipment (2) (13)
Net cash flows from investing
activities 6,482 19,748
------------------------------------- ----- ------------- -------------
Cash flows from financing
activities
Proceeds from issuance
of ordinary shares through
placing - net
of share issuance cost 9 57,745 -
Dividends paid 9 (11,851) (10,667)
Payment of loans and borrowings 11 (45,221) -
Loan issuance cost 11 (192) (180)
Net cash flows from financing
activities 481 (10,847)
------------------------------------- ----- ------------- -------------
Net increase/(decrease)
in cash and cash equivalents 508 4,418
Impact of foreign currency
exchange gain/(loss) on
cash and cash
equivalents 5 625
Cash and cash equivalents
at 1 January 22,113 23,243
Cash and cash equivalents
at 30 June 22,626 28,286
------------------------------------- ----- ------------- -------------
The accompanying notes form an integral part of the condensed
consolidated interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
for the six months ended 30 June 2017
1. Reporting entity
BBGI SICAV S.A. ("BBGI", or the "Company" or, together with its
consolidated subsidiaries, the "Group") is an investment company
incorporated in Luxembourg in the form of a public limited company
(société anonyme) with variable share capital (société
d'investissement à capital variable, or "SICAV") and regulated by
the Commission de Surveillance du Secteur Financier ("CSSF") under
Part II of the Luxembourg Law of 17 December 2010 on undertakings
for collective investments with an indefinite life. The Company
qualifies as an alternative investment fund within the meaning of
Article 1 (39) of the law of 12 July 2013 on Alternative Investment
Fund Managers ("2013 Law") implementing Directive 2011/61/EU of the
European Parliament and of the Council of 8 June 2011 on
Alternative Investment Fund Managers and amending Directives
2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and
(EU) No 1095/2010 and is authorised as an internal alternative
investment fund manager in accordance with Chapter 2 of the 2013
Law. The Company was admitted to the official list of the UK
Listing Authority (premium listing, closed-ended investment fund)
and to trading on the main market of the London Stock Exchange on
21 December 2011.
The Company's registered office is EBBC, 6E, route de Trèves,
L-2633 Senningerberg, Luxembourg.
The Company is a closed-ended investment company that invests
principally in a diversified portfolio of Public Private
Partnership ("PPP")/Private Finance Initiative ("PFI")
infrastructure or similar assets. The Company has limited
investment in projects that are under construction.
As at 30 June 2017, the Group employed 18 staff (30 June 2016:
16 staff).
Reporting period
The Company's reporting period runs from 1 January to 31
December each year. The Company's condensed consolidated interim
statement of financial position, condensed consolidated interim
income statement, condensed consolidated interim statement of
comprehensive income and condensed consolidated interim statement
of cash flows include comparative figures as at 31 December 2016 or
for the six months ended 30 June 2016.
The amounts presented as 'non-current' in the condensed
consolidated interim statement of financial position are those
expected to be settled after more than one year. The amounts
presented as 'current' are those expected to be settled within one
year.
These condensed consolidated interim financial statements were
approved by the Management Board on 29 August 2017.
2. Basis of preparation
Statement of compliance
The condensed consolidated interim financial statements of the
Company have been prepared in accordance with IAS 34 Interim
Financial Reporting in accordance with International Financial
Reporting Standards ("IFRS"), as adopted by the European Union, and
do not include all information required for full annual financial
statements.
Changes in accounting policy
The accounting policies, measurement and valuation principles
applied by the Group in these condensed consolidated interim
financial statements are the same as those applied by the Group in
its annual consolidated financial statements as of and for the year
ended 31 December 2016.
Basis of measurement
These condensed consolidated interim financial statements have
been prepared on the historical cost basis, except for derivative
financial instruments and investments at fair value through profit
or loss ("FVPL investments"), which are reflected at fair
value.
Functional and presentation currency
These condensed consolidated interim financial statements are
presented in Sterling, the Company's functional currency.
Use of estimates and judgments
The preparation of condensed consolidated interim financial
statements in conformity with IFRS requires the Management Board to
make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
In the process of applying the Group's accounting policies, the
Management Board has made the following judgments that have the
most significant effect on the amounts recognised in the condensed
consolidated interim financial statements.
The Company as an Investment Entity
The Management Board has assessed that the Company is an
Investment Entity in accordance with the provisions of IFRS 10. The
Company meets the following criteria to qualify as an Investment
Entity:
a) Obtains funds from one or more investors for the purpose of
providing those investors with investment management services:
The Group is internally managed with management focused solely
on managing those funds received from its shareholders in order to
maximise investment income/returns.
b) Commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income, or both:
The investment objectives of the Company are to:
- Provide investors with secure and highly predictable long-term
cash flows whilst actively managing the investment portfolio with
the intention of maximising the capital value over the long
term.
- Target a dividend of 6.50 pence per share per annum. The
Company will aim to increase this
distribution progressively over the longer term.
- Target an IRR in the region of 7% to 8% on the GBP1 IPO issue
price of its ordinary shares, to be achieved over the longer term
via active management, to enhance the value of existing
investments.
The above-mentioned objectives support the fact that the main
business purpose of the Company is to seek to maximise investment
income for the benefit of its shareholders.
c) Measures and evaluates performance of substantially all of
its investments on a fair value basis:
The investment policy of the Company is to invest in equity,
subordinated debt or similar interests issued in respect of
infrastructure projects that have been developed predominantly
under the PPP/PFI or similar procurement models. Each of these
PPP/PFI projects is valued at fair value. The valuation is carried
out on a six-monthly basis as at 30 June and 31 December each
year.
Based on the Management Board's assessment, the Company also
meets the typical characteristics of an Investment Entity as
follows:
a) it has more than one investment - as at 30 June 2017, the
Company has 39 PPP/PFI investments;
b) it has more than one investor - the Company is listed on the
London Stock Exchange with its shares widely held by a broad pool
of investors;
c) it has investors that are not related parties of the entity -
other than those shares held by the Supervisory Board and
Management Board directors, and certain other employees, all
remaining shares in issue (more than 99%) are held by non-related
parties of the Company; and
d) it has ownership interests in the form of equity or similar
interests - the Group holds interests in PPP/PFI projects in the
form of equity interests, subordinated debt and similar
instruments.
Fair valuation of financial assets and financial liabilities
The Group accounts for its investments in PPP/PFI entities
("SPC" or "Project Entities") as FVPL investments.
The valuation is determined using the discounted cash flow
methodology. The cash flows forecast to be received by the Company
or its consolidated subsidiaries, generated by each of the
underlying assets, and adjusted as appropriate to reflect the risk
and opportunities, have been discounted using project specific
discount rates. The valuation methodology is the same one used in
previous reporting periods.
The fair value of other financial assets and liabilities, other
than current assets and liabilities, is determined by discounting
future cash flows at an appropriate discount rate and with
reference to recent market transactions, where appropriate. Further
information on assumptions and estimation uncertainties are
disclosed in Note 13.
Fair values are categorised into different levels in a fair
value hierarchy based on the inputs in the valuation methodology,
as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
-- Level 2: inputs other than quoted prices included in Level 1,
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data ("unobservable inputs").
If the inputs to measure fair value of an asset or a liability
fall into different levels of the fair value hierarchy, then the
fair value measurement is categorised in its entirety at the same
level of the fair value hierarchy as the lowest level input that is
significant to the entire measurement.
The Group recognises transfers between levels of fair value
hierarchy at the end of the reporting period in which the change
has occurred.
Going concern basis of accounting
The Management Board has examined significant areas of possible
financial risk including cash and cash requirements. It has not
identified any material uncertainties which would cast significant
doubt on the Company's ability to continue as a going concern for a
period of not less than 12 months from the date of approval of the
condensed consolidated interim financial statements. The Management
Board has satisfied itself that the Company has adequate resources
to continue in operational existence for the foreseeable future.
After due consideration, the Management Board believes it is
appropriate to adopt the going concern basis of accounting in
preparing the condensed consolidated interim financial
statements.
3. Segment reporting
IFRS 8 - Operating Segments adopts a "through the eyes of the
management" approach to an entity's reporting of information
relating to its operating segments, and also requires an entity to
report financial and descriptive information about its reportable
segments.
Based on a review of information provided to the Management
Board, the Group has identified five reportable segments based on
the geographical concentration risk. The main factor used to
identify the Group's reportable segments is the geographical
location of the projects. The Management Board has concluded that
the Group's reportable segments are: (1) UK; (2) Mainland Europe;
(3) Australia; (4) North America; and (5) Holding Activities. These
reportable segments are the basis on which the Group reports
information to the Management Board.
Segment information for the six months ended 30 June 2017 is
presented below:
Continental North Holding Total
-----------------------
UK Europe Australia America Activities Group
In thousands
of Pounds Sterling
----------------------- --------- ------------ ---------- -------- ----------- ---------
Income from FVPL
investments 16,583 3,035 5,617 6,555 - 31,790
Administration
expenses - - - - (3,182) (3,182)
Other operating
expenses - (net) - - - - (334) (334)
----------------------- -------- ----------- ---------
Results from
operating activities 16,583 3,035 5,617 6,555 (3,516) 28,274
----------------------- --------- ------------ ---------- -------- ----------- ---------
Finance cost - - - - (1,057) (1,057)
Finance income - - - - 3 3
Tax expense - - - - (1,942) (1,942)
----------------------- --------- ------------ ---------- -------- ----------- ---------
Profit or loss
from continuing
operations 16,583 3,035 5,617 6,555 (6,512) 25,278
----------------------- --------- ------------ ---------- -------- ----------- ---------
Segment information for the six months ended 30 June 2016 is
presented below:
Continental North Holding Total
-----------------------
UK Europe Australia America Activities Group
In thousands
of Pounds Sterling
----------------------- ----------- -------------- -------------- ------------ ------------- --------
Income from FVPL
investments 6,679 6,669 12,115 31,050 - 56,513
Administration
expenses - - - - (2,520) (2,520)
Other operating
expenses - (net) - - - - (6,443) (6,443)
----------------------- ------------ ------------- --------
Results from
operating activities 6,679 6,669 12,115 31,050 (8,963) 47,550
----------------------- ----------- -------------- -------------- ------------ ------------- --------
Finance cost - - - - (1,053) (1,053)
Finance income - - - - 8 8
Tax expense - - - - (425) (425)
----------------------- ----------- -------------- -------------- ------------ ------------- --------
Profit or loss
from continuing
operations 6,679 6,669 12,115 31,050 (10,433) 46,080
----------------------- ----------- -------------- -------------- ------------ ------------- --------
Segment information as at 30 June 2017 is presented below:
Continental North Holding Total
-------------------
UK Europe Australia America Activities Group
In thousands of
Pounds Sterling
------------------- --------- ------------ ---------- --------- ----------- ---------
Assets
FVPL investments 226,676 50,268 109,310 184,264 - 570,518
Other non-current
assets - - - - 54 54
Current assets - - - - 49,845 49,845
------------------- --------- ------------ ---------- --------- ----------- ---------
Total assets 226,676 50,268 109,310 184,264 49,899 620,417
------------------- --------- ------------ ---------- --------- ----------- ---------
Liabilities
Non-current - - - - 2,576 2,576
Current - - - - 7,714 7,714
------------------- --------- ------------ ---------- --------- ----------- ---------
Total liabilities - - - - 10,290 10,290
------------------- --------- ------------ ---------- --------- ----------- ---------
Segment information as at 31 December 2016 is presented
below:
North Mainland Holding Total
---------------------
UK America Australia Europe Activities Group
In thousands
of Pounds Sterling
--------------------- --------- --------- ---------- --------- ----------- ---------
Assets
FVPL investments 221,522 188,371 108,671 51,362 - 569,926
Other non-current
assets - - - - 68 68
Current assets - - - - 24,072 24,072
--------------------- --------- --------- ---------- --------- ----------- ---------
Total assets 221,522 188,371 108,671 51,362 24,140 594,066
--------------------- --------- --------- ---------- --------- ----------- ---------
Liabilities
Non-current - - - - 49,082 49,082
Current - - - - 6,200 6,200
--------------------- --------- --------- ---------- --------- ----------- ---------
Total liabilities - - - - 55,282 55,282
--------------------- --------- --------- ---------- --------- ----------- ---------
The Holding Activities of the Group include the activities of
the Group which are not specifically related to a certain project
or region but to those companies which provide services to the
Group. The total current assets classified under Holding Activities
mainly represent cash and cash equivalents.
Transactions between reportable segments are conducted at arm's
length and are accounted for in a similar way to the basis of
accounting used for third parties. The accounting methods used for
all the segments are similar and comparable with those of the
Company.
4. Administration expenses
Six months Six months
ended ended
30 June 2017 30 June 2016
In thousands of Pounds
Sterling
------------------------ ------------- -------------
Personnel expenses 1,841 1,549
Legal and professional
fees 447 320
Other expenses 894 651
------------------------ ------------- -------------
3,182 2,520
------------------------ ------------- -------------
The Group has engaged certain third parties to provide legal,
depositary, custodian, audit, tax and other services to the Group.
The expenses incurred in relation to such services are treated as
administration expenses.
The legal and professional fees include audit, audit related and
non-audit related fees charged by the Group's external auditor as
follows:
Six months Six months
ended ended
30 June 2017 30 June 2016
In thousands of Pounds
Sterling
------------------------ ------------- -------------
Audit fees 67 79
Audit related fees - -
Non-audit related fees - -
------------------------ ------------- -------------
67 79
------------------------ ------------- -------------
5. Other operating expenses
Six months Six months
ended ended
30 June 2017 30 June 2016
In thousands of Pounds
Sterling
--------------------------- ------------- -------------
Acquisition-related costs 755 148
Foreign currency exchange -
loss 60
Net loss on derivative
financial instruments
(see Note 13) - 6,767
--------------------------- ------------- -------------
815 6,915
--------------------------- ------------- -------------
Acquisition costs means those costs incurred as part of the
secondary investment acquisition process and primary investment bid
submissions. These acquisition-related costs are made up of
third-party due diligence, legal and other costs directly related
to secondary and primary investment activity during the period to
date (see Note 7). The figure includes unsuccessful bid costs of
approximately GBP40,000 in the six months ended 30 June 2017
(period ended 30 June 2016: GBP68,000).
6. Other operating income
Six months Six months
ended ended
30 June 2017 30 June 2016
In thousands of Pounds
Sterling
--------------------------- ------------- -------------
Foreign currency exchange
gain - 472
Net gain on derivative
financial instruments
(see Note 13) 62 -
Other income 419 -
481 472
--------------------------- ------------- -------------
7. FVPL investments
The movements of FVPL investments are as follows:
30 June 2017 31 December
2016
In thousands of Pounds
Sterling
------------------------------ ------------- ------------
Balance at 1 January 569,926 504,776
Acquisitions of/additional
investment in FVPL
investments - 9,525
Income from FVPL investments 31,790 99,523
Distributions received (26,168) (42,514)
Reclassification to other
receivables (5,030) (1,384)
570,518 569,926
------------------------------ ------------- ------------
The impact of unrealised foreign exchange gains or losses on the
income from FVPL investments for the period ended 30 June 2017
amounted to a GBP3.2 million loss (year ended 31 December 2016:
GBP51.2 million gain).
Distributions from FVPL Investments are received after: (a)
financial models have been tested for compliance with certain
ratios; (b) financial models have been submitted to the external
lenders of the Project Entities; or (c) approvals of the external
lenders on the financial models have been obtained.
As at 30 June 2017 and 31 December 2016, loan and interest
receivable from unconsolidated subsidiaries is embedded within the
FVPL Investments.
The valuation of FVPL Investments considers all future cash
flows related to individual projects.
Interest income, dividend income, project-related directors' fee
income and other income recorded under the accruals basis at the
level of the consolidated subsidiaries for the six months ended 30
June 2017, amounted to GBP24,301,000 (year to 31 December 2016:
GBP44,942,000). The associated cash flows from these items were
taken into account when valuing the projects.
In June 2016, the Company signed a strategic agreement with a
subsidiary of SNC-Lavalin Group Inc. (TSX ticker: SNC)
("SNC-Lavalin") to acquire substantial equity interests in five PPP
projects in Canada. All assets are operational and classified as
availability-based under the investment policy of the Company.
The acquisition of the interests in four operational assets
mentioned above is expected to occur in the second half of 2017.
The interest in one project is expected to occur at a later date
subject to a number of project-specific conditions precedent being
satisfied. The agreed total cash consideration payable by the
Company for the five initial project interests is expected to be up
to CAD 189 million, which will be funded from the Company's
existing cash resources and drawings under its extended credit
facility.
8. Taxes
A significant portion of the profit before tax results from fair
valuation of FVPL investments. The net income of the unconsolidated
subsidiaries is taxed in their respective jurisdictions. As a
consequence of the adoption of IFRS 10, the Company is classified
as an Investment Entity (see Note 2), meaning the tax expenses of
the unconsolidated subsidiaries are not included within these
condensed consolidated interim financial statements. Therefore, the
consolidated tax expense and tax assets/liabilities, if any, do not
include those of the Project Entities. The tax liabilities of the
Project Entities are reflected within the fair value calculation of
the FVPL investments.
The Company pays an annual subscription tax amounting to 0.05%
of its total net assets. For the six months ended 30 June 2017,
BBGI SICAV S.A. incurred a subscription tax expense of GBP143,000
(30 June 2016: GBP121,000). The Company as a SICAV is not subject
to taxes on capital gains or income. All other consolidated
companies are subject to taxation at the applicable rate in their
respective jurisdictions.
There are no unrecognised taxable temporary differences. The
Group did not recognise any deferred tax asset on tax losses
carried forward.
9. Capital and reserves
Share capital
Changes in the Company's share capital are as follows:
30 June 2017 31 December
2016
In thousands of Pounds
Sterling
------------------------- ------------- ------------
Share capital as at 1
January 442,680 440,259
Issuance of ordinary -
shares through placing 58,533
Share issuance cost on -
the placing (788)
Share capital issued
through scrip dividend 3,001 2,421
------------------------- ------------- ------------
503,426 442,680
------------------------- ------------- ------------
The changes in the number of ordinary shares of no par value
issued by the Company are as follows:
30 June 2017 31 December
2016
In thousands of shares
----------------------------- ------------- ------------
In issue at beginning
of the period/year 432,216 430,393
Shares issued through 43,039 -
placing of ordinary shares
Shares issued through
scrip dividend 2,093 1,823
----------------------------- ------------- ------------
477,348 432,216
----------------------------- ------------- ------------
During April 2017, the Company raised gross proceeds of GBP58.5
million through a placing of 43,039,300 new ordinary shares of no
par value ('Placing'). The Placing price was 136.0 pence per
Placing share. The proceeds of the Placing were used to repay the
amounts drawn on the RCF (see Note 11) and also to part finance the
Mersey Gateway Bridge project cash collateral account (see Note
15).
All shares rank equally with regard to the Company's residual
assets. The holders of ordinary shares are entitled to receive
dividends as declared from time to time, and are entitled to one
vote per share at general meetings of the Company.
Translation reserve
Foreign currency differences are recognised in other
comprehensive income, and presented in the foreign currency
translation reserve in equity except for exchange differences from
intragroup monetary items which are reflected in the profit and
loss. The translation reserve comprises foreign currency
differences arising from the translation of the financial
statements of foreign operations.
Dividends
The final 2016 dividend declared by the Company during the six
months ended 30 June 2017 was as follows:
Six months
ended
30 June 2017
In thousands of Pounds Sterling except
as otherwise stated
---------------------------------------- --------------
Final dividend of 3.125 pence per
qualifying ordinary share - for the
year ended
31 December 2016 14,852
---------------------------------------- --------------
The 31 December 2016 final dividend was paid during June 2017.
The value of the scrip election was GBP3,001,000, with the
remaining amount of GBP11,851,000 paid in cash to those investors
that did not elect for the scrip.
The final 2015 dividend declared by the Company during the six
months ended 30 June 2016 was as follows:
Six months
ended
30 June 2016
In thousands of Pounds Sterling except
as otherwise stated
--------------------------------------------- --------------
Final dividend of 3.00 pence per qualifying
ordinary share - for the year ended
31 December 2015 12,912
--------------------------------------------- --------------
The 31 December 2015 final dividend was paid in June 2016. The
value of the scrip election was GBP2,245,000, with the remaining
amount of GBP10,667,000 paid in cash to those investors that did
not elect for the scrip.
Net Asset Value
The consolidated net asset value and net asset value per share
as at 30 June 2017, 31 December 2016 and 31 December 2015 are as
follows:
30 June 31 December 31 December
2017 2016 2015
In thousands of Pounds
Sterling/pence
------------------------------ -------- ------------ ------------
Net asset value attributable
to the owners of the
Company 610,127 538,784 482,370
Net asset value per
ordinary share (pence) 127.82 124.66 112.08
------------------------------ -------- ------------ ------------
10. Earnings per share
The basic and diluted earnings per share are calculated by
dividing the profit attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding.
Six months Six months
ended ended
30 June 30 June 2016
2017
In thousands of Pounds
Sterling/shares
------------------------------ ----------- -------------
Profit attributable to
ordinary shareholders 25,278 46,080
Weighted average number
of ordinary shares in issue 477,348 432,092
------------------------------ ----------- -------------
Basic and diluted earnings
per share (in pence) 5.30 10.66
------------------------------ ----------- -------------
The weighted average number of shares outstanding for the
purpose of computation of earnings per share is computed as
follows:
Six months Six months
ended ended
30 June 2017 30 June 2016
In thousands of shares
-------------------------------- ------------- -------------
Shares outstanding as at
1 January 432,216 430,393
Effect of shares issued
on placing of ordinary
shares 43,039 -
Effect of scrip dividends
issued 2,093 1,699
-------------------------------- ------------- -------------
Weighted average - outstanding
shares 477,348 432,092
-------------------------------- ------------- -------------
Shares issued via scrip dividends and during placing have
participation rights on all the profits or losses of the Group for
the full six months ended 30 June 2017. The denominator for the
purposes of calculating both basic and diluted earnings per share
is the same because the Company has not issued any share options or
other instruments that would cause dilution.
11. Loans and borrowings
The Company has a three-year revolving credit facility from ING
Bank and KfW IPEX-Bank ("RCF"). In June 2017, the Company utilised
the remaining part of the accordion tranche provision, a commitment
increase mechanism within the RCF, to increase the total commitment
from GBP110 million to GBP180 million. The term of the facility is
three years expiring in January 2018 . The borrowing margin is 185
basis points over LIBOR.
As at 30 June 2017, the Company had utilised GBP5.6 million of
the GBP180 million RCF (31 December 2016: utilised GBP70.3 million
of the GBP110 million RCF) to cover letters of credit (31 December
2016: GBP25.1 million). There were no cash borrowings under the RCF
as at 30 June 2017.
The Company repaid the previously drawn amount of GBP45.2
million during April 2017 using some of the proceeds of the Placing
(see Note 9). There is no interest payable under the RCF as at 30
June 2017 (31 December 2016: GBP45,000).
The unamortised debt issuance cost related to the RCF amounted
to GBP379,000 as at 30 June 2017 (31 December 2016: GBP466,000).
The Company incurred additional loan issuance cost during the
period amounting to GBP192,000. The unamortised debt issuance cost
is currently presented as other current asset in the condensed
consolidated interim statement of financial position as there were
no drawn outstanding amount under the RCF (31 December 2016: netted
against the cash amount drawn under the RCF).
The total finance cost incurred in relation to the RCF for the
six months ended 30 June 2017 amounted to GBP1,057,000 (30 June
2016: GBP1,053,000). The total finance cost for the six months
ended 30 June 2017 includes the amortisation of the debt issue cost
of GBP279,000 (30 June 2016: 199,000).
Pledges and collaterals
As at 30 June 2017 and 31 December 2016, the Group has pledged
all the current and future assets held within the consolidated
subsidiaries to the RCF lending banks.
12. Other payables
Other payables are composed of the following:
30 June 2017 31 December
2016
In thousands of Pounds
Sterling
------------------------ ------------- ------------
Accruals 3,057 2,823
Others 87 133
3,144 2,956
------------------------ ------------- ------------
13. Fair value measurements
The fair values of financial assets and liabilities, together
with the carrying amounts shown in the condensed consolidated
interim statement of financial position, are as follows:
30 June 2017
------------------------------------------------
Fair
value
through Loans Other Total
profit and financial carrying Fair
or
loss receivables liabilities amount value
In thousands of Pounds
Sterling
----------------------------- --------- ------------ ------------ --------- ---------
Assets
FVPL investments 570,518 - - 570,518 570,518
Trade and other receivables - 26,534 - 26,534 26,534
Cash and cash equivalents 22,626 - - 22,626 22,626
593,144 26,534 - 619,678 619,678
----------------------------- --------- ------------ ------------ --------- ---------
Liabilities
Derivative financial
instruments 5,134 - - 5,134 5,134
Trade payables - - 104 104 104
Other payables - - 3,144 3,144 3,144
----------------------------- --------- ------------ ------------ --------- ---------
5,134 - 3,248 8,382 8,382
----------------------------- --------- ------------ ------------ --------- ---------
31 December 2016
------------------------------------------------
Fair
value
through Loans Other Total
profit and financial carrying Fair
or
loss receivables liabilities amount value
In thousands of Pounds
Sterling
----------------------------- --------- ------------ ------------ --------- ---------
Assets
FVPL investments 569,926 - - 569,926 569,926
Trade and other receivables - 1,897 - 1,897 1,897
Cash and cash equivalents 22,113 - - 22,113 22,113
592,039 1,897 - 593,936 593,936
----------------------------- --------- ------------ ------------ --------- ---------
Liabilities
Loans and borrowings - - 44,800 44,800 45,266
Derivative financial
instruments 7,195 - - 7,195 7,195
Trade payables - - 145 145 145
Other payables - - 2,956 2,956 2,956
----------------------------- --------- ------------ ------------ --------- ---------
7,195 - 47,901 55,096 55,562
----------------------------- --------- ------------ ------------ --------- ---------
FVPL investments
The valuation of FVPL investments is carried out on a six
monthly basis as at 30 June and 31 December each year. An
independent third-party valuer reviews this portfolio
valuation.
The valuation is determined using the discounted cash flow
methodology. The cash flows forecast to be received by the Company
or its subsidiaries, generated by each of the underlying assets and
adjusted as appropriate to reflect the risk and opportunities, are
discounted using project specific discount rates. The valuation
methodology is the same one used for the valuation of the portfolio
in previous reporting periods.
During the valuation process, the Group uses certain
macroeconomic assumptions for the cash flows as shown below:
Macroeconomic assumptions
End of period 2017 2018-2020 2021 onwards
------------------ --------------- --------------- ---------------
UK
Indexation (%)
(1) 1.75 2.75 2.75
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Corporate
Tax (%) (9) 19.0 19.0 17.0
Canada
Indexation (%) 1.00/1.35 2.00/2.35 2.00/2.35
(1,2)
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Corporate 27.0/26.0/26.5 27.0/26.0/26.5 27.0/26.0/26.5
Tax (%) (3)
GBP/CAD as at
30 June 2017
(4) 1.688 1.688 1.688
Australia
Indexation (%)
(1,5) 1.50 2.50 2.50
Deposit Interest 3.50/4.50 3.50/4.50 3.50/4.50
Rate (%) (6)
SPC Corporate
Tax (%) 30.0 30.0 30.0
GBP/AUD as at
30 June 2017
(4) 1.692 1.692 1.692
Germany
Indexation (%)
(1) 1.00 2.00 2.00
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Corporate
Tax (%) (7) 15.8 15.8 15.8
GBP/EUR as at
30 June 2017
(4) 1.138 1.138 1.138
Norway
Indexation (%)
(1,8) 1.94 2.94 2.94
Deposit Interest
Rate (%) 1.8 1.8 3.5
SPC Corporate
Tax (%) 24.0 24.0 24.0
GBP/NOK as at
30 June 2017
(4) 10.893 10.893 10.893
USA
Indexation (%)
(1,10) 1.50 2.50 2.50
Deposit Interest
Rate (%) 1.0 1.0 2.5
SPC Federal
Tax (%) 35.0 35.0 35.0
GBP/USD as at
30 June 2017
(4) 1.300 1.300 1.300
(1) The lower 2017 inflation rate is applicable for projects for
which the documentation does not prescribe the actual published
rate, if available, to be used for the next 12 months from the date
of the index being published
(2) All Canadian projects have a long-term 2.0% indexation
factor with the exception of Northeast Stoney Trail and Northwest
Anthony Henday Drive, each of which have a slightly different
indexation factor derived from a basket of regional labour, CPI and
commodity indices
(3) The tax rate is 27% in Alberta and Saskatchewan, 26% in
British Columbia and 26.5% in Ontario
(4) As published on www.oanda.com
(5) Long-term Consumer Price Index 2.50% and Long-term Labour
Price Index 3.50%
(6) Cash on Debt Service Reserve Accounts and Maintenance
Service Reserve Accounts can be invested on a six-month basis. All
other funds are assumed to be deposited on a shorter term
(7) Including Solidarity charge and excluding Trade tax that
varies between communities
(8) Indexation of revenue based on basket of four specific
indices
(9) UK Corporate tax rate to decrease from 19% to 17% in
2020
(10) 80% of ORB indexation factor for revenue is contractually
fixed and is not tied to CPI
Other key inputs and assumptions include:
-- Any deductions or abatements during the operations period are
passed down to subcontractors.
-- Cash flows to and from the project companies are received at
the times anticipated.
-- Where the operating costs of the Company or its project
portfolio are fixed by contract, such contracts are performed, and
where such costs are not fixed, they are in line with the
budget.
-- Contractual payments to the project companies remain on track
and are not terminated before their contractual expiry date.
Discount rate sensitivity
The discount rates used for individual assets range between 7.2%
and 10.10%. The value weighted average rate is approximately 7.48%
(7.56% at 31 December 2016). This methodology calculates the
weighted average based on the value of each project in proportion
to the total portfolio value, i.e. based on the net present value
of their respective future cash flows.
The discount rates used for individual project entities are
based on BBGI's knowledge of the market, discussions with advisors
and publicly available information on relevant transactions.
The following table shows the sensitivity of the FVPL
investments to a change in the discount rate:
+1% to 8.48% - 1% to 6.48%
in 2017 in 2017
Profit Profit
Equity or loss Equity or loss
Effects in thousands
of Pounds Sterling
---------------------- --------- --------- ------- ---------
30 June 2017 (53,652) (53,652) 62,479 62,479
31 December 2016 (52,649) (52,649) 61,377 61,377
---------------------- --------- --------- ------- ---------
Foreign exchange rate sensitivity
A significant proportion of the Company's underlying investments
are denominated in currencies other than Pounds Sterling. The
Company maintains its accounts, prepares the valuation and pays
distributions in Pounds Sterling. Accordingly, fluctuations in
exchange rates between Pounds Sterling and the relevant local
currencies will affect the value of the Company's underlying
investments.
The following table shows the sensitivity of the FVPL
investments due to a change in foreign exchange rates compared to
the macroeconomic assumptions above:
Increase by Decrease by
10% 10%
Profit Profit
Equity or loss Equity or loss
Effects in thousands
of Pounds Sterling
---------------------- --------- --------- ------- ---------
30 June 2017 (23,726) (23,726) 28,999 28,999
31 December 2016 (27,913) (27,913) 34,116 34,116
---------------------- --------- --------- ------- ---------
Sensitivity applied against the foreign exchange rates at 30
June 2017. This sensitivity only applies to unhedged cash
flows.
Inflation sensitivity
The project cash flows are correlated with inflation (e.g. RPI
or CPI). The table below demonstrates the effect of a change in
inflation rates compared to the macroeconomic assumptions
above:
+1% -1%
Profit Profit
Equity or loss Equity or loss
Effects in thousands
of Pounds Sterling
---------------------- ------- --------- --------- ---------
30 June 2017 34,989 34,989 (28,697) (28,697)
31 December 2016 31,535 31,535 (27,022) (27,022)
---------------------- ------- --------- --------- ---------
Sensitivity applied against those inflation rates as set out in
the macroeconomic assumptions table above.
Deposit rate sensitivity
The project cash flows are positively correlated with the
deposit rates. The table below demonstrates the effect of a change
in long-term deposit rates compared to the macroeconomic
assumptions above:
+1% -1%
Profit Profit
Equity or loss Equity or loss
Effects in thousands
of Pounds Sterling
---------------------- ------- --------- --------- ---------
30 June 2017 12,381 12,381 (12,363) (12,363)
31 December 2016 11,832 11,832 (11,749) (11,749)
---------------------- ------- --------- --------- ---------
Sensitivity applied against those long-term deposit rates as set
out in the macroeconomic assumptions table above.
Lifecycle costs sensitivity
Of the 39 projects in the portfolio, 13 project companies retain
the lifecycle obligations. The remaining 26 projects have this
obligation passed down to the sub-contractor. The table below
demonstrates the impact of a change in lifecycle costs.
Increase by Decrease by
10% 10%
Profit Profit
Equity or loss Equity or loss
Effects in thousands
of Pounds Sterling
---------------------- --------- --------- ------- ---------
30 June 2017 (12,216) (12,216) 12,229 12,229
31 December 2016 (13,445) (13,445) 13,200 13,200
---------------------- --------- --------- ------- ---------
The sensitivity is applied to the 13 projects within the
portfolio which retain the lifecycle obligation, i.e. the
obligation is not passed down to the sub-contractor. These projects
represent approximately 50% of the total portfolio value as at 30
June 2017.
Derivative financial instruments
The fair value of derivative financial instruments ("foreign
exchange forwards") is calculated by discounting the difference
between the future settlement amount due to the difference between
the contractual forward rate and the estimated forward exchange
rates at the maturity of the forward contract. The foreign exchange
forwards are fair valued periodically. The fair value of derivative
financial instruments as of 30 June 2017 amounted to GBP5,134,000 -
liability (31 December 2016: GBP7,195,000 - liability).
The unrealised gain on the valuation of foreign exchange
forwards for the six months ended 30 June 2017 amounted to
GBP62,000 (30 June 2016: GBP6,662,000 - unrealised loss). For the
period ended 30 June 2017, the realised loss from these derivative
financial instruments amounted to GBP1,999,000 (30 June 2016:
GBP105,000 - realised loss).
Other items
The carrying amounts of cash and cash equivalents, receivables
and payables that are payable within one year, or on demand, are
assumed to be their respective fair values.
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets and liabilities.
Level 2: inputs, other than quoted prices included in Level 1,
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The following table shows the grouping of assets/(liabilities)
recognised at fair value under their respective levels as at 30
June 2017:
Level Level Level
1 2 3 Total
In thousands of Pounds
Sterling
------------------------ ------- -------- -------- --------
FVPL investment - - 570,518 570,518
Derivative financial
asset/(liability) - (5,134) - (5,134)
------------------------ ------- -------- -------- --------
The following table shows the grouping of assets/(liabilities)
recognised at fair value in different levels as at 31 December
2016:
Level Level Level
1 2 3 Total
In thousands of Pounds
Sterling
------------------------ ------- -------- -------- --------
FVPL investment - - 569,747 569,747
Derivative financial
asset/(liability) - (7,195) - (7,195)
------------------------ ------- -------- -------- --------
The following table shows a reconciliation of the movements in
the fair value measurements in level 3 of the fair value
hierarchy:
30 June 2017 31 December
2016
In thousands of Pounds
Sterling
------------------------------ ------------- ------------
Balance at 1 January 569,926 504,776
Acquisitions of/additional
investment in FVPL
investments - 9,525
Income from FVPL investments 31,790 99,523
Distributions received (26,168) (42,514)
Reclassification to other
receivables (5,030) (1,384)
570,518 569,926
------------------------------ ------------- ------------
The impact of unrealised foreign exchange gains or losses on the
FVPL investments for the period ended 30 June 2017 amounted to a
GBP3.2 million loss (year ended 31 December 2016: GBP51.2 million
gain).
14. Subsidiaries established
The Group has established the below legal entity, which is
included in the consolidation:
Place Effective
of Ownership Year
Company name Purpose Incorporation Interest Acquired/Established
------------------- -------- -------------- ----------- ---------------------
BBGI LP Invest Can Holding
Inc. entity Canada 100% 2017
The Group has established the below legal entities, which are
not included in the consolidation due to the Investment Entity
exemption (see Note 2):
Place Effective
of Ownership Year
Company name Purpose Incorporation Interest Acquired/Established
----------------- -------- -------------- ----------- ---------------------
Holding
BBGI GHIB LP Inc entity Canada 100% 2017
Holding
BBGI GHIB LP entity Canada 100% 2017
Other than the above, no further subsidiaries were
acquired/established during the six months ended 30 June 2017.
15. Related parties and key contracts
All transactions with related parties were undertaken on an
arm's-length basis.
Supervisory Board fees
The members of the Supervisory Board of the Company were
entitled to a total of GBP74,000 in fees for the six months ended
30 June 2017 (30 June 2016: GBP70,000). There were no outstanding
amounts due as at 30 June 2017 and 31 December 2016.
Directors' shareholding in the Company
30 June 31 December
2017 2016
In thousands of shares
------------------------- -------- ------------
David Richardson 169 166
Colin Maltby 115 112
Frank Schramm 247 193
Duncan Ball 247 193
Michael Denny 40 39
818 703
------------------------- -------- ------------
Remuneration of the Management Board
Under the current remuneration program, all staff of BBGI
Management HoldCo are entitled to an annual base salary payable
monthly in arrears, which is reviewed annually by the Management
Board. The Management Board members are entitled to a fixed
remuneration under their contracts and are also entitled to
participate in a short-term incentive plan and a long-term
incentive plan. Compensation under their contracts is reviewed
annually by the Supervisory Board.
The total short-term and other long-term benefits recorded in
the condensed consolidated interim income statement for key
management personnel are as follows:
Six months Six months
ended ended
30 June 30 June
2017 2016
In thousands of Pounds Sterling
--------------------------------- ----------- -----------
Short-term benefits 848 713
Share-based payment 171 103
Other long-term benefits - 105
1,019 921
--------------------------------- ----------- -----------
Share-based compensation
Each of the members of the Management Board received award
letters ("2016 Award", "2015 Award" and "2014 Award", respectively)
under the Group's long-term incentive plan. These awards are to be
settled by BBGI Management Holdco S.à r.l. in the Company's own
shares. Of the awards granted, 50% vests by reference to a
performance measure based on the Company's Total Shareholder Return
("TSR condition") over the Return Periods (below), and the
remaining vests by reference to a performance measure based on the
increase in the Company's Investment Basis Net Asset Value per
share ("NAV condition). Further details are as follows:
2016 Award 2015 Award 2014 Award
December December December
2016- December 2015- December 2014- December
Return Period 2019 2018 2017
Vesting period (by 36 mos 36 mos
reference to performance ending ending 36 mos ending
measure - NAV Condition) 31/12/2019 31/12/2018 31/12/2017
Maximum number of
shares which will
vest 785,562 696,998 725,498
The fair value of the equity instruments awarded to the
Management Board was determined using a Monte Carlo model, the key
parameters of which are listed in the following table:
2016 Award 2015 Award 2014 Award
Share price at grant GBP 1.395 GBP 1.28
date GBP 1.21
Maturity 3 years 3 years 2.34 years
Target dividends (2017 GBP0.0625 -
to 2019) -
Target dividends (2016 - GBP0.06
to 2018) -
Target dividends (2015 - -
to 2017) GBP 0.06
Volatility 10% 10% 10%
Risk free rate 0.25% 0.85% 0.64%
------------------------ ---------- ---------- -----------
The expected volatility reflects the assumption that the
historical volatility over a period similar to the life of the plan
is indicative of future trends, which may not necessarily be the
actual outcome.
The fair value of the awards and amounts recognised as
additional paid in capital in the Group's condensed consolidated
interim statement of financial position are as follows:
30 June 31 December
2017 2016
In thousands of Pounds Sterling
--------------------------------- ------- -----------
2016 Award 68 -
2015 Award 162 108
2014 Award 245 196
--------------------------------- ------- -----------
Amount recognised as additional
paid-in capital 475 304
--------------------------------- ------- -----------
The amounts recognised as expenses in the Group's condensed
consolidated interim income statement are as follows:
Six months Six months
ended ended
30 June 30 June
2017 2016
In thousands of Pounds Sterling
--------------------------------- ---------- ----------
2016 Award 68 -
2015 Award 54 54
2014 Award 49 49
--------------------------------- ---------- ----------
Amount recognised as additional
paid in capital 171 103
--------------------------------- ---------- ----------
Receivable component of FVPL Investments
As at 30 June 2017, the loan and interest receivable component
of FVPL investments, which is included in the FVPL investments,
amounted to GBP170,115,000 (31 December 2016: GBP194,309,000). The
fixed interest charged on the receivables ranges from 3.95% to
13.5% per annum. The receivables have expected repayment dates
ranging from 2017 to 2045.
Trade and other receivables
As at 30 June 2017, trade and other receivables include
short-term receivables from project holding companies amounting to
GBP6,699,000 (31 December 2016: GBP1,687,000) and an amount of
GBP19,684,000 provided to Mersey Gateway Bridge project on the
Security Agent's cash collateral account, to replace the previously
existing letter of credit coverage provided to the project. The
remaining amount pertains to third-party receivables.
16. Subsequent events
There have been no significant subsequent events from 30 June
2017 to the date of approval of the condensed consolidated interim
financial statements which would impact the current amounts and
disclosures included herein.
Cautionary Statement
Certain sections of this report including the Company Overview,
the Chairman's Statement and the Report of the Management Board
(the "Review Section") have been prepared solely to provide
additional information to shareholders to assess the Group's
strategies and the potential for those strategies to succeed. These
should not be relied on by any other party or for any other
purpose.
The Review Section may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "forecasts", "projects", "expects", "intends",
"may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology.
These forward-looking statements include matters that are not
historical facts. They appear in a number of places throughout this
document and include statements regarding the intentions, beliefs
or current expectations of the Directors concerning, amongst other
things, the investment objectives and investment policy, financing
strategies, investment performance, results of operations,
financial condition, liquidity, prospects, and distribution policy
of the Company and the markets in which it invests.
By their nature forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies may differ
materially from the impression created by the forward-looking
statements contained in this document.
Subject to their legal and regulatory obligations, the Directors
expressly disclaim any obligations to update or revise any
forward-looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events,
conditions or circumstances on which any statement is based.
In addition, the Review Section may include target figures for
future financial periods. Any such figures are targets only and are
not forecasts.
This interim report has been prepared for the Group as a whole
and therefore gives greater emphasis to those matters that are
significant to BBGI SICAV S.A. and its subsidiaries when viewed as
a whole
(1) Represents the Company's total number of shares outstanding
at 30 June 2017 multiplied by the closing market price of the
shares on that date.
(2) In accordance with the Company's Investment Policy
(3) These are targets only and not profit forecasts. There can
be no assurance that these targets will be met.
(4) BBGI's previous market announcement referenced a total cash
consideration of approximately CAD 208 million for the five assets,
which subsequently reduced to a figure of up to
CAD 189 million following SNC-Lavalin's disposal of part of its
equity investment in one asset to a co-shareholder.
(5) Based on share price at 30 June 2017 and after adding back
dividends paid or declared since listing. Expressed as the
percentage appreciation of the share price of the Company,
after
adding back dividends during the period over the share price of
the Company at the start of the period.
6 The compound annual growth rate (CAGR) represents the steady
state annual growth rate required to achieve a TSR of 83.1% over
the same period from IPO to 30 June 2017.
(7) Refer to the Financial Results section of the interim report
for a definition of the Ongoing Charge Percentage.
(8) The use of the corporate credit facility to cover letters of
credit does not constitute cash borrowings.
(9) 53.33% equity and 60% sub debt
(10) 53.33% equity and 59.46% sub debt
(11) 76.20% equity and 80% sub debt
12 Entitled to 100% of distributions
13 Although NCP is considered as an early stage construction
asset the present value of future project distributions are
effectively offset by the present value of the future equity
subscription obligation.
(14) In June 2017, the Company announced that it had signed a
strategic agreement with a subsidiary of SNC-Lavalin Group Inc.
(TSX ticker: SNC) ("SNC-Lavalin") to invest in an
investment vehicle which will hold substantial equity interests
in five operational PPP projects in Canada. The above pro forma
illustrates the portfolio breakdown assuming the
completion of this acquisition on 30 June 2017.
15 Or 11.6% on a CAGR basis.
(16) Based on share price at 30 June 2017 and after adding back
dividends paid or declared since listing.
(17) The Ongoing Charge percentage shown for 30 June 2017 based
on an annualised calculation.
(18) Following a recent change to the Prospectus Regulation,
with effect from 20 July 2017, the threshold for the issue of new
shares on a regulated market above which a prospectus is
required to be published has changed from 10% to 20% of the
number of shares of the same class already admitted to trading,
within a 12 month period.
19 Refer to the Financial Results section of this report for
further detail on the ongoing charge percentage.
(20) Based on an twelve month estimate of recurring costs at 30
June 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SDMFWSFWSEIA
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