BBGI SICAV has announced its interim results for the six months ended 30 June 2016. During the period, the company’s NAV increased by 8.7% to £521.78m, whilst its NAV per share increased by 8.3% t0 120.8p. The company’s final dividend of 3.0p per share for 2015 resulted in a total payment for the year of 6.0p per share, which was in line with target. The Board has announced that it is increasing its dividend target for 2016 to 6.25p per share (an increase of 4.16%) and an interim dividend of 3.125p per share has been declared. The company’s chairman, David Richardson, says that the results have been heavily influenced by the market reaction to the UK referendum on ‘Brexit’. Specifically, he says that the resultant weakening of Sterling, the Company’s reporting currency, has improved the Sterling valuation of the c.60% of its assets which are held in Canada, Australia, the USA and Continental Europe and demonstrates the benefit of having a portfolio which is diversified by both geography and currency.
In terms of performance, the company says that the performance of the portfolio and cash receipts were ahead of its business plan and underlying financial models. The company had an IFRS NAV of £517.9m as at 30 June 2016, which is an increase of 7.4% over six months (£482.4m as at 31 December 2015). The company made a net profit under IFRS of £46.1m million for the six months ended 30 June 2016, an increase of 182.8% year-on-year (£16.3 million for the six months ended 30 June 2015).
The chairman says that the underlying performance in the 6 months was robust with a slight reduction in estimated discount rates and management actions improving valuations across the portfolio. He says that cash flows remained strong and ahead of their model, and this gave them the confidence to raise the interim dividend to 3.125 pence per share.; the first step toward a current year target of 6.25 pence per share.
In terms of current portfolio shape, as at 30 June 2016, BBGI’s says that its 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 US. 96% of the assets by value are operational; 0% are in early-stage construction, 4% are in late-stage construction and expected to become operational in December 2016.
In terms of outlook, the company’s chairman says that the secondary market for infrastructure assets remains fierce with demand far outstripping supply. Thi9s has had a favorable impact on valuations but, reflecting this, he says that prices have remained high and they have not found any secondary assets in the half year which provide additional value for shareholders. He says that they are seeing potential value in the primary market and the company is involved in a number of bidding consortia.
The Company is showing a net debt position of approximately 3.2% of the NAV at 30 June 2016 but our current facilities give us sufficient scope for further expansion. Strategically, however, we do not intend to have structural leverage and therefore expect to raise further equity capital at an appropriate time. We
In terms of financing, as at 30 June 2016 the Group had a total cash balance of £28.3m and total borrowings outstanding of £45.2m equating to a net debt position of £16.9m (approximately 3.2% of NAV). The Company increased the total commitment under the corporate credit facility from £80 million to £110 million with effect from 3 May 2016 and so it says it has room for further expansion. The Company retains the ability to increase further the total commitment under the facility to £180m. However, it says that it does not e4xpect to have structural leverage and so expects to raise further equity over time. The company says that it anticipates that the Luxembourg parliament will pass legislation this year which will enable it to raise new capital at a premium of more than 5% to Net Asset Value (which is the current legal limit). It says that, given the premium at which its shares trade, it consider it in shareholder’s interests to await this legislation.
BBGI benefits heavily from sterling’s depreciation : BBGI