www.bb-gi.com
Annual Report 2022
Our purpose is to deliver
social infrastructure for
healthier, safer and more
connected societies, while
creating sustainable value
for all stakeholders
Contents
Strategic report
1 About BBGI
2 Financial Highlights
3 Portfolio Highlights
4 Portfolio at a Glance
7 Chair’s Statement
8 Co-CEO’s Statement
12 Our Investment Strategy
14 Operating Model
16 Portfolio Review
20 Portfolio Snapshot: Top Five Assets
23 Market Trends and Pipeline
26 Operating and Financial Review
30 Valuation
35 Financial Results
38 Alternative Performance Measures (‘APM’)
39 Reconciliation of Investment Basis to IFRS
40 Risk
48 Environment, Social and Governance
50 Contribution to Sustainable Development Goals
52 Stakeholder Engagement
54 Sustainable Finance Disclosure Regulation
55 Pathway to net zero
57 Climate-related risks
58 TCFD Disclosures
Corporate governance
66 Governance at a glance
68 Biographies of Directors –
Supervisory Board
70 Biographies of Directors –
Management Board
72 Board leadership and purpose
74 Division of Responsibilities
76 Composition, Succession and Evaluation
77 Administration
78 Nomination Committee Report
80 Audit Committee Report
84 Remuneration Committee Report
86 Remuneration at a glance
92 Viability
93 Management Board Responsibilities Statement
Financial statements
94 Audit Report
98 Consolidated Income Statement
99 Consolidated Statement of Other
Comprehensive Income
100 Consolidated Statement of Financial Position
101 Consolidated Statement of Changes in Equity
102 Consolidated Statement of Cash Flows
103 Notes to the Consolidated Financial Statements
137 Audit Report
141 Company Statement of Comprehensive Income
141 Company Statement of Financial Position
143 Company Statement of Changes in Equity
144 Company Statement of Cash Flows
145 Notes to the Company Financial Statements
156 Board Members, Agents and Advisers
157 Glossary
158 Cautionary Statement
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www.bb-gi.com
Image on front cover: Women’s College Hospital, Toronto, ON, Canada
BBGI Global Infrastructure S.A.
(BBGI, the ‘Company’, and together with
its consolidated subsidiaries, the ‘Group’)
is a global infrastructure investment
company helping to provide the
responsible capital required to build
and maintain critical social infrastructure
1
.
From hospitals to schools, to affordable
housing and safer roads, we partner
with the public sector to deliver social
infrastructure that forms the building
blocks of local economies, while creating
sustainable value for all stakeholders.
About BBGI
1 Social infrastructure refers to public infrastructure assets and services and includes education, healthcare, blue light (fire and police),
affordable housing, modern correctional facilities, clean energy and transport infrastructure assets. In exchange for the provision of
these assets and services, BBGI receives a revenue stream that is paid directly by the public sector.
Our vision:
We invest to serve and
connect people.
Our values:
– Trusted to deliver.
– Dependable partner.
– Investor with impact.
– Present-focused,
future-ready.
Our purpose:
Our purpose is to deliver
social infrastructure for
healthier, safer and
more connected
societies, while creating
sustainable value for
all stakeholders.
Annual Report 2022 1
Corporate governanceStrategic report
Financial statements
LIFT Liverpool and Sefton
Financial Highlights
2
LIFT Liverpool and Sefton, UK
Ongoing charges
0.87%
(31 December 2021: 0.86%)
NAV per share
149.9pps
up 6.6% as at 31 December 2022
(31 December 2021: 140.7pps)
High-quality inflation linkage
0.5%
FY 2021: 0.4 per cent
2022 dividend declared
per share
7.48pps
3
2023 target dividend
7.93pps
+6%
Annualised total NAV return
per share
9.1%
FY 2021: 8.8%
Cash dividend cover
1.47x
FY 2021: 1.31x
2024 target dividend
8.40pps
+6%
Investment Basis NAV
£1,069.2m
up 6.7% as at 31 December 2022
(31 December 2021 £1,001.6 million)
2 Refer to the Alternative Performance Measures section of this Annual Report for further details.
3 Pence per share (pps).
2 BBGI Global Infrastructure S.A.
Portfolio Highlights
Strong operational
performance of our
globally diversified portfolio
of 56 high-quality, 100 per
cent availability-style
infrastructure assets.
Cash receipts ahead of
expectations, with no
material lockups or defaults.
Discount rate increased from
6.6 per cent to 6.9 per cent,
reflecting an equity risk
premium of c.3.1 per cent.
Attractive pipeline of
availability-style investments
in Europe, North America,
and Australia, maximising the
benefits of strategic
investment partnerships
with leading contractors.
Contracted high-quality
inflation linkage of 0.5 per
cent
4
resulting in a £76 million
increase in NAV.
Robust portfolio performance
has enabled an upward
revision of previously
announced dividend
targets for 2023 and 2024.
Net debt position on an
Investment Basis of
£26.3 million, with
£57.5 million drawn under the
revolving credit facility (‘RCF’).
Two new availability-style
investments totalling
£64 million.
Consistently high level
of asset availability rate
of 99.9 per cent maintained.
Published Net Zero Plan
for BBGI and for our
Portfolio Companies.
Socially beneficial investment
under SFDR’s Article 8.
4 Inflation linkage of 0.5 per cent means that if inflation is one percentage point higher than our modelled assumptions for
all future periods then our portfolio returns will increase from 6.9 per cent to 7.4 per cent.
Annual Report 2022 3
Corporate governanceStrategic report
Financial statements
Availability-style
revenue assets
100%
Regulated assets
–
Demand-based
assets
–
Operations 99.5%
Construction
0.5%
Canada 35%
UK
32%
Continental Europe
12%
US
11%
Australia
10%
Transport 53%
Healthcare
20%
Blue light and
modern correctional
facilities
12%
Education
9%
3%
Affordable housing
Clean energy
2%
1%
Other
Ohio River Bridges (US) 11%
Golden Ears Bridge
(Canada)
10%
Northern Territory
Secure Facilities
(Australia)
5%
Victoria Correctional
Facilities
(Australia)
4%
A1/A6 Motorway
(Netherlands)
Next five largest
investments
16%
Remaining investments
4%
50%
≥25 years
≥20 years and
<25 years
≥10 years and
<20 years
<10 years
24%
25%
45%
6%
100% 45%
≥75% and <100%
7%
≥50% and <75%
27%
<50%
21%
AAA 57%
AA+
11%
AA
32%
The fundamentals
Based on portfolio value as at 31 December 2022.
Portfolio at a Glance
Investment type
100 per cent availability-style
5
revenue stream.
Investment status
Low-risk operational portfolio.
Geographical split
Geographically diversified in stable
developed countries.
Sector split
Well-diversified sector exposure with large
allocation to lower-risk availability-style road
and bridge investments.
Investment life
Long investment life with 49 per cent of
portfolio by value with a duration of greater
than or equal to 20 years; weighted average life
of 20.2 years. Average portfolio debt maturity
of 16.3 years.
Top-five investments
Well-diversified portfolio with no major single
asset exposure.
Investment ownership
79 per cent of assets by value in the portfolio
are 50 per cent owned or greater.
Country rating
All assets located in countries with ratings
between AA and AAA
6
.
5 Availability-style means revenues are paid provided the assets are available for use, so our portfolio has no exposure to demand-based or regulated investments.
6 Source: Standard & Poor’s credit ratings.
4 BBGI Global Infrastructure S.A.
2022
20362029 2043
2025
20402032 2046
2024
20382027 20412034 2048
2023
20372030 2044
2026
2033 204720392031 20452028 20422035
2049 2050 2051
Illustrative cash flows
(from 1 January 2022)
Illustrative cash flows
(assets acquired since
1 January 2022)
Income Phase Capital Repayment Phase
0
25
50
75
100
125
150
Cash flows (£m)
Projected portfolio cash flow
The Company’s underlying assets generate
a consistent and long-term stream of cash
flows for the portfolio, extending up to 2051.
These cash flows are predictable, owing to the
involvement of government or government-
backed counterparties and the contractual
nature of the agreements. Additionally, the
index-linked provisions offer an attractive
inflation linkage of approximately 0.5 per cent,
contributing £76 million to the Net Asset Value
(NAV) during the year.
The investments made over the year to
31 December 2022 contributed positively to
stable long-term cash flows. Based on current
estimates, and if there were to be no further
acquisitions, the existing portfolio is forecasted
to enter into the capital repayment phase in
September 2040, after which cash inflows from
the portfolio would be paid to the Company’s
shareholders as capital and the portfolio
valuation will reduce as assets reach the
end of their concession term.
As at 31 December 2022, BBGI had a weighted
average portfolio life of 20.2 years, a decrease
of 0.1 years compared with 31 December 2021.
By prioritising the acquisition of assets with
a long residual life, BBGI has been able to
maintain a portfolio with a long weighted
average life, which has only slightly decreased
since our IPO in 2011.
Cash flows (£m)
This illustrative chart is a target only, as at 31 December 2022, and is not a profit forecast. There can be no assurance this target will be met.
The hypothetical target cash flows do not consider any unforeseen costs, expenses or other factors that may affect the portfolio assets and therefore
the impact on the cash flows to the Company. As such, the graph above should not in any way be construed as forecasting the actual cash flows from
the portfolio. There are minor cash flows extending beyond 2051 but for illustrative purposes, these are excluded from the chart above.
Portfolio at a Glance continued
Annual Report 2022 5
Corporate governanceStrategic report
Financial statements
UK 25
Canada
16
Germany
7
Australia
3
3
Netherlands
Norway
1
US
1
Our global assets
Portfolio at a Glance continued
Location breakdown
UK
25 assets
Canada
16 assets
Germany
7 assets
Australia
3 assets
Netherlands
3 assets
Norway
1 asset
US
1 asset
Total assets
56
6 BBGI Global Infrastructure S.A.
Chair’s Statement
On behalf of the Supervisory
Board, I am pleased to report a
strong financial and operational
performance for 2022. Despite a
volatile geopolitical backdrop
and challenging macroeconomic
environment, characterised by
global increases in inflation and
interest rates and general market
uncertainty, our Company has
remained resilient throughout
the year; we continued to
generate predictable, high-
quality inflation-linked income,
increased dividends, and secure
returns for our shareholders.
Overview of strong financial and operational
performance for 2022
We have continued to execute successfully on
our low-risk investment strategy, which has
resulted in an NAV per share increase of 6.6 per
cent this year to 149.9 pence, cash flows ahead
of expectations, a dividend per share of 7.48
pence and strong dividend cover of 1.47x.
This strong performance, coupled with the
long-term predictable nature of the Company’s
cash flows and high-quality inflation linkage,
gives us continued confidence in our progressive
dividend policy. As a result, we have revised our
dividend targets for the years 2023 and 2024,
increasing the growth rate from 2 per cent to
6 per cent, ensuring our shareholders benefit
from the increased value created by our
high-quality, inflation-linked portfolio.
ESG is embedded in our DNA and I am proud
of BBGI’s role as a steward of critical social
infrastructure. We help meet the essential needs
of communities and make a positive, long-term
impact on society and the economy. Our purpose
is to focus on delivering social infrastructure for
healthier, safer, and more connected societies,
while creating sustainable value for all
stakeholders. During 2022, we continued to
further embed our ESG commitments as part
of our sustainability journey.
Further strengthening our robust approach
to governance
As an internally-managed investment company,
having robust controls is of key importance to
securing the sound financial and operational
performance of our investments over the short
and long term.
We continue to refine our rigorous approach to
governance and, over the past year, have reviewed
the annual plans for our Committees, to ensure
they continue to provide sufficient depth to our
governance process and effectiveness.
With all of our Supervisory Board members
being independent Non-Executive Directors,
we continue to be compliant with all the AIC
Corporate Governance requirements on Board
and Director independence and we operate a
clear division of responsibilities between the
Supervisory Board and the Management Board.
Effective engagement with our stakeholders
is a major part of our long-term success and
sustainability. As part of this both I, and the
Chairs of each Committee of the Supervisory
Board, make ourselves available to speak to
shareholders and to all stakeholders more
generally throughout the year.
Further enhancing our Board and
increasing diversity
In 2022, we welcomed Andrew Sykes and June
Aitken as new Supervisory Board members.
We have already benefitted from the fresh
perspectives they bring to the Board. Andrew
Sykes has succeeded Howard Myles as Senior
Independent Director and Chair of our
Remuneration Committee. Both appointments
have helped to ensure that we have a diverse,
well-balanced, and experienced Supervisory
Board and Committees, which will continue to
effectively serve our shareholders in carrying
out our duties of oversight of the Company
and Management Board.
We are strongly supportive of the various
initiatives and regulatory changes to encourage
greater gender and ethnic equality in publicly
listed corporate entities, including the FTSE
Women Leaders and Parker Reviews. We are
proud that 60 per cent of our Supervisory Board
members are female, and that we are one of the
few FTSE 350 companies to have both a female
Supervisory Board Chair and a female Audit
Committee Chair. As part of our ongoing
commitment to foster, cultivate and preserve
a culture of diversity, equity and inclusion,
we keep our policies on diversity, equity and
inclusion under review.
Positive outlook
Despite the wider market volatility, we remain
confident that our high-quality, resilient, and
globally diversified portfolio will continue to
deliver solid returns notwithstanding increased
economic headwinds and market uncertainty.
Global mega-trends, such as urbanisation,
combined with the increased need for private
sector funding of global infrastructure
investment, are positive drivers for BBGI.
The Management Board continues to use its
specialist knowledge, industry relationships
and networks to source attractive investment
opportunities for our pipeline. Our internal
management structure helps to create the
proper incentives for the Management Board
to focus on enhancing the value of our portfolio
and growing BBGI in an accretive and
disciplined manner – our priority is to create
sustainable value for all our stakeholders.
I would like to thank the entire BBGI team for
their work in delivering another strong year for
our shareholders – despite the challenging wider
market backdrop – as well as our clients, partners
and service providers, who continue to support
us in providing a critical role in our communities.
Sarah Whitney
Chair
29 March 2023
Annual Report 2022 7
Corporate governanceStrategic report
Financial statements
Co-CEO’s Statement
8 BBGI Global Infrastructure S.A.
The Company performed
strongly in 2022 and continued
to deliver on our vision: to serve
and connect people. We’re proud
of our consistently robust
performance since our IPO in
2011: our NAV per share has
increased each year for the
past 11 years and we remain
confident that BBGI is well
positioned to continue to deliver
sustainable, attractive value for
all stakeholders over the short
and long term.
Global markets in 2022 have been challenging
for investors and companies alike, yet this
environment has highlighted the clear benefits
of our low-risk and defensive, availability-style
investment strategy. The volatile and uncertain
economic and geopolitical backdrop has
resulted in significant global increases in
inflation, rising interest rates and potentially
recessionary environments.
Yet through our consistent, disciplined
approach to active asset management and
prudent financial management, we have
continued to deliver strong financial results and
robust portfolio performance throughout the
year, with cash flows ahead of expectations and
further dividend growth for our shareholders.
Our high-quality inflation linkage is forecast to
deliver higher distributions over the short term.
This has enabled us to increase our dividend
targets for 2023 and 2024 to 7.93pps and 8.40pps
respectively, representing a 6 per cent increase
year on year. Furthermore, we are introducing a
new dividend target for 2025 of 8.57pps.
Our priorities remain to preserve and enhance
the value of our portfolio, acting as a steward of
essential infrastructure for our public sector
clients, with a strong focus on delivering positive
social impact and supporting communities and
economic growth. ESG is integrated into our
business model and executive compensation is
also linked to ESG performance.
Our globally diversified infrastructure portfolio
includes education, healthcare, blue light (fire and
police), affordable housing, modern correctional
facilities, clean energy and transport assets,
which all generate secure government-backed
cash flows with high-quality inflation linkage.
Highlights
Our globally diversified infrastructure portfolio
of 56 assets performed strongly:
Dividend
7.48pps
for the year 2022 (2021: 7.33pps).
Revised dividend targets
for 2023 for 2024
7.93pps 8.40pps
representing a 6% increase year on year,
and a new dividend target of 8.57pps for 2025:
all are expected to be fully cash-covered.
Strong cash dividend cover
1.47x
(2021: 1.31x).
NAV per share increased
6.6% to 149.9pps
(2021: 140.7pps).
Annualised total NAV return per share
9.1%
Ongoing charges
0.87%
(2021: 0.86 per cent).
High-quality inflation linkage
0.5%
Focus on delivering social impact
SFDR Article 8
High degree of
climate resilience
independently confirmed across the portfolio
of assets.
We would like to thank our team once again
for their hard work over the past year. Their
dedication and approach are outstanding and
remain a fundamental part of our success.
Strong business model and resilient portfolio
Our robust and defensive business model
exemplifies our prudent and low-risk approach
to investing, generating long-term value for all
our stakeholders. We offer investors a long-
term, contracted, stable and predictable
revenue stream with high-quality inflation
linkage, underpinned by highly rated,
creditworthy public sector counterparties.
We remain the only internally managed LSE-
listed equity infrastructure investment company,
which ensures that our interests are fully
aligned with those of our shareholders. We are
led by creating shareholder value first and
portfolio growth second. In 2022, we again
maintained the lowest comparative ongoing
charge of 0.87 per cent through our efficient
and cost-effective structure
7
.
Our core criteria for our portfolio are
availability-style assets; with government-
backed counterparties; located in highly-rated
investment-grade countries with stable, well-
developed operating environments; climate
resilient; and high-quality inflation linkage.
‘Availability-style’ unlike ‘demand-based’
means that revenues are paid provided the
asset is available for use. BBGI has no exposure
to demand-based or regulated investments.
At the year-end, BBGI’s investment portfolio
was 99.5 per cent operational, with only one
asset under construction.
We invest in countries with credit ratings
between AA and AAA, in Australia, Canada,
Germany, the Netherlands, Norway, the UK and
the US. All have stable operating environments,
with independent and proven legal systems.
7 In comparison to the latest publicly available information for all closed-ended, LSE-listed equity infrastructure investment companies.
Co-CEO’s Statement continued
Annual Report 2022 9
Corporate governanceStrategic report
Financial statements
Co-CEO’s Statement continued
Value-driven active asset management
We focus on operational performance to drive
efficiencies and generate portfolio optimisations
and take a hands-on approach to preserving
and enhancing the value of our investments,
delivering well-maintained infrastructure
for communities and end-users, and stable
attractive returns for shareholders. Throughout
2022, we worked closely with our public sector
clients to ensure the continued smooth
functioning of essential social infrastructure.
Building and maintaining strong client
relationships is an important part of our
business, and our asset management team
meets regularly with our public sector clients.
Our active asset management activities during
2022 included applying high-quality corporate
governance frameworks, which helped enable us
to maintain our track record of no reported lock-
ups or material defaults at any of our Portfolio
Companies, and generating a consistently high
asset availability rate of 99.9 per cent.
Selective acquisition strategy
We pursue growth that is accretive to shareholder
value, not just for growth’s sake, and we have
maintained a long-weighted, average portfolio
life of over 20.2 years. We source transactions
through our extensive industry relationships
and networks and we finance investments using
our existing cash resources and RCF.
During 2022, we successfully grew and further
diversified our portfolio, while maintaining
strategic discipline in our acquisition strategy and
portfolio construction. As with previous years, we
assessed considerably more investments in 2022
than we pursued. We invested approximately
£64.4 million in two availability-style assets.
In February 2022, we completed our investment
in the entity responsible for delivering the 132
MW John Hart Generating Station in Canada,
which is a PPP hydroelectric power station.
We are not exposed to any power price risk.
This renewable energy infrastructure has strong
environmental credentials, helping to provide
clean energy to over 80,000 homes on
Vancouver Island, British Columbia.
In September 2022, we acquired a 49 per cent
equity interest in the A7 Motorway between
Bordesholm and Hamburg in Germany, which
will help minimise any increase in exhaust
emissions from the higher traffic load by
reducing congestion and traffic jams. We
screened both investments for ESG factors,
including their alignment with our selected
UN Sustainable Development Goals (‘SDGs’),
and climate-change resiliency.
We continue to evaluate acquisition opportunities
according to our criteria, and take a selective and
disciplined approach to evaluating potential
investment opportunities. Transaction volumes
in 2022 were impacted as we entered a ‘price
discovery phase’ between buyers and sellers.
However, we are still seeing strong demand
from investors for long-term, stable and
inflation-linked income, and there is an
attractive pipeline of acquisition opportunities
in our availability-style sector. There is also
potential to augment our portfolio with select
opportunities in adjacent sectors with the same
low-risk profile, such as investments in European
primary care. This sector is very similar to
our Local Improvement Finance Trust (‘LIFT’)
investments, where we already own over 30
primary care facilities in England.
Valuation – high-quality inflation linkage,
discount rates and deposit rates
During 2022, inflation and interest rates have
increased in all jurisdictions where BBGI invests.
The rise in long-term interest rates had an
impact on discount rates, but it has become
clear that not all asset classes perform
identically in a rising interest rate environment.
Our equity cash flows are positively linked to
inflation at approximately 0.5 per cent: if
long-term inflation is one per cent higher than
our assumptions for all future periods, returns
will increase from 6.9 per cent to 7.4 per cent. In
the reporting period, the effect of actual inflation
and our updated short-term inflation forecast
resulted in a £76 million increase in the NAV.
We achieve this high-quality inflation linkage
through contractual indexation mechanics in our
project agreements with our public sector clients
at each Portfolio Company, and update the
inflation adjustment at least annually. We pass on
the indexation mechanism to our subcontractors
– on whom we rely to support our assets’
operations – and this provides an inflation cost
hedge to effectively manage our cost base.
The weighted average discount rate applied to
our portfolio increased from 6.6 per cent to 6.9
per cent, reflecting an equity risk premium of
c.3.1 per cent over the longer-term weighted
average government bond yields. Actual and
projected inflation rates also increased and,
coupled with higher actual and forecasted
deposit rates for money held on deposit at
Project Company level, have more than offset
any negative effects on the NAV from rising
discount rates. The sensitivity analysis on
page 33 illustrates the effect of this combined
movement on our NAV, in a scenario where we
experience discount, inflation, and deposit rate
rises across our portfolio. Additionally, we have
included a scenario of a two-percentage point
higher inflation rate over the next three years,
compared to our forecast assumptions.
Prudent financial management
We ended the year with a net debt position of
£26.3 million, with £57.5 million cash borrowings
outstanding under our £230 million RCF.
The RCF, which has the possibility, under its
accordion tranche, to be increased by a further
£70 million, matures in May 2026. As a principle,
we only draw on our RCF to finance new
acquisitions, giving our shareholders maximum
certainty of securing our pipeline. We manage
market liquidity risk by maintaining adequate
cash and cash equivalents for day-to-day and
medium-to-long-term capital needs. Borrowings
in underlying entities are non-recourse, and
– with minor exceptions only – borrowing costs
are fixed and amortising over the period of our
ownership of each respective asset, which
leaves BBGI with minimal refinancing risk.
During 2022, we successfully grew and further
diversified our portfolio, while maintaining strategic
discipline in our acquisition strategy and portfolio
construction.”
10 BBGI Global Infrastructure S.A.
Risk management
Our approach to risk management remains
unchanged and there has been no material
movement in our risk profile over the past year.
Our portfolio is not directly impacted by the
events in Ukraine or energy price rises.
In the current macroeconomic environment,
a key risk for BBGI would be further interest
rate increases and the associated impact on
discount rate and NAV, although this is
expected, at least, to be partly offset by higher
than forecasted deposit rates and inflation-
linked income. For further information, please
see the sensitivity on page 33 and the risk
section on page 40.
While there is an elevated inflationary
environment in all our jurisdictions, we mitigate
this risk in our portfolio by seeking to match the
indexation of revenues and costs.
With approximately two-thirds of our portfolio
outside the UK, BBGI is exposed to foreign-
exchange volatility. We have a prudent hedging
policy aimed at mitigating foreign exchange risk
and it has worked well to limit the NAV impact
from movements against Sterling, the Group’s
reporting currency. We operate a four-year
portfolio distribution hedging policy, and a one-
year rolling balance sheet hedging approach.
We aim to limit the impact of foreign exchange
volatility of the NAV to 3 per cent, if all
currencies move against Sterling by 10 per cent.
Environmental, Social and Governance (‘ESG’)
progress
The landscape for responsible investment has
shifted markedly since 2011 and, as stewards of
important social infrastructure investments, we
continue to evolve the reporting and monitoring
of our ESG performance, with ESG considerations
fully integrated into our business model.
We align with the Sustainable Finance
Disclosure Regulation (‘SFDR’) Article 8 product
classification, promoting social characteristics.
SFDR provides a framework for transparency for
companies that make a genuine contribution to
sustainable outcomes.
We disclose information in line with the Task
Force on Climate-Related Financial Disclosures
(‘TCFD’) recommendations and the UN Global
Compact (‘UNGC’). We also align with the UN
SDGs as an integral part of our approach to
ESG. We are committed to the UNGC’s Ten
Principles and are a signatory to the Net Zero
Asset Manager’s Initiative. Our Portfolio
Companies are also expected to contribute to
the objectives of the Paris Agreement and we
are in the process of compiling a Greenhouse
Gas (‘GHG’) inventory for all our Portfolio
Companies, by mid-2023. This will be consistent
with the GHG Protocol, and will include Scope 1,
2 and material Scope 3 emissions.
Our published Net Zero Plan for BBGI and
key goals at the corporate level and for our
Portfolio Companies includes the following:
– Reduce our corporate GHG emissions by
50 per cent by 2030, embedded in our
executive remuneration targets.
– Net zero corporate GHG emissions by 2040.
– Report Scope 1, 2 and material Scope 3
emissions at all of our Portfolio Companies
from June 2023 onwards.
– 70 per cent of our Portfolio Companies
by value to be ‘net zero’, ‘aligned’, or
‘aligning’
8
, by 2030, embedded in our
executive remuneration targets. This means
that by 2030, 70 per cent of our assets
under management (portfolio companies
by value) will have a long-term goal to be
net zero by 2050 or sooner.
Looking ahead
We are well placed to benefit from ongoing
strong demand for public infrastructure.
Government debt has escalated due to
COVID-19 mitigation measures and soaring
energy prices in Europe, and the debt-to-GDP
ratio and risk-free rates have risen in almost all
our jurisdictions.
Against this backdrop, the scope for government-
financed infrastructure investments is limited, and
governments worldwide are expected to seek
private financial support to meet community
demand to deliver essential infrastructure.
Our strong financial and operational performance
over 2022 has reinforced the attractions of our
asset class, particularly for investors looking for
stable and predictable cash flows, dividend
growth, and assets with high-quality inflation
linkage and low correlation to other asset classes.
We remain confident that our reputation as a
specialist investor in low-risk global infrastructure,
and our well-established relationships with key
vendors, will allow us to continue to source
attractive and accretive investment opportunities.
In an uncertain world, we firmly believe in BBGI’s
ability to continue to deliver positive and
sustainable value for all stakeholders over the
short and longer term. We sincerely thank our
shareholders for their support over the past year
and look forward to the future with confidence.
Duncan Ball Frank Schramm
Co-CEO Co-CEO
29 March 2023
On behalf of the Management Board
8 Paris Aligned Investment Initiative Net Zero Investment Framework specific guidance for the Infrastructure sector
https://www.iigcc.org/download/iigcc-paii-infrastructure-consultation/?wpdmdl=5961&refresh=63f715ed3f4cc1677137389
Co-CEO’s Statement continued
Annual Report 2022 11
Corporate governanceStrategic report
Financial statements
Our Investment Strategy
BBGI provides access to a
globally diversified portfolio
of infrastructure investments,
which generate long-term and
sustainable returns and serve a
critical social purpose in their
local communities.
BBGI’s portfolio is well-diversified across sectors
in education, healthcare, blue light (fire and
police), affordable housing, modern correctional
facilities, clean energy and transport infrastructure
assets. Our business model is built on four
strategic pillars: (i) low risk, (ii) globally
diversified, (iii) strong ESG approach and
(iv) internally managed.
Mersey Gateway Bridge, UK
12 BBGI Global Infrastructure S.A.
9 SFDR disclosure requirements. The Company is designated as an Article 8 Fund under SFDR and will report on criteria for a socially beneficial investment.
10 In comparison to the latest publicly available information for all closed-ended, LSE-listed equity infrastructure investment companies.
Low-risk
– Availability-style investment strategy.
– Secure, public sector-backed contracted
revenues.
– Stable, predictable cash flows, with high-
quality inflation linkage and progressive
long-term dividend growth.
Strong ESG approach
– ESG fully integrated into the business
model.
– Focus on delivering positive social impact
– SFDR Article 8
9
– and high degree of
climate resilience.
– Executive compensation linked to
ESG performance.
Internally managed
– In-house management team focused
on delivering shareholder value first,
portfolio growth second.
– Management interests aligned with those
of shareholders.
– Strong pricing discipline and portfolio
management.
– Lowest comparative ongoing charges
10
.
Globally diversified
– Focus on highly rated investment
grade countries.
– Stable, well-developed operating
environments.
– A global portfolio, serving society
through supporting local communities.
Consistent delivery of objectives
1
Robust shareholder
returns
2
Low correlation to other
asset classes
3
Sustainable growth
Our Investment Strategy continued
Annual Report 2022 13
Corporate governanceStrategic report
Financial statements
Operating Model
We follow a proven operating
model based on three principles:
value-driven active asset
management, prudent financial
management and a selective
acquisition strategy to preserve
and create value, achieve
portfolio growth and ensure
ESG considerations are
embedded in our processes.
These operational pillars are
fundamental to our success.
We ensure stable operational performance
through an active asset management approach,
where we actively seek to preserve value and,
where possible, identify and incorporate value
enhancements over the lifetime of the assets
under our ownership. Our approach aims to
reduce costs to our public sector clients and
asset end-users, and to enhance the operational
efficiency of each asset. It also allows us to
generate a high level of asset availability,
underpinning the social purpose of our portfolio.
Our prudent financial management focuses on
efficient cash and corporate cost management
and implementing our foreign exchange hedging
strategy. Our portfolio’s wide geographical
diversification results in exposure to multiple
currencies. We actively seek to manage
geographical concentration and mitigate
foreign exchange risk.
We pursue a selective acquisition strategy,
so our Management Board’s focus remains
within its area of expertise, and we uphold
the strategic pillars defined by our investment
proposition. We actively seek acquisitions with
long-term, predictable and inflation-protection
characteristics that support the portfolio’s
contracted, high-quality, inflation linkage
of 0.5 per cent.
Our operating model
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Mersey Gateway Bridge, UK
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14 BBGI Global Infrastructure S.A.
Value-driven active
asset management
We pursue a standardised approach across
our portfolio to preserve value, to derive
operational and value enhancements, and to
improve customer experience including:
– Strong client relationships, by prioritising
regular meetings to achieve high rates of
client satisfaction.
– Focused asset management, to ensure
distributions are on time, and on or
above budget.
– Focused cost management and portfolio-
wide cost-saving initiatives, to leverage
economies of scale or outperform the
base case, such as portfolio insurance
and standardised management contracts
for Portfolio Companies, and lifecycle
cost reviews.
– Comprehensive monitoring, to ensure
we fulfil our contractual obligations.
– Detailed climate risk assessments and ESG
KPI tracking tool, which includes over 100
KPIs and questions, and evaluates the
governance and non-financial performance
of each of our investments.
– Maintaining high availability levels by
proactively managing any issues, including
site visits to all significant investments.
– Reviewing Portfolio Company debt
facilities and investigating potential
refinancing benefits.
– Measured exposure to construction risk
to support NAV uplift by de-risking assets
over the construction period.
Prudent financial
management
We focus on cash performance at both the
asset and portfolio level to drive efficiencies,
including:
– Progressive future dividend growth,
underpinned by high-quality inflation
linkage and strong portfolio distributions.
– Low ongoing charges through our
efficient and cost-effective internal
management structure.
– Managing and mitigating foreign exchange
risk through our hedging strategy: hedging
forecast portfolio distributions, balance
sheet hedging through foreign exchange
forward contracts, and borrowing in
non-Sterling currencies.
– Euro-denominated running costs, which
provide a natural hedge against Euro-
denominated portfolio distributions.
– Efficient treasury management system for
cash in the underlying Portfolio Companies
to maximise interest income on deposits.
– Maintaining modest cash balances at the
corporate level to limit cash drag, facilitated
through access to the RCF.
Selective acquisition strategy
and strategic investment
partnership
We maintain strategic discipline in our acquisition
strategy and portfolio composition to ensure
we pursue growth that builds shareholder value,
not just for growth’s sake, including:
– Broad industry relationships throughout
multiple geographies.
– Pre-emption rights to acquire
co-shareholders’ interests.
– Visible pipeline through a North American
strategic partnership.
– Global exposure to benefit from
geographical diversification.
– Robust framework embedding ESG
principles into investment due diligence.
– Revolving corporate debt facility to support
transaction execution.
– Focus on the Management Board’s core
areas of expertise.
We continue to leverage strong relationships
with leading construction companies to source
potential pipeline investments, which support
our low-risk and globally diversified investment
strategy.
Typically, these contractors have secured the
mandate to design and build new assets but
continue to look to divest financially after the
construction period has finished – thereafter
often maintaining facility management
contracts through a long-term partnership.
BBGI is an attractive partner for several reasons:
– Our cost of capital is typically lower than
construction companies, so involving BBGI
can make the bid more competitive.
– We are a long-term investor with a
publicly-listed status, which is attractive
to government and government-backed
counterparties.
– We are considered a reliable source of
liquidity should a construction partner
decide to sell.
– Having a financial partner is a prerequisite
for some construction companies so they
can avoid consolidating the Portfolio
Company debt onto the balance sheet
of their parent company.
– We have extensive asset credentials and a
strong track record, which can assist with
the shortlisting process for new projects.
Operating Model continued
Annual Report 2022 15
Corporate governanceStrategic report
Financial statements
Portfolio Review
Portfolio summary
The Company’s investments as at 31 December
2022 consisted of interests in 56 high-quality,
availability-style social infrastructure assets,
99.5 per cent of which are fully operational (by
portfolio value). The portfolio has no exposure
to demand-based or regulated investments,
and is diversified across sectors in education,
healthcare, blue light (fire and police), affordable
housing, modern correctional facilities, clean
energy and transport infrastructure assets.
Located in the UK, North America, Australia and
Continental Europe, all Portfolio Companies are
in stable, well-developed and highly-rated
investment grade countries.
Portfolio breakdown*
For portfolio statistics, refer to the Portfolio at a
Glance section of this Annual Report.
No. Asset Country
Percentage
holding %
1 A1/A6 Motor way Netherlands 37.1
2 A7 Motorway Germany 49
3 Aberdeen Western Peripheral Route UK 33.3
4 Avon & Somerset Police HQ UK 100
5 Ayrshire and Arran Hospital UK 100
6 Barking Dagenham & Havering
(LIFT)
UK 60
7 Bedford Schools UK 100
8 Belfast Metropolitan College UK 100
9 Burg Correctional Facility Germany 90
10 Canada Line Canada 26.7
11 Champlain Bridge Canada 25
12 Clackmannanshire Schools UK 100
13 Cologne Schools Germany 50
14 Coventry Schools UK 100
15 E18 Motorway Norway 100
16 East Down Colleges UK 100
17 Frankfurt Schools Germany 50
18 Fürst Wrede Military Base Germany 50
19 Gloucester Royal Hospital UK 50
20 Golden Ears Bridge Canada 100
21 Highway 104 Canada 50
22 John Hart Generating Station Canada 80
23 Kelowna and Vernon Hospital Canada 100
24 Kent Schools UK 50
25 Kicking Horse Canyon Canada 50
26 Lagan College UK 100
27 Lisburn College UK 100
28 Liverpool & Sefton Clinics (LIFT) UK 60
29 M1 Westlink UK 100
30 M80 Motorway UK 50
31 McGill University Health Centre Canada 40
32 Mersey Care Hospital UK 79.6
33 Mersey Gateway Bridge UK 37.5
34 N18 Motorway Netherlands 52
Golden Ears Bridge, Canada
No. Asset Country
Percentage
holding %
35 North Commuter Parkway Canada 50
36 North East Stoney Trail Canada 100
37 North London Estates Partnership
(LIFT)
UK 60
38 North West Fire and Rescue UK 100
39 North West Regional College UK 100
40 Northwest Anthony Henday Drive Canada 50
41 Northern Territory Secure Facilities Australia 100
42 Ohio River Bridges US 66.7
43 Poplar Affordable Housing
& Recreational Centres
UK 100
44 Restigouche Hospital Centre Canada 80
45 Rodenkirchen Schools Germany 50
46 Royal Women’s Hospital Australia 100
47 Scottish Borders Schools UK 100
48 South East Stoney Trail Canada 40
49 Stanton Territorial Hospital Canada 100
50 Stoke & Staffs Rescue Service UK 85
51 Tor Bank School UK 100
52 Unna Administrative Centre Germany 90
53 Victoria Correctional Facilities Australia 100
54 Westland Town Hall Netherlands 100
55 William R. Bennett Bridge Canada 80
56 Women’s College Hospital Canada 100
* In alphabetical order
16 BBGI Global Infrastructure S.A.
Operating model in action
Preserving and enhancing value through
active asset management
During 2022, the portfolio value increased by
approximately £148 million
11
from the rebased
value, driven largely by the net effect of actual
inflation and a change in the short-term
forecast for inflation and deposit rates forecast,
the positive net effect of foreign exchange and
the portfolio performance resulting from our
hands-on active asset management approach.
Our active value-driven approach to asset
management and the robustness of our portfolio
meant that the availability level of the Company’s
assets was recorded at approximately 99.9 per
cent and any deductions were either borne by
third-party facility management companies
and road operators, or were part of planned
expenditures.
There were no material lock-ups or default
events reported during the year and we are very
proud of this achievement.
High-quality inflation linkage
During the year, BBGI’s strong financial and
operational performance was partly due to
inflation exceeding forecast assumptions in
all regions where the Company is active.
The total inflation effect was £76 million,
with shareholders benefitting from BBGI’s
high-quality cash flow correlation with inflation
linkage at 0.5 per cent, especially in a rising
interest rate environment.
BBGI has a portfolio of 56 availability-style
assets with government or government-backed
counterparties, which have contractual income
streams. The obligations of these contracts are
underpinned by Project Agreements, with each
agreement being unique but generally following
a standard approach. Project Agreements
typically include either partial or full indexation to
an appropriate inflation factor to compensate for
increasing costs over the life of the concession.
The Portfolio Companies enter into facilities
management and operating subcontracts that
mirror the inflation arrangements contained
in the Project Agreement. In the UK, Project
Agreements tend to have a Retail Price Index
(‘RPI’) adjustment factor, while other regions
commonly use Consumer Price Index (‘CPI’)
indexation. However, some Project Agreements
have bespoke inflation indexes that reflect
expected operations and maintenance costs.
The extent of a Portfolio Company’s linkage to
inflation is determined by the portion of income
and costs linked to inflation. In most cases,
cash flows are positively inflation-linked as
the indexation of revenues is greater than
the indexation of expenses.
The high-quality and defensive nature of the
Company’s inflation linkage are underpinned by:
Contractual increases: The adjustment for
inflation is a contractual component of the
100 per cent availability-style cash flows for
each Portfolio Company, and is supported by
creditworthy government or government-backed
counterparties in AA to AAA-rated countries.
The Company does not invest in demand-based
assets. Although such assets may seem to offer
a strong theoretical inflation linkage (e.g. the
ability to raise prices in response to an increase
in CPI), they are likely still subject to changes
in elasticity of demand. Toll roads and student
accommodation projects are examples of such
assets, which may have the potential to increase
prices in response to an increase in CPI, but may
be hindered by market demand from increasing
revenue, while costs may simultaneously rise.
Protection against rising costs: The Company
transfers the indexation mechanism to its
subcontractors, who are crucial in supporting
the operations of our assets. This arrangement
serves as an inflation cost hedge, which helps
the Company to efficiently control its cost base.
Similarly, in most cases, the risk of energy costs
increases rests with the public sector client or
has been passed down to the subcontractor.
Not dependent on regulatory review:
The inflation adjustment is automatic and
contractual and is not subject to regulatory
review. Once the relevant reference factor is
published, the adjustment is mechanical.
Portfolio approach: The Company’s inflation
linkage comes from diverse Portfolio
Companies in different countries.
Prudent financial management
Our assets performed well during the reporting
period with cash receipts during the year ahead
of business plan. This robust performance and
the confidence in the business model allowed
the Company to achieve its dividend target of
7.48pps for 2022, increase our dividend targets
of 7.93pps and 8.40pps for 2023 and 2024
respectively, as well as introduce a new dividend
target of 8.57pps for 2025.
Cash receipts during the year allowed the
Company to achieve a strong dividend cover of
1.47x. The predictable nature of our cash flows
allows for high visibility for future dividends,
and therefore gives us the confidence to revise
our dividend targets and extend our dividend
guidance to 2025, with dividends expected to
be fully cash covered.
During the year, we continued to implement our
hedging strategy, which seeks to hedge 100 per
cent of projected non-Sterling and non-Euro
portfolio distributions over the next four years.
Additionally, in November 2022, we executed
balance sheet hedges to limit our NAV exposure
to fluctuations in foreign exchange rates.
The Company has efficient cash management
in place which aims to avoid cash drag. This
includes using the proven financing methodology
of drawing on its RCF before raising new equity
to repay the temporary debt. The committed
amount of the RCF is £230 million, which matures
in May 2026. Furthermore, there is the possibility
to increase the quantum to £300 million by
means of an accordion provision. This enables
the Company to execute larger acquisitions in
an efficient manner and to be a trusted and
repeat partner in its key markets.
With £57.5 million drawn under the RCF,
the net debt position on an Investment Basis
as at 31 December 2022 was £26.3 million.
Selective acquisition strategy
Successful acquisitions
During the year, we continued to pursue
a selective acquisition strategy, investing
approximately £64.4 million, including interests
in two new projects both of which earn
availability-based revenue in return for
providing essential public services. This
disciplined approach demonstrates the
Management Board’s commitment to avoiding
style drift and evidences how BBGI’s strong
industry relationships and nimble operating
model continue to realise a pipeline of
acquisition opportunities, with the Management
Board having assessed many more potential
opportunities than those acquired. Although the
Company received invitations to bid on several
transactions over the year, the Management
Board declined opportunities that were not
accretive in terms of inflation linkage, yield or
residual life.
11 After adjusting for the balance sheet hedge position of £2.9 million.
Portfolio Review continued
Annual Report 2022 17
Corporate governanceStrategic report
Financial statements
Portfolio Company in-house
SNC-Lavalin O&M Inc
Capilano Highway Services
Cushman and Wakefield
Black & McDonald
Integral FM
Honeywell
Hochtief Solutions AG
Carmacks Maintenance Services
Graham AM
Intertoll Ltd.
BEAR Scotland
Guildmore Ltd.
Amey Community Ltd.
Galliford Try FM
Remaining investments
13%
10%
10%
6%
6%
5%
5%
4%
4%
3%
3%
3%
3%
3%
3%
19%
100%
13%
10%
10%
6%
6%
5%5%
4%
4%
3%
3%
3%
3%
3%
3%
19%
Expired
Within 1 year
1–2 years
2–5 years
5–10 years
10+ years
40%
8%
11%
20%
15%
6%
100%
Expired,
40%
Within
1 year, 8%
1–2 years,
11%
2–5 years,
20%
5–10 years,
15%
10+ years,
6%
The two new investments were:
– John Hart Generating Station
Replacement Project (Canada):
In February 2022, BBGI completed the
acquisition of an investment in InPower BC
General Partnership, the entity responsible
for delivering the John Hart Generating
Station Replacement Project (John Hart
Generating Station), an investment
delivered through the existing strategic
partnership between the Company and
SNC-Lavalin Group Inc. The PPP consists
of the design, construction, financing,
maintenance and rehabilitation of a new
three-turbine, 132 MW hydroelectric power
generation station on the Campbell River,
British Columbia, including a three
generating unit underground powerhouse,
2.1 kilometres of water passage tunnels
and a water bypass system to protect
downstream fish habitat. The acquisition
price was approximately £24 million.
Service commencement was achieved in
2019 and the concession runs until 2033.
The asset is classified as availability-style
under the investment policy of the
Company. The investment is not subject
to demand or power price risk. Availability
payments are received from the British
Columbia Hydro & Power Authority (rated
AA/Aaa by DBRS Morningstar and Moody’s
respectively), a Crown corporation wholly-
owned by the Government of British
Columbia. The station generates clean and
reliable energy for over 80,000 homes.
– A7 Motorway (Germany): In September
2022, BBGI completed the acquisition of a
49 per cent interest in Via Solutions Nord
GmbH & Co. KG, the project company
for the A7 Motorway PPP near Hamburg
in Germany. The asset is classified as
availability-based under the investment
policy of the Company and aligns with
BBGI’s ESG principles.
The project consists of the design,
construction, financing, operation,
maintenance and rehabilitation of 65
kilometre widening of a section of the
A7 Motorway between Neumünster
and Hamburg. The project includes
11 interchanges, six parking facilities and
four rest areas, various civil engineering
structures and a 550-metre noise enclosure
tunnel. Availability payments are received
from Federal Republic of Germany,
represented by the Free City of Hamburg
and the Federal State of Schleswig-Holstein,
rated AAA/Aaa by S&P and Moody’s
respectively. Construction completion was
achieved in December 2019 and the
concession runs until 2044.
The increased efficiency of the A7 Motorway
will help to minimise any increase in exhaust
emissions from the higher traffic load by
reducing congestion and traffic jams and is
expected to achieve a consistent traffic flow
and uniform driving speeds. Environmental
impact assessments (EIA) have been
performed. During the EIA procedure, all
potentially affected Natura 2000 sites,
habitats and species have been analysed,
including habitats and species placed
beyond Natura 2000 sites.
Both projects acquired during the year add to
the portfolio’s diversification across multiple
social infrastructure sectors where the demand
for private sector investment remains high.
Strategic investment partnerships
We continue to leverage strong relationships
with leading construction companies to source
a potential pipeline, which supports our low-risk
and globally diversified investment strategy.
Typically, contractors active in the sector have
secured the mandate to design and build new
assets but often look to divest financially after
the construction period has finished – thereafter
often maintaining facility management contracts
through a long-term partnership. There are
several reasons why BBGI is an appealing partner:
– We possess a substantial asset portfolio
and a robust performance history.
– As a long-term investor with a publicly-
listed status, we are an attractive option
for government and government-backed
counterparties.
– We are recognised as a trustworthy source
of liquidity if a construction partner decides
to sell in the future.
One notable relationship is the North American
strategic partnership with SNC-Lavalin, which
covers four availability-based assets. More
details of the projects covered by the pipeline
agreement are provided in the Market Trends
and Pipeline section of this Annual Report.
Avoiding style drift
As competition to acquire availability-style
assets at attractive valuations remains robust,
the Company’s Management Board consciously
works to avoid ‘style drift’. This refers to the
practice of moving up the risk spectrum,
particularly where pricing does not accurately
reflect inherent risks, both to find investible assets
and to deliver the targeted returns to investors.
The Management Board has made the conscious
decision to avoid investing in infrastructure
transactions with a demand-based revenue
stream, which are typically highly correlated to
Gross Domestic Product (‘GDP’) or subject to
uncertainty due to regulatory review periods
and political interventions.
Portfolio Review continued
O&M Contractors
Latent defects limitations/
Warranty period remaining
18 BBGI Global Infrastructure S.A.
We continue to pursue essential social
infrastructure assets, which match our low-risk,
globally diversified investment strategy and
unwavering ESG principles. BBGI has investments
in LIFT assets, where BBGI typically owns the
land and buildings, and availability payments are
fully linked to RPI. We will continue to seek out
opportunities to expand and diversify our
portfolio of essential social infrastructure by
exploring investments with similar features of
long-term and inflation-linked revenues tied to
public sector counterparties or related to the
public sector, whether through long-term
concessions or direct asset ownership.
Although this disciplined strategy may
occasionally result in periods of slower portfolio
growth, we are confident the benefits, such as
dependable and consistent income and returns
with low volatility, justify its continued
implementation. By adhering to our area of
expertise, we offer a less complex business
proposition, which should result in fewer
surprises, and a more predictable and stable
return for our shareholders.
Supply chain monitoring
The Management Board continually reviews the
potential concentration risk of operations and
maintenance (‘O&M’) contractors that provide
counterparty services to the Company’s assets.
The table on page 18 illustrates the level of
O&M contractor exposure as a percentage of
portfolio value
12
at 31 December 2022.
The Management Board has not identified any
significant risk exposure and remains comfortable
with the current contractor allocation. The
Company benefits from a diverse contractor
base and supply chain, with no concentrated
exposure, and is supported by a strict supply
chain monitoring policy. We regularly monitor
the performance of subcontractors and have
risk mitigation measures in place to deal with
any supply chain issues.
We are pleased to confirm that we have not
recorded any material adverse supply chain
issues during the year.
Construction defects
The Company routinely monitors the quality
of its assets to identify any construction defects
early on and, where necessary, to implement
the appropriate remediation measures.
Further information can be found in the pie
chart on page 18.
The responsibility for, and the cost of
remediation and related deductions falls to the
relevant construction subcontractor on each
asset, subject to statutory limitation periods.
This is a key component of the Company’s
effective counterparty risk management.
Latent defects risk was mitigated during the
year with 60 per cent of portfolio value covered
by either limitation or warranty periods and
there were no material defects reported on any
of the Company’s portfolio assets.
12 For the purpose of this illustration, when a project has more than one FM contractor and/or O&M contractor, the exposure is allocated equally among the contractors.
Westland Town Hall, Netherlands
Portfolio Review continued
Annual Report 2022 19
Corporate governanceStrategic report
Financial statements
Portfolio Snapshot: Top Five Assets
Our five largest assets
1
Ohio River Bridges
Type:
Availability-style
Status:
Operational
Equity holding (per cent) BBGI:
66.7 per cent
Total investment volume:
US$1.175 billion
Financial close/operational:
March 2013/December 2016
Concession period:
35 years (post-construction)
ending in 2051
The project includes a 760-metre cable-stay
bridge; a 500-metre long twin vehicular tunnel
and 2.25 kilometres of associated six-lane
interstate highway, with more than 21 bridges
and multiple roundabout style interchanges.
The asset greatly improves connectivity, public
safety and economic growth, which benefits
residents, businesses and visitors in the Southern
Indiana region, particularly for road-users
travelling to and from the state of Kentucky.
In October 2021, a US$528 million green bond
offering was completed to refinance its existing
indebtedness. This transaction allowed the
Portfolio Company to optimise its financing
costs over the remaining term of the contract
thereby further strengthening its financing
structure, while also benefitting the public
sector client through a reduction in future
service payments. Recent environmental
initiatives include installing solar panels on the
O&M buildings, a commitment to transitioning
its fleet of vehicles to reduced-emission and
electric-powered, pollinator habitats and
other wildlife conservation initiatives, and
an organisation-wide recycling programme,
to name a few.
20 BBGI Global Infrastructure S.A.
IMAGES
REQUIRED
IMAGES
REQUIRED
Located near Darwin, Northern Territory
(the ‘Territory’), the project involves the design,
build, financing, operation and maintenance of
three separate centres including: a 1,000-bed
multi-classification male and female correctional
centre, a 30-bed secure mental health and
behavioural management centre (the first of its
kind in the Territory), and a 48-bed supported
accommodation and programme centre for
community-based offenders.
The latter is designed to support the Australian
Government’s goals of enhanced rehabilitation,
education and reduced reoffending rates in
the Territory.
The asset is one of the largest social infrastructure
projects in the Territory and is the largest PPP
ever procured to date. BBGI acquired its initial
50 per cent interest in the asset while it was still
in construction and subsequently acquired the
remaining 50 per cent stake in July 2015.
3
Northern Territory
Secure Facilities
Type:
Availability-style
Status:
Operational
Equity holding (per cent) BBGI:
100 per cent
Total investment volume (debt and equity):
A$620 million
Financial close/operational:
October 2011/November 2014
Concession period:
30 years (post-construction)
ending in 2044
2
Golden Ears Bridge
Type:
Availability-style
Status:
Operational
Equity holding (per cent) BBGI:
100 per cent
Total investment volume (debt and equity):
C$1.1 billion
Financial close/operational:
March 2006/June 2009
Concession period:
32 years (post-construction)
ending in 2041
Golden Ears Bridge represented the largest
private financing for a greenfield PPP in Canada
at the time of its launch. The project involves
the design, build, financing, operation and
maintenance of the Golden Ears Bridge in
Vancouver, which is a 1-kilometre, six-lane road
that spans the Fraser River and connects Maple
Ridge and Pitt Meadows to Langley and Surrey.
The road opened in March 2009 and includes
more than 3.5 kilometres of ramps, viaducts,
minor bridges and underpasses, and more than
13 kilometres of mainline roadway; a large part
of which has been landscaped.
The project has brought close to C$1 billion in
construction-related activity to the area, while
commuters using the bridge now save up to
40 minutes per peak-hour round-trip from
Maple Ridge to Langley. In coordination with
the asset operator, we have implemented an
LED conversion for all project lighting, which
has delivered annual energy savings in excess
of 380,000 kWh and has reduced carbon dioxide
emissions at a rate of 273 metric tons per year.
Portfolio Snapshot: Top Five Assets continued
Annual Report 2022 21
Corporate governanceStrategic report
Financial statements
Portfolio Snapshot: Top Five Assets continued
5
A1/A6 Motor way
Type:
Availability-style
Status:
Operational
Equity holding (per cent) BBGI:
37.14 per cent
Total investment volume (debt and equity):
€727.4 million
Financial close/operational:
February 2013/June 2017
Concession period:
25 years (post-construction)
ending in 2042
At the time of its launch, the A1/A6 Motorway
project represented one of the largest greenfield
PPP projects in the Netherlands and forms part
of the wider Schiphol – Amsterdam – Almere
(SAA) corridor. The project is for the design,
construction, financing, and maintenance of 18
kilometres of the A1 and A6 motorways to the
south of Amsterdam and involves re-routing
and widening of the A1 (to 2 x 5 lanes and 2
reversible lanes), reconstruction of two major
interchanges, expansion of the A6 (to 4 x 2 lanes
and 2 reversible lanes) and the construction of
various new bridges, an aqueduct and the
longest free span railway bridge in Europe,
as well as demolition of the old part of the A1.
The project forms part of a wider programme
of five connected and adjacent projects, which
together provide for significant extra road traffic
capacity, reduced journey times and improved
accessibility of the north flank of the economical
heart of the Netherlands around Amsterdam.
As a result, the liveability of the area has been
improved significantly. In 2020, SAAone replaced
all traditional street lighting, more than 2,000
fixtures in total with LED lighting, making the
infrastructure more maintenance-friendly, more
sustainable and more reliable than traditional
lighting. Moreover, it decreases the CO₂-footprint
of the project by at least 350 tons per year.
4
Victoria Correctional
Facilities
Type:
Availability-style
Status:
Operational
Equity holding (per cent) BBGI:
100 per cent
Total investment volume:
A$244.5 million
Financial close/operational:
January 2004/March 2006
Concession period:
25 years (post-construction)
ending in 2031
Victoria Correctional Facilities is an availability-
based PPP asset entailing the design, finance,
construction and operation of two correctional
facilities for the State of Victoria, Australia (the
‘State’). The first facility, Metropolitan Remand
Centre, accommodates up to 1,000 male
offenders and is located approximately 20
kilometres from Melbourne city centre.
The second, smaller facility is the Marngoneet
Correctional Centre that houses up to 550
male offenders and is located approximately
65 kilometres from Melbourne city centre.
The operational period is 25 years and runs
until 2031.
A substantial augmentation was requested
by the State to reinforce the facility and this
completed in June 2018.
The Project is currently undertaking a material
expansion of its accommodation (276 beds) and
associated infrastructure across both facilities.
The Portfolio Company is managing the delivery
of the works, which are expected to be complete
by Q2 2024.
22 BBGI Global Infrastructure S.A.
Formal pipeline assets
Asset Sector Estimated Asset
Capital Value
1
Concession length
after construction
completion
Confederation Line
(Ottawa, ON)
Rail C$3.2 billion 30 years
Eglinton Crosstown LRT
(Toronto, ON)
Rail C$9.1 billion 30 years
Highway 407 East Extension
Phase I (ON)
Road C$1.2 billion 30 years
Champlain Bridge
(Montreal, QC)
Road &
Bridge
C$3.2 billion 30 years
1 Includes both debt and equity.
By many measures, 2022 was
a difficult year, characterised by
rising inflation worldwide, the
end of lenient monetary policies,
supply chain interruptions, and
the conflict in Ukraine. These
occurrences led global markets
towards a downward trend,
and the associated challenges
persist into 2023.
While this environment may discourage investor
confidence, we remain optimistic about our
resilient and defensive business model, low-risk
investment strategy and the markets in which we
operate. As interest rates rise from historic lows,
combined with inflation concerns and general
uncertainty, the stability, inflation linkage and
resilience associated with availability-style social
infrastructure investments have ensured that it
remains an attractive asset class.
Competition for these availability-style assets
varies between markets. Availability-style social
infrastructure remains an appealing sector to
many investors, however it can be difficult for
new entrants with big ambitions to deploy
meaningful amounts of equity quickly since the
typical transaction size is often smaller than
other infrastructure investment opportunities,
and individual asset sales are more common
than large portfolio transactions. With a
well-established platform, specialist skills, strong
industry relationships and a reputation among
sellers of transacting successfully, BBGI has been
able to grow its portfolio from 19 assets at IPO
to 56, whilst maintaining pricing discipline, and
expects to be able to continue to do so in 2023
and beyond, subject to market conditions.
Across BBGI’s target markets, infrastructure
under-investment remains a prevalent issue.
Public finance budget constraints require the
private sector’s involvement in providing the
necessary funding and expertise to construct,
maintain, and operate critical infrastructure
assets. Many governments have ambitious
plans to make significant infrastructure
commitments that will generate employment,
rejuvenate communities, transition to a
low-carbon economy, and act as a stimulus
for economic recovery. In the regions where
we operate, there is a consistent baseline of
new investment opportunities, and we
anticipate this trend will continue.
At the same time, construction companies
continue to consider the divestments of
availability-based infrastructure investments
they hold. This could be to recycle capital into
new opportunities after a project reached
construction completion or in response to capital
needs in other parts of their business due to
economic challenges. BBGI has well-established
relationships with most major construction
companies in the sector and this continues
to be a good source of new investments.
As a result of this trend, BBGI completed two
transactions with construction companies and
PPP developers in 2022 and we anticipate that
there will be further investment opportunities
in 2023.
Our key markets offer a generally robust set of
opportunities for availability-style transactions,
which are likely to arise from various sources,
including:
– A strategic partnership in North America
with SNC-Lavalin, which has already led to
the acquisition of six assets since 2017,
along with a formal pipeline agreement
covering four additional assets with a value
of c.C$200 million. In this arrangement,
BBGI has the option but not the obligation
to transact.
– Ongoing bids for various secondary
transactions, such as EU transportation
and social opportunities.
– Soliciting off-market transactions through
BBGI’s extensive network of market
participants in Australia, Europe, and
North America.
– Acquisition of accretive equity interests
from co-shareholders in existing assets.
– Participation in competitive sale processes,
particularly to test pricing assumptions.
– Selective participation in primary
investment opportunities and bids on new
availability-style assets as part of public
sector procurement processes.
We will continue to source opportunities to
further diversify and expand our essential social
infrastructure portfolio by considering investment
opportunities with similar characteristics of
low-risk, availability-style, long-term and
inflation-linked revenues with public sector
counterparties or a link to the public sector,
whether through long-dated concessions or
direct ownership of assets, with a strong
approach to ESG.
Canada
Canada remains one of the most productive
PPP markets globally, and it is also one of the
Company’s most established and stable markets.
Nearly 300 assets in Canada have been procured
under the PPP model, with a total value of over
C$140 billion for assets currently in operation
or under construction, including hospitals,
education, courthouses, and transport assets.
In 2022, ten PPP transactions worth US$4.62
billion reached financial close in Canada, down
from twelve transactions worth US$5.11 billion
in 2021. Ontario has the largest pipeline of
opportunities, as confirmed by its November
2022 market update, which emphasises its
commitment to modernising public assets in
the province, such as hospitals, highways,
public transit, children’s treatment centres, and
correctional facilities. Infrastructure Ontario’s
plans include 26 projects in pre-procurement and
13 in active procurement, with a total estimated
contract value of C$60 billion. The list also
contains 16 government-announced projects in
the early stages of planning and defining the
project’s scope, timing, and delivery model.
Although other provinces have smaller
programmes, they are still promising. With 16
assets in Canada, BBGI is well-positioned to
take part in an appealing primary pipeline or
be a highly credible purchaser and manager
of secondary assets when they become
operational. We anticipate there will continue
to be a diverse range of availability-style social
Market Trends and Pipeline
2023 and beyond
Annual Report 2022 23
Corporate governanceStrategic report
Financial statements
infrastructure investment opportunities for
BBGI to consider in 2023 and 2024, as assets
developed over the past few years become
operational and may come to market.
Additionally, the Company benefits from its
North American strategic partnership with
SNC-Lavalin, which covers four assets. We
anticipate that the pipeline agreement could
result in additional investment opportunities of
over C$200 million over the next few years, all of
which will be evaluated on a case-by-case basis.
UK and Ireland
Private capital has been essential to the
maintenance and development of the UK’s
existing infrastructure, as well as the financing
of new greenfield projects. The UK has one of
the world’s most established and attractive
infrastructure markets for private investors,
and the PFI market has grown significantly
over the past few decades.
PFI was a method used by the UK Government
to finance public infrastructure projects such
as schools, hospitals, and roads. Over 700 PFI
projects were signed in the UK between the
early 1990s and the introduction of its successor,
PF2, in 2012. However, PF2 was only used for a
few projects before being discontinued in 2018,
and the UK Government is exploring alternative
ways to finance public infrastructure projects.
This has meant that the greenfield infrastructure
investment pipeline has been relatively
subdued, although stronger in some areas
(such as Wales) and sectors (such as water
projects). Although there will not be a UK-wide
replacement for the PFI or PF2 model, Wales
has recently closed several private finance
projects under its new Mutual Investment
Model – including the widening of the A465
Motorway and its 21st Century Schools
programme. With Mutual Investment Model
projects, the Welsh Government takes up to
a 20 per cent stake in the special purpose
company, providing the Government with
a greater stake in the project’s success and
greater accountability. The UK Government is
also developing new revenue support models
and considering how existing models such as
the Regulated Asset Base model and Contracts
for Difference can be applied in new areas.
It remains open to new ideas from the market.
Despite the decline in greenfield PPP
procurement, the UK Government remains
committed to major infrastructure investment,
particularly in health, education, science, and
defence, with plans to invest over £600 billion
over the next five years. Private investment will
also play a critical role in supporting the UK’s
net zero 2050 ambitions and in the green
industrial revolution, with key sectors including
energy transition, electric vehicle charging
infrastructure, and fibre optic broadband.
We remain optimistic that PFI and PF2 deal flow
will be replaced by next generation transaction
procurement models with similar attributes and
risk and return profiles to the traditional PFI
procurement model.
The Company is committed to finding essential
social infrastructure assets that fit our low-risk,
availability-style, globally diversified investment
strategy, and strong approach to ESG. As existing
investors in Local Improvement Finance Trust
assets, BBGI has title to the land and building
for the significant majority of these LIFT assets
and the availability payments are fully indexed
with RPI.
We believe there may be interesting acquisition
opportunities and pipeline for these types of
primary care infrastructure assets in the UK
and Ireland.
We continue to seek opportunities to expand
our essential social infrastructure portfolio in
the UK and Ireland, looking for investments with
similar long-term and inflation-linked revenue
streams with public sector counterparties or
a link to the public sector. This may include
long-term concessions or direct ownership of
assets. We aim to diversify our portfolio while
focusing on our low-risk and availability-based
investment strategy, and ensuring our
investments align with our strong ESG approach.
US
Since 2015, the US PPP market has experienced
steady growth with more than 125 greenfield
PPP deals reaching financial close and a total
deal value exceeding US$60 billion. In 2022,
the US PPP market hit a record with US$22
billion in projects reaching financial close.
In 2021, the US ranked as the second-largest
greenfield PPP market globally by deal value,
with 26 greenfield PPP transactions reaching
financial close for a total value of US$6 billion.
Historically, US municipalities and states
have been less receptive to PPPs as the US
procurement system is less structured and
lacks a centralised and unified body. However,
an increasing number of state legislatures are
making PPPs more acceptable, and higher
education institutions are turning to PPP
agreements for a broader range of projects.
With the passing of the US$1.2 trillion
Infrastructure Investment and Jobs Act (IIJA) in
November 2021, this could act as a catalyst for
more PPP investment in the US. The IIJA includes
US$550 billion in new funding to rebuild roads
and bridges, clean water infrastructure resilience,
EV charging infrastructure, broadband, and
more. The IIJA also expands how states and
localities may use Private Activity Bonds (PAB)
to help finance projects involving private
investment, such as carbon capture and
broadband access.
A recent study by White & Case and Acuris
Studios
13
found that 86 per cent of public
authorities interviewed agreed that PPPs were the
preferred way to deliver infrastructure projects.
There is optimism that an attractive pipeline of
infrastructure projects will emerge over time.
Continental Europe
While many European countries have slowed
down their PPP programmes, others are
pushing ahead. Overall, Continental European
infrastructure markets remain active with certain
countries offering a pipeline of new assets as
well as secondary opportunities. We believe
these markets are likely to provide attractive
investment opportunities over the medium term.
Belgium
Though Belgium has had an active PPP pipeline,
the number and value of closed projects has
declined in recent years. Over the past two years,
a large schools package, Antwerp Prison and
Ghent R4 all reached financial close. The relative
infancy of the Belgian PPP market continues to
hinder secondary activity, but we anticipate
increase activity following construction
completion of some of the recent projects.
Market Trends and Pipeline continued
13 Source: https://www.whitecase.com/insight-our-thinking/looking-ahead-future-us-infrastructure
24 BBGI Global Infrastructure S.A.
Germany
In Germany, the federal government has shown
a positive attitude towards the use of PPPs and
some projects are expected to come to the
market in the short to medium term.
With seven existing assets in Germany including
our first road investment made in September
2022 in the A7 Motorway, strong credentials,
and German language skills among our senior
executive and asset management teams,
BBGI is well positioned to consider any
upcoming opportunities.
Netherlands
Over the past decade, the Netherlands has
established itself as a dependable market for
social infrastructure investment, consistently
delivering a sizeable stream of deals that have
attracted significant international developers
and financiers.
Despite the absence of a centralised PPP
authority or a comprehensive legislative
framework for PPPs, the Central Government
Real Estate Agency (Rijksvastgoedbedrijf) has
taken charge of all large PPP housing projects
for the central government and its agencies.
These projects include court buildings, hospitals,
correctional facilities, government offices, and
museums. Decentralised authorities, such as
provinces and municipalities, also manage PPP
projects related to social, healthcare, or public
institution accommodation.
Rijkswaterstaat is responsible for major
infrastructural PPP projects, such as motor
highways, floodgates, and tunnels.
Since 2017, the Dutch PPP market has
experienced a slowdown, with the Government
completing its road PPP pipeline in June 2018,
which was previously a crucial source of
greenfield investment. Nevertheless, in August
2021, Rijkswaterstaat revealed it had engaged
a team of advisers, including Deloitte, EY, PwC,
Rebel, and Turner & Townsend, to provide
financial and economic guidance for future
PPP projects.
With Dutch language skills among our asset
management team, and significant investments
in the A1/A6 and N18 motorways in the
Netherlands as well as a civic facility in
Westland, BBGI is well positioned in the Dutch
secondary market for social infrastructure.
Australia
Over the last decade, Australia has been very
active in the development of social infrastructure
projects. Each state and territory have appointed
a lead government agency to implement PPP
policies. Infrastructure Australia provides advice
on Australia’s infrastructure priorities.
Although the market dipped in 2020 due to
COVID-19, it recovered quickly and 2021 and
2022 were both record years in terms of total
transaction value – reflected by the Australian
Government’s historic A$110 billion
infrastructure commitment.
PPPs in Australia have been very active with
the establishment of the National PPP Policy
Framework in 2008. In 2021, closed PPP projects
reached A$27 billion and in 2022 a new record
was set with more than A$37 billion in PPP
projects closed. Since January 2015, over 30
greenfield PPP projects have closed.
The transport sector has traditionally dominated
the nation’s PPP market. Since 2015, more than
85 per cent of deal value from greenfield
transactions has come from the transport sector.
Twelve greenfield social infrastructure deals have
closed since 2015, with a value of A$7.5 billion.
Healthcare is the most active sub-sector at
A$5.0 billion, including notable deals such
as the A$1.8 billion Footscray Hospital
Redevelopment in Victoria.
New South Wales and Victoria, the two biggest
states, are each spending A$90 billion over four
years on major projects. There may be some
later investment opportunities in Queensland
connected to Brisbane winning the 2032 Summer
Olympics. In addition to the aforementioned
primary opportunities, we expect some
construction companies and investors may look
to sell equity in projects once the construction is
completed and the assets have been de-risked.
BBGI has three large operational assets in
Australia and will continue to monitor the market
for both primary and secondary opportunities.
Growth outlook
Over the last decade, BBGI has been able
to grow its portfolio consistently, while
maintaining price discipline and a selective
and disciplined approach to evaluating
potential investment opportunities.
We expect this trend to continue into
2023 and beyond. We expect our growth
to come predominantly from secondary
market opportunities and in certain cases
from primary bidding opportunities.
A1/A6 motorway, Netherlands
Market Trends and Pipeline continued
Annual Report 2022 25
Corporate governanceStrategic report
Financial statements
Operating and Financial Review
The Management Board is pleased to present the Operating and Financial Review
for the year ended 31 December 2022.
Highlights and Key Performance Indicators
Refer to the Financial Highlights section for a summary of the Year in Numbers for 2022.
Certain key performance indicators (‘KPIs’) for the past five years are outlined below:
KPI Target Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Commentary
Dividends
(paid or declared)
Progressive long-term
dividend growth in
pence per share
6.75 7.00 7.18 7.33 7.48
Achieved
Targets: 7.93pps for
2023, 8.40pps for 2024
and 8.57pps for 2025
NAV per share Positive NAV per share
growth
2.8% 2.0% 1.2% 2.1% 6.6%
Achieved
Annualised total
shareholder return
since IPO
7% to 8% on IPO issue
price of £1 per share
11.2% 11.3% 11.0% 10.4% 8.8%
Achieved
Ongoing charge Competitive cost
position
0.93% 0.88% 0.86% 0.86% 0.87%
Achieved
Cash dividend cover >1.0 x
1.50x 1.30x 1.27x 1.31x 1.47x
Achieved
Refinancing risk
(as a percentage
of portfolio)
Minimise refinancing
risk
7% 6% 7% 6% 5%
Achieved
Asset availability > 98% asset
availability
Yes Yes Yes Yes Yes
Achieved
Single asset concentration
risk (as a percentage of
portfolio value)
To be less than 25% of
portfolio at time of
acquisition
11%
(GEB)
10%
(GEB)
9%
(GEB)
11%
(ORB)
11%
(ORB)
Achieved
Availability-style assets
(as a percentage of portfolio)
Maximise availability-
based assets
100% 100% 100% 100% 100%
Achieved
26 BBGI Global Infrastructure S.A.
Asset Management
Cash performance
The Company’s portfolio of 56 availability-style
infrastructure investments continued to perform
well during the year with cash flows ahead of
forecast and the underlying financial models.
Construction exposure
The Company’s investment policy is to invest
principally in assets that are operational and
have completed construction. Accordingly,
investment in construction assets will be
limited to 25 per cent of the portfolio value.
The rationale for this approach is to be able to
produce a stable dividend for our shareholders,
while gaining exposure to the potential NAV
uplift that occurs when assets move from a
successful construction stage to the operational
stage. The Company has demonstrated that it
can manage such assets during the construction
period and its successful transition into a stable
operational asset.
The Management Board believes that
the Company’s ability to meet its dividend
targets is not compromised by having some
construction exposure.
As at 31 December 2022, approximately 99.5
per cent of the assets were operational with
only one project, Highway 104 in Nova Scotia,
Canada, under construction, with completion
expected in 2023.
Investment performance
Returns track record
The share price closed the year at 156.6pps,
representing a 4.5 per cent premium to the
NAV per share at the year-end.
The total NAV return per share since IPO
to 31 December 2022 was 160.9 per cent or
9.1 per cent on an annualised basis. TSR since
IPO to 31 December 2022 was 152.6 per cent or
8.8 per cent on an annualised basis and exceeds
the 7 per cent to 8 per cent IRR target on IPO
issue price of £1 per share.
We believe a key benefit of the portfolio is the
high-quality cash flows derived from long-term
availability-style government or government-
backed contracts with high-quality inflation
linkages. As a result, portfolio performance
has been largely uncorrelated to the many
wider macroeconomic factors that may cause
market volatility in other sectors. Against the
FTSE All-Share, the Company has shown a
low ten-year correlation of 25.8 per cent and
a beta of 0.24
14
.
Distribution policy
Distributions on ordinary shares are planned to
be paid twice a year, normally in respect of the
six months ended 30 June and the six months
ended 31 December.
Dividends
In April 2022, the Company paid a second
interim dividend of 3.665pps for the period
1 July 2021 to 31 December 2021. The 2022
interim dividend of 3.74pps for the period
1 January to 30 June 2022 was paid on 20
October 2022. In February 2023, subsequent to
the year-end, the Company declared a second
interim dividend of 3.74pps in respect of the
six-month period ended 31 December 2022.
This resulted in a total dividend of 7.48pps
for the year ended 31 December 2022.
We are reaffirming our progressive dividend
policy with revised target dividends of 7.93pps
and 8.40pps for 2023 and 2024, respectively.
We are also introducing a new dividend target
for 2025 of 8.57pps.
BBGI Share Price Performance
Share price (rebased to 100)
14 The FTSE All-Share, ten-year data represents the ten years preceding 31 December 2022.
BBGI
FTSE All Share
Dec
2022
Dec
2011
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2012
Jun
2022
Jun
2013
Jun
2014
Jun
2015
Jun
2016
Jun
2017
Jun
2018
Jun
2019
Jun
2020
Jun
2021
Jun
2012
90
100
110
120
130
140
150
160
170
180
190
Operating and Financial Review continued
Annual Report 2022 27
Corporate governanceStrategic report
Financial statements
Operating and Financial Review continued
Average annual dividend
increases from 2012 to 2022
3.1%
FY 2023 revised upwards to
7.93pps
15
– a 6.0 per cent increase
FY 2024 revised upwards to
8.40pps
15
– a 6.0 per cent increase
FY 2025 new target dividend of
8.57pps
15
– a 2.0 per cent increase
Investor communications
The Company places great importance on
communication with its shareholders and
welcomes their views. We intend to remain at
the forefront of disclosure and transparency
in our sector, and therefore the Management
Board and, where required, the Supervisory
Board regularly review the level and quality of
the information that the Company makes public.
The Company formally reports twice a year
through its Annual and Interim Reports.
Other Company information is provided
through the Company’s website and through
market announcements. At Shareholder General
Meetings, each share is entitled to one vote,
all votes validly cast at such meetings (including
by proxy) are counted, and the Company
announces the results on the day of the
relevant meeting.
The Management and Supervisory Boards
are keen to develop and maintain positive
relationships with the Company’s shareholders.
As part of this process, immediately following
release of the Annual and Interim Reports at the
end of March and August each year, the Co-CEOs
present the Company’s results to market analysts
and subsequently conduct investor roadshows
and offer shareholder meetings to discuss the
results, explain the ongoing strategy of the
Company, and receive feedback.
Outside of these formal meetings, feedback from
investors is received by the Management Board
and the Corporate Brokers and, together with
the feedback from results meetings, is reported
to the Supervisory Board. Throughout the year,
the Co-CEOs have made themselves available
to shareholders and key sector analysts, for
discussion of key issues and expectations around
Company performance. The Co-CEOs intend
to continue to be available to meet with
shareholders periodically to facilitate an open
two-way communication on the development
of the Company. Shareholders may contact
members of both the Management and
Supervisory Boards at the registered office of
the Company, the address for which can be
found on the final page of the Annual Report or
on the Company’s website at www.bb-gi.com.
While shareholder engagement is typically
conducted by the Co-CEOs, the Chair of the
Supervisory Board and Chairs of each committee,
make themselves available throughout the year
to understand shareholder views on governance
and performance.
In 2021 we undertook a comprehensive
materiality assessment among our employees,
shareholders, clients, partners and subcontractors
to identify ten material topics influencing our
ESG strategy. These ten topics have informed
key ESG commitments and KPIs that we are
now tracking to ensure incremental progress in
our delivery of positive stakeholder outcomes.
A progress update of each KPI is provided
annually in our ESG report.
Given this level of engagement with
shareholders and other stakeholders, the
Management and Supervisory Boards consider
that they meet the requirements of AIC Code of
Corporate Governance Principle 5D.
Share capital
The issued share capital of the Company is
713,331,077 ordinary shares of no-par value.
All of the issued ordinary shares rank pari passu.
During the year ended 31 December 2022,
the Company issued 1,205,272 ordinary shares.
Voting rights
There are no special voting rights, restrictions
or other rights attached to any of the ordinary
shares. There are no restrictions on the voting
rights attaching to ordinary shares.
15 These are targets only and are not a profit forecast. There can be no assurance that these targets will be met or that the Company will make any distribution at all.
Proven progressive dividend policy
Pence per share
4
5
6
7
8
9
20212017
2024
target
2016 20192015 20222018
2025
target
2023
target
2020
3.1% average increase
+6%
+6%
+2%
201420132012
7.33
6.50
8.40
6.25
7.00
6.00
7.48
6.75
8.57
7.93
7.18
5.76
5.50
5.50
28 BBGI Global Infrastructure S.A.
Discount management
The Management Board will actively monitor
any discount to the NAV per share at which the
ordinary shares may trade and will report to
the Supervisory Board on any such discount
and to the extent appropriate propose actions
to mitigate this.
Purchase of ordinary shares by the Company
in the market
In order to assist in the narrowing of any
discount to the NAV at which the ordinary
shares may trade from time to time and/or to
reduce discount volatility, the Company may,
subject to shareholder approval:
– Make market purchases of up to 14.99 per
cent annually of its issued ordinary shares.
– Make tender offers for ordinary shares.
No shares have been bought back during the
year ended 31 December 2022. The most recent
authority to purchase ordinary shares, which
may be held in treasury or subsequently
cancelled, was granted to the Company on
29 April 2022. This authority expires on the
date of the next Annual General Meeting
(‘AGM’) to be held on 28 April 2023, at which
point the Company will propose to renew its
authority to buy back ordinary shares.
Continuation vote
The Company’s Articles of Association (‘Articles’)
require the Boards to offer a continuation vote
to the Company’s shareholders at every second
AGM to allow the Company to continue in
its current form. On 30 April 2021, at the
Company’s AGM, the shareholders voted
unanimously for the continuation of the
Company. In accordance with the Articles,
a further continuation vote will be offered to
shareholders at the AGM due to be held on
28 April 2023.
LIFT Liverpool and Sefton, UK
Operating and Financial Review continued
Annual Report 2022 29
Corporate governanceStrategic report
Financial statements
900
950
1,000
1,050
1,100
Less other
net (assets)/
liabilities as at
31 December
2021
(i)
Net Asset
Value as at
31 December
2021
60.7
946.1
(27.9)
(93.5)
81.5
64.4
37.1
1,069.2
1,097.0
(28.5)
975.2
(26.4)1,001.6
6.1%8.1% 3.7%(2.8%)
% change in NAV
Total inflation effect
£76 million
Portfolio value
31 December
2021
Acquisitions
(ii)
Distributions
(iii)
Rebased
opening portfolio
value 1 January
2021
Portfolio
Return
(iv)
Change
in market
discount rate
Change in
macroeconomic
assumptions
Foreign
exchange
net movement
(v)
Portfolio value
31 December
2022
Less other
net (assets)/
liabilities as at
31 December
2022
(i)
Net Asset
Value as at
31 December
2022
£m
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 for consideration as part of its approval of the Annual and Interim Reports. The valuation is undertaken on a six-monthly basis
as at 30 June and 31 December each year, and is reviewed by an independent third-party valuation expert.
The Company’s investments are principally non-market traded investments with predictable long-term availability-style revenue; therefore, the valuation is
determined using the discounted cash flow methodology. The Company makes forecast assumptions for key macroeconomic factors that impact the cash
flow forecasts of investments such as inflation rates and deposit rates, and we adjust for any enacted changes in taxation rates during the reporting period.
Our assumptions are based on market data, publicly available economic forecasts, and long-term historical averages. In addition, we exercise judgement in
assessing the expected future cash flows from each investment based on the detailed financial models produced by each Portfolio Company, adjusting
these financial models where necessary to reflect the Company’s assumptions as well as any specific cash flow assumptions. The Company’s consolidated
valuation is a sum-of-the-parts valuation with no further adjustments made to reflect scale, scarcity or diversification of the overall portfolio.
The fair value of each investment is then derived from the application of an appropriate discount rate, alongside contracted foreign exchange rates or
reporting period-end foreign exchange rates, and withholding taxes (as applicable). The discount rate applied takes into consideration risks associated
with the investment, including the phase of the investment (construction, ramp-up or stable operation), investment-specific risks and opportunities,
as well as country-specific factors. The Company uses judgement in determining the appropriate discount rates. This judgement is based on the
Company’s knowledge of the market, considering information obtained from its investment and bidding activities, benchmark analysis with comparable
companies and sectors, discussions with advisers in the relevant markets, and publicly available information. As government bond yields have increased
significantly in 2022, there was limited transactional market data available in the second half of 2022. BBGI has therefore complemented its market-
based approach for this reporting period by using the capital asset pricing model where government risk free rates plus an equity risk premium are
used to calculate discount rates. This method is used as a reasonability check to our market-based approach.
The valuation methodology remains unchanged from previous reporting periods.
A breakdown of the movements in the NAV is shown in the chart below.
Valuation
NAV movement 31 December 2021 to 31 December 2022
The NAV at 31 December 2022 was £1,069.2 million (31 December 2021: £1,001.6 million), representing an increase of 6.7 per cent.
(i) These figures represent the net assets of the Group after excluding the investments at fair value through profit or loss (‘Investments at FVPL’) and the net position on currency hedging
instruments. Refer to the Pro Forma Balance Sheet in the Financial Results section of this Annual Report for further breakdown.
(ii) Refer to the Portfolio Review section of this Annual Report for further details on acquisitions during the year.
(iii) While distributions from Investments at FVPL reduce the portfolio value, there is no impact on the Company’s NAV as the effect of the reduction in the portfolio value is offset by
the receipt of cash at the consolidated Group level. Distributions in the above graph are shown net of withholding tax.
(iv) Portfolio Return comprises the unwinding of the discount rate, portfolio performance, the net effect of actual inflation, and updated operating assumptions to reflect current expectations.
(v) Includes the net asset from balance sheet hedging of £2.9 million. Under IFRS, this net asset is recorded separately as a derivative financial asset in the Consolidated Statement of Financial Position.
Key drivers for NAV change
The rebased opening portfolio value, after considering acquisitions in the reporting period of £64.4 million and cash distributions from investments
of (£93.5) million was £946.1 million.
Portfolio return comprises the unwinding of the discount rate, portfolio performance, the net effect of actual inflation,
and updated operating assumptions:
During the year, the Company recognised an £81.5 million portfolio return, representing an 8.1 per cent increase in the NAV from the unwinding of
discount rates, the net effect of actual inflation and portfolio performance to reflect current expectations based on the Company’s hands-on active
asset management. As the Company moves closer to forecasted investment distribution dates, the time value of those cash flows increases on a net
present value basis and this effect is called unwinding.
Change in macroeconomic assumptions:
During the year, the Company recognised an increase in the portfolio value of £60.7 million, or a 6.1 per cent increase in the NAV, resulting from
changes in macroeconomic assumptions. The main drivers were an increase in the short-term inflation and deposit rates of £75.1 million, which were
partially offset by a provision for additional taxes of c.£12.5 million, likely to be realised based on expected change in interest limitation rules
16
.
16 See the Risk Section on page 40 for further details.
30 BBGI Global Infrastructure S.A.
Short-term inflation is forecast to remain
at an elevated level compared to long-term
assumptions and as a result, we believe it
appropriate to incorporate a two-year
short-term inflation forecast assumption
in our operational jurisdictions.
In total, the combined effect of revised
short-term inflation forecasts and the update
of actual inflation (included in Portfolio Return,
above) resulted in a £76.2 million, or a 7.6 per
cent increase in NAV, and this demonstrates
the contracted high-quality inflation linkage of
our investment proposition. See also page 38
for further details on our inflation linkage.
Short-term deposit rates have risen in
conjunction with the increase in underlying
benchmark rates and are expected to remain at
elevated levels in most jurisdictions. We also
believe it appropriate to update some of our
long-term deposit rate assumptions to reflect
the current rate environment. The effect of
revised deposit rate assumptions resulted in a
£15.8 million, or a 1.6 per cent increase in NAV.
Foreign exchange:
The forecasted distributions from investments
are converted to Sterling at either the contracted
foreign exchange rate, for 100 per cent of
non-Sterling and non-Euro denominated cash
flows forecast to be received over the next four
years on an annual rolling basis, or at the closing
foreign exchange rate for the unhedged future
cash flows.
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 dividends in Sterling. Accordingly,
fluctuations in exchange rates between Sterling
and the relevant local currencies will affect the
value of the Company’s underlying investments.
During the year ended 31 December 2022,
the depreciation of Sterling (GBP) against the
Canadian Dollar (CAD), Australian Dollar (AUD),
the Euro (EUR), and the US Dollar (USD), and
the slight appreciation of Sterling against the
Norwegian Krone (NOK) accounted for a net
increase in the portfolio value of £37.1 million,
which includes the unrealised result from the
Company’s balance sheet hedging. Since IPO
in December 2011, the net cumulative effect of
foreign exchange movements on the portfolio
value, after considering the effect of balance
sheet hedging, has been an increase of £11.9
million, or 1.1 per cent of the 31 December
2022 NAV.
The table below shows the closing exchange
rates, which were used to convert unhedged
future cash flows into the reporting currency
at 31 December 2022.
Although the closing rate is the required
conversion rate to use for the unhedged future
cash flows, it is not necessarily representative
of future exchange rates as it reflects a specific
point in time.
The Group uses forward currency swaps to
(i) hedge 100 per cent of forecasted cash flows
over the next four years on an annual rolling
basis and (ii) to implement balance sheet
hedging in order to limit the decrease in the
NAV to approximately three per cent, for a ten
per cent adverse movement in foreign exchange
rates
17
. This is achieved by hedging a portion
of the non-Sterling and non-Euro portfolio
value
18
. The effect of the Company’s hedging
strategy can also be expressed as a theoretical
or implicit portfolio allocation to Sterling
exposure. In other words, on an unhedged
basis, the portfolio allocation to Sterling
exposure at 31 December 2022 would need to
be approximately 74 per cent to obtain the
same NAV sensitivity to a ten per cent adverse
change in foreign exchange rates, as shown in
the Foreign Exchange Sensitivity table below.
Macroeconomic events
The quality and predictability of portfolio cash
flows has come into sharper focus given
uncertainty in the markets generally and
continued elevated inflation levels in particular.
Against this backdrop, the Company is well-
positioned through its contracted high-quality
inflation linkage, which is achieved through
annually updated contractual indexation in
the Company’s project agreements.
Additionally, there has been no material adverse
effect on the portfolio valuation resulting from
the war in Ukraine. This is primarily as a result of
the Company holding a low-risk, 100 per cent
availability-style portfolio, coupled with strong
stakeholder collaboration.
Discount rates
The market for availability-style transactions
continued to be competitive with discount rates,
based on our market observations, remaining
largely stable during the first half of 2022.
During the second half of 2022, the number of
availability-style transactions slowed materially
in part due to the changing macroeconomic
environment. As transactional data is limited,
the Company complemented its market-based
approach for this reporting period by using the
capital asset pricing model where government
risk free rates plus an equity risk premium are
used to calculate discount rates. This analysis is
used as a plausibility check for our market-
based approach. While there is no direct
correlation between government bond yields
and the risk premium on the one hand and
market discount rates on the other, the equity
risk premium is a useful additional data point.
As at 31 December 2022, the risk premium is
310 basis points over the weighted average
government bond yield of 380 basis points.
The Company believes that a risk premium in
the range of 250 to 350 basis points is
appropriate for the low-risk availability style
assets in our portfolio. This is supported by an
announcement of the German Network Agency,
which calculated equity risk premium for
regulated gas and assets of around 3 per cent.
As it is generally accepted that PPP/PFI assets
have a lower risk profile than regulated assets,
on this basis the risk premium for PPP/PFI assets
should be generally around the 3 per cent mark.
Going forward, the Company believes that
investment demand in the availability-style social
infrastructure providing long-term predictable
inflation-linked characteristics will remain strong.
Based on data from transactional activity,
benchmark analysis with comparable companies
and sectors, discussions with advisers in the
relevant markets, publicly available information
gathered over the year and equity risk premium
over government bond yields, we have
increased the weighted average discount rate
to 6.9 per cent (31 December 2021: 6.6 per
cent). This methodology calculates the
weighted average based on the value of each
investment in proportion to the total portfolio
value, i.e. based on the net present value of
their respective future cash flows.
Specific discount rates consider risks associated
with the investment including the phase the
investment is in, such as construction, ramp-up
or stable operation, investment-specific risks
and opportunities, as well as country-specific
factors. We apply a risk premium for investments
in construction to reflect the higher-risk inherent
in the construction phase of any investment’s
lifecycle. Currently, the portfolio has one
investment in construction, Highway 104, which
represents approximately 0.5 per cent of the
GBP/
Valuation
impact
FX rates as of
31 December 2022
FX rates as of
31 December 2021
FX rate
change
AUD 1.7743 1.8607 4.64%
CAD
1.6386 1.7159 4.50%
EUR
1.1298 1.1912 5.15%
NOK
11.9150 11.9114 (0.03%)
USD
1.2097 1.3512 10.47%
17 Based on the portfolio composition on the date the
balance sheet hedge contracts are entered into.
18 The Company assumes an equal and offsetting amount
between running costs and Euros received into the future.
Valuation continued
Annual Report 2022 31
Corporate governanceStrategic report
Financial statements
overall portfolio value. Construction is expected
to be completed in 2023. We have also applied
a risk premium or discount to a limited number
of other investments to reflect the individual
situations. For example, adjustments have been
applied to acute hospitals in the UK, where a
risk premium of 50bps continues to be applied.
The only UK acute hospital in the portfolio is
Gloucester Royal Hospital, which represents less
than one per cent of the overall NAV. This risk
premium reflects the continued situation in the
UK where some public health clients are under
cost pressure and are actively looking for cost
savings including deductions. To date, BBGI has
not been affected.
Valuation continued
31 December 2022 31 December 2021
Inflation
UK
(i)
RPI/CPIH
13.4% (actual) for 2022; 5.8% for 2023 then 2.75% (RPI)/
2.0% (CPIH)
2.75%/2.00%
Canada
6.3% (actual) for 2022; 4.0% for 2023; 2.3% for 2024
then 2.0%
2.00%/2.35%
Australia 8.0% for 2022; 4.75% for 2023 3.25% for 2024 then 2.5% 2.50%
Germany/
Netherlands
(ii)
8.4% for 2022; 6.3% for 2023; 3.4% for 2024 then 2.0% 2.00%
Norway
(ii)
5.9% (actual) for 2022; 4.9% for 2023 then 2.25% 2.25%
US 6.5% (actual) for 2022; 3.4% for 2023 then 2.5% 2.50%
Deposit rates
(p.a.)
UK 2.00% to 2024, then 1.50% 0.00% to 2023, then 1.00%
Canada 3.50% to 2024, then 1.75% 0.50% to 2023, then 1.50%
Australia 3.25% to 2024, then 3.00% 0.25% to 2023, then 2.00%
Germany/
Netherlands
0.50% to 2024, then 1.0% 0.00% to 2023, then 0.50%
Norway 2.00% to 2024, then 2.00% 0.00% to 2023, then 2.00%
US 3.75% to 2024, then 1.50% 0.00% to 2023, then 1.50%
Corporate
tax rates
(p.a.)
UK 19.00% until March 2023 then 25% 19.0% to Q1 2023, then 25.0%
Canada
(iii)
23.00%/26.50%/27.00%/29.00% 23.0%/26.5%/27.0%/29.0%
Australia 30.00% 30.0%
Germany
(iv)
15.83% (incl. solidarity charge) 15.8% (incl. solidarity charge)
Netherlands 25.80% 25.8%
Norway 22.00% 22.0%
US 21.00% 21.0%
(i) On 25 November 2020, the UK Government announced the phasing out of RPI after 2030 to be replaced with CPIH; the Company’s UK portfolio indexation factor changes from RPI to CPIH
beginning on 1 January 2031.
(ii) CPI indexation only. Where investments are subject to a basket of indices, a projection for non-CPI indices is used.
(iii) Individual tax rates vary among Canadian Provinces: Alberta; Ontario, Quebec, Northwest Territory; Saskatchewan, British Columbia; New Brunswick.
(iv) Individual local trade tax rates are considered in addition to the tax rate above.
Macroeconomic assumptions
Apart from the discount rates, we use the following assumptions (‘Assumptions’) for the cash flows:
32 BBGI Global Infrastructure S.A.
-10% -8% -6% -4% -2% 0%
Positive change in variable
Negative change in variable
2% 4% 6% 8% 10%
Discount rate
+/- 1%
Inflation rate
-/+ 1%
Foreign Exchange
+/- 10%
Combined
+1% inflation, deposit rates,
and discount rates
Lifecycle costs
+/- 10%
Deposit rate
-/+ 1%
Corporate tax rate
+/- 1%
Refinancing – senior
debt rate + 1%
GDP -/+ 0.5%
(8.1%)
(4.30%)
(2.2%)
(2.4%)
(1.9%)
(1.0%)
(0.8%)
0.0%
1.0%
1.9%
2.2%
(2.1%)
2.9%
4.8%
9.4%
0% 1% 2% 3% 4% 5% 6% 7%
Inflation +2% for 5 Years
Inflation +2% for 3 Years
Inflation +2% for 1 Year
1.1%
4.9%
6.1%
Sensitivities
Discount rate sensitivity
The weighted average discount rate applied to
the Company’s portfolio of investments is the
single most important judgement and variable.
The following table shows the sensitivity of the
NAV to a change in the discount rate.
Discount rate
sensitivity
(i)
Change in NAV
31 December 2022
Increase by 1%
to c.7.9%
(£87.1) million,
i.e. (8.1)%
Decrease by 1%
to c.5.9%
£100.7 million,
i.e. 9.4%
(i) Based on the weighted average rate of 6.9 per cent.
Inflation has increased in all jurisdictions across
BBGI’s geographies and interest rates have risen
from historical lows. In the event long-term
interest rates rise substantially further, this is
likely to affect discount rates, and as a result,
negatively impact portfolio valuation.
Combined sensitivity: inflation, deposit rates
and discount rates
It is reasonable to assume that if discount rates
increase, then deposit rates and inflation would
also be affected. To illustrate the effect of this
combined movement on the Company’s NAV, a
scenario was created assuming a one percentage
point increase in the weighted average discount
rate to 7.9 per cent, and a one percentage point
increase in both deposit and inflation above the
macroeconomic assumptions.
Combined sensitivity:
inflation, deposit rates
and discount rates
Change in NAV
31 December 2022
Increase by 1% (£22.8) million,
i.e. (2.1)%
Inflation sensitivity
The Company’s investments are contractually
entitled to receive availability-style revenue
streams from public sector clients, which are
typically adjusted every year for inflation. Facilities
management subcontractors for accommodation
investments and operating and maintenance
subcontractors for transport investments have
similar indexation arrangements. The portfolio
cash flows are positively linked with inflation
(e.g. RPI, CPI, or a basket of indices).
This inflation linkage is achieved through
contractual indexation mechanics in the various
project agreements with the public sector
clients at the Portfolio Companies and the
inflation adjustment updated at least annually.
Inflation sensitivity
The table below shows the sensitivity of the
NAV to a change in inflation rates compared to
the long-term assumptions in the table above:
Inflation sensitivity
Change in NAV
31 December 2022
Inflation +1% £51.5 million,
i.e. 4.8%
Inflation −1% (£45.5) million,
i.e. (4.3)%
Expressed as a % of NAV
Valuation continued
Expressed as % of NAV
Annual Report 2022 33
Corporate governanceStrategic report
Financial statements
Short-term inflation sensitivity
It is reasonable to assume that inflation could be
elevated for the short term before diminishing.
To illustrate the effect of persistent higher
short-term inflation on the Company’s NAV,
three scenarios were created assuming inflation
is two percentage points above our assumptions
for the next one, three and five years.
Short-term inflation
sensitivity
Change in NAV
31 December 2022
Inflation +2%
for one year
£12.0 million,
i.e. 1.1%
Inflation +2%
for three years
£52.6 million,
i.e. 4.9%
Inflation +2%
for five years
£65.6 million,
i.e. 6.1%
Foreign exchange sensitivity
As described above, a significant proportion
of the Company’s underlying investments are
denominated in currencies other than Sterling.
The following table shows the sensitivity of the
NAV to a change in foreign exchange rates:
Foreign exchange
sensitivity
(i)
Change in NAV
31 December 2022
Increase by 10% (£23.7) million,
i.e. (2.2)%
Decrease by 10% £31.5 million,
i.e. 2.9%
(i) Sensitivity in comparison to the spot foreign exchange
rates at 31 December 2022 and considering the
contractual and natural hedges in place, derived by
applying a 10 per cent increase or decrease to the
Sterling/foreign currency rate.
Deposit rate sensitivity
Portfolio Companies typically have cash
deposits that are required to be maintained as
part of the senior debt funding requirements
(e.g. six-month debt service reserve accounts
and maintenance reserve accounts). BBGI’s
proportionate interest in the total deposits
held by the Portfolio Companies exceed £400
million. The asset cash flows are positively
correlated with the deposit rates.
The table below shows the sensitivity of the
NAV to a percentage point change in long-term
deposit rates compared to the long-term
assumptions in the table above:
Deposit rate
sensitivity
Change in NAV
31 December 2022
Deposit rate +1% £20.7 million,
i.e. 1.9%
Deposit rate −1% (£20.7) million,
i.e. (1.9)%
Lifecycle costs sensitivity
Lifecycle costs are the cost of planned
interventions or replacing material parts of an
asset to maintain it over the concession term.
They involve larger items that are not covered by
routine maintenance and, for roads, it will include
items such as replacement of asphalt, rehabilitation
of surfaces, or replacement of electromechanical
equipment. Lifecycle obligations are generally
passed down to the facility maintenance provider,
with the exception of transportation investments,
where these obligations are typically retained
by the Portfolio Company.
Of the 56 investments in the portfolio at
year-end, 20 investments retain the lifecycle
obligations. The remaining 36 investments have
this obligation passed down to the subcontractor.
The table below shows the sensitivity of the
NAV to a change in lifecycle costs:
Lifecycle costs
sensitivity
(i)
Change in NAV
31 December 2022
Increase by 10% (£26.0) million,
i.e. (2.4)%
Decrease by 10% £23.5 million,
i.e. 2.2%
(i) Sensitivity applied to the 20 investments in the portfolio
that retain the lifecycle obligation i.e. the obligation is not
passed down to the subcontractor.
Corporate tax rate sensitivity
The profits of each Portfolio Company are
subject to corporation tax in the country where
the Portfolio Company is located.
The table below shows the sensitivity of the NAV
to a change in corporate tax rates compared to
the assumptions in the table above:
Corporate tax rate
sensitivity
Change in NAV
31 December 2022
Tax rate +1% (£11.2) million,
i.e. (1.0)%
Tax rate −1% £11.0 million,
i.e. 1.0%
Refinancing: senior debt rate sensitivity
Assumptions are used where a refinancing of
senior debt is required for an investment during
the remaining investment concession term.
There is a risk that such assumptions may
not be achieved.
The table below shows the sensitivity of the
NAV to a one percentage point increase to the
forecasted debt rate.
Senior debt
refinancing sensitivity
Change in NAV
31 December 2022
Debt rate +1% (£9.1) million,
i.e. (0.8)%
Gross Domestic Product sensitivity
Our portfolio is not sensitive to GDP.
The principal risks faced by the Group and the
mitigants in place are outlined in the Risk section.
Key Portfolio Company and portfolio
cash flow Assumptions underlying the
NAV calculation include:
Discount rates and the Assumptions, as set
out above, continue to be applicable.
The updated financial models used for
the valuation accurately reflect the terms
of all agreements relating to the Portfolio
Companies and represent a fair and
reasonable estimation of future cash flows
accruing to the Portfolio Companies.
Cash flows from and to the Portfolio
Companies are received and made at the
times anticipated.
Non-UK investments are valued in local
currency and converted to Sterling at either
the period-end spot foreign exchange rates
or the contracted foreign exchange rate.
Where the operating costs of the Portfolio
Companies are contractually fixed, such
contracts are performed, and where such
costs are not fixed, they remain within the
current forecasts in the valuation models.
Where lifecycle costs/risks are borne by the
Portfolio Companies, they remain in line with
current forecasts in the valuation models.
Contractual payments to the Portfolio
Companies remain on track and contracts
with public sector or public sector backed
counterparties are not terminated before
their contractual expiry date.
Any deductions or abatements during the
operations period of Portfolio Companies
are passed down to subcontractors under
contractual arrangements or are part of
the planned (lifecycle) forecasts.
Changes to the concession period for
certain investments are realised.
In cases where the Portfolio Companies
have contracts which are in the construction
phase, they are either completed on time
or any delay costs are borne by the
construction contractors.
Enacted tax or regulatory changes, or
forecast changes with a high probability,
on or prior to this reporting period-end
with a future effect materially impacting
cash flow forecasts, are reflected in the
financial models.
In forming the above assessments, BBGI uses
its judgement and works with our Portfolio
Company management teams, as well as using
due diligence information from, or working
with, suitably qualified third parties such as
technical, legal, tax and insurance advisers.
Valuation continued
34 BBGI Global Infrastructure S.A.
Financial Results
The Consolidated Financial Statements of the Group for the year ended 31 December 2022 are on pages 98 to 102.
Basis of accounting
We have prepared the Group’s Consolidated Financial Statements in accordance with International Financial Reporting Standards (‘IFRS’) as adopted
by the European Union (‘EU’). In accordance with IFRS, the Company qualifies as an Investment Entity and, as such, does not consolidate its investments
in subsidiaries that qualify as investments at fair value through profit or loss. Certain subsidiaries that are not Investments at FVPL, but instead provide
investment-related services or activities that relate to the investment activities of the Group, are consolidated. As an Investment Entity, the Company
recognises distributions from Investments at FVPL as a reduction in their carrying value. These distributions reduce the estimated future cash flows
which are used to determine the fair value of the Investments at FVPL. The accounting principles applied are in line with those principles applied in
the prior year reporting.
Income and costs
Pro forma Income Statement
Investment Basis
Year ended
31 Dec 22
£ million
Year ended
31 Dec 21
£ million
Income from Investments at FVPL 137.6 73.6
Other operating income 0.1 0.7
Operating income 137.7 74.3
Administrative expenses (11.7) (10.2)
Other operating expenses (1.5) (1.5)
Net finance result (2.0) (1.9)
Profit before tax 122.5 60.7
Tax expense – net (3.5) (2.7)
Profit for the year 119.0 58.0
Other comprehensive loss (0.5) (0.6)
Total comprehensive income 118.5 57.4
Basic earnings per share (pence) 16.7 8.47
During the year, the Group recognised income from Investments at FVPL of £137.6 million (31 December 2021: £73.6 million). This income from
Investments at FVPL is made up of a combination of the positive effect of inflation and deposit interest rate increases, the net effect of foreign
exchange on the portfolio value, the unwinding of discount and value enhancements. Further detail on the income generated by the Group’s
Investments at FVPL is provided in the Valuation section of this Annual Report.
During the year, the Company recognised a net loss of £10.6 million on balance sheet hedging and £11.3 million on cash flow hedging (31 December
2021: £0.8 million net loss on balance sheet hedging and £1.0 million net loss on cash flow hedging). The net result of balance sheet and cash flow
hedging is included in the income from Investments at FVPL.
Administrative expenses include personnel expenses, legal and professional fees, and office and administration expenses. See further detail in the
Group Level Corporate Cost analysis below.
Profit for the year ended 31 December 2022 increased by 105.2 per cent to £119.0 million (31 December 2021: £58.0 million).
Group Level Corporate Cost Analysis
The table below is prepared on an accrual basis.
Corporate costs
Year ended
31 Dec 22
£ million
Year ended
31 Dec 21
£ million
Net finance result 2.0 2.0
Personnel expenses 7.9 6.9
Legal and professional fees 2.6 2.5
Office and administration 1.2 0.8
Acquisition-related costs 0.6 1.5
Taxes 3.5 2.7
Corporate costs 17.8 16.4
Annual Report 2022 35
Corporate governanceStrategic report
Financial statements
The net finance result for the year was £2.0 million (31 December 2021: £2.0 million) and reflects borrowing costs, commitment fees and other fees
relating to the Group’s RCF. At 31 December 2022, the Group had £57.5 million of borrowings outstanding under the RCF.
Personnel expenses for the year were £7.9 million (31 December 2021: £6.9 million) with the increase driven largely by inflation adjustments to staff
salaries and movements in foreign exchange rates.
Acquisition-related costs incurred during the year amounted to £0.6 million (31 December 2021: £1.5 million), which include unsuccessful bid costs
amounting to less than £0.1 million (31 December 2021: £0.7 million)
Ongoing Charges
The Ongoing Charges (‘OGC’) percentage presented in the table below is prepared in accordance with the AIC recommended methodology, latest update
published in April 2022.
Ongoing Charges Information
Year ended
31 Dec 22
£ million
Year ended
31 Dec 21
£ million
Ongoing Charges (using AIC recommended methodology) 0.87% 0.86%
In accordance with the AIC recommended methodology, fees that are linked to investment performance could be viewed as analogous to performance
fees paid by externally managed investment companies and should therefore be excluded from the principal OGC calculation.
Fees directly linked to investment performance recorded in 2022 as a percentage of average NAV were 0.09 per cent (2021: 0.10 per cent). Combined,
the aggregate of Ongoing Charges plus investment performance fees was 0.96 per cent in the year (2021: 0.96 per cent).
For the year ended 31 December 2022, and in line with AIC recommendations, certain non-recurring costs were excluded from the Ongoing charges,
most notably acquisition-related advisory costs of £0.6 million, taxes of £3.5 million and the net finance result of £2.0 million.
The table below provides a reconciliation of Ongoing Charges and the Ongoing Charges Percentage to the administration expenses under IFRS.
Year ended
31 Dec 22
£ million
(except %)
Year ended
31 Dec 21
£ million
(except %)
Administration expenses to 31 December 11.7 10.2
Less: Non-recurring costs as per AIC guidelines
Non-recurring professional and external advisory costs (0.6) (0.2)
Personnel costs related to acquisition or non-recurring (0.8) (0.9)
Compensation linked to investment performance (1.0) (1.0)
Other non-recurring costs – –
Ongoing charges
(i)
9.3 8.3
Divided by:
Average undiluted Investment Basis NAV for 2022 (average of 31 December 2022: £1,069.2 million and
30 June 2022: £1,068.7 million) 1,069.0 959.9
Ongoing Charges percentage
(i)
0.87% 0.86%
(i) Figures reported are based on actual results rather than the rounded figures presented in this table.
Cash flows
The table below summarises the sources and uses of cash and cash equivalents for the Group.
Year ended
31 Dec 22
£ million
Year ended
31 Dec 21
£ million
Distributions from Investments at FVPL
(i)
96.3 75.1
Net cash used in operating activities (20.3) (12.1)
Additional Investments at FVPL and other assets (64.5) (79.2)
Realised hedging loss on investing activities (12.6) (1.6)
Net cash flows from financing activities 3.8 24.3
Impact of foreign exchange gain/(loss) on cash and cash equivalents 1.5 (0.2)
Net cash inflow 4.2 6.3
(i) Distributions in the above table are shown gross of withholding tax. The associated withholding tax outflow is included in ‘Net cash flows used in operating activities’.
Financial Results continued
36 BBGI Global Infrastructure S.A.
The performance of the Group’s portfolio of investments continued to be strong during the year, with gross distributions coming in ahead of business
plan, up 28.2 per cent on a comparative basis.
Cash dividends paid during the year ended 31 December 2022 amounted to £51.7 million, an increase of £3.7 million on the previous year.
Refer to the Consolidated Statement of Cash Flows for further details on cash flows during the year ended 31 December 2022.
Cash dividend cover
For the year ended 31 December 2022, the Group achieved a cash dividend cover ratio of 1.47x (year ended 31 December 2021: 1.31x) calculated as
follows:
31 Dec 2022
£ million
(except ratio)
31 Dec 2021
£ million
(except ratio)
Distributions from Investments at FVPL 96.3 75.1
Less: Net cash flows used in operating activities (20.3) (12.1)
Net distributions 76.0 63.0
Divided by: Cash dividends paid 51.7 48.0
Cash dividend cover (ratio) 1.47x 1.31x
The strong cash dividend coverage for the year was underpinned by BBGI’s contracted, high-quality inflation-linked portfolio cash flows. Furthermore,
the Company received additional distributions during the year that were outside of the contracted cash flows, including the proceeds from the
completion of an opportunistic refinancing and a tax refund, which was not forecasted in the reporting period.
Pro Forma Balance Sheet
Investment
Basis
(i)
£ million
Investment
Basis
(i)
£ million
Investments at FVPL 1,097.0 975.2
Trade and other receivables 0.9 1.0
Other assets and liabilities (2.4) (2.4)
Net cash (debt) (26.3) 26.9
Derivative financial asset (liability) – net – 0.9
NAV attributable to ordinary shares 1,069.2 1,001.6
(i) Represents the value of the Group’s total assets less the value of its total liabilities under the Investment Basis NAV. The Investment Basis NAV represents the residual interest of the shareholders
in the Group, after all the liabilities of the Group, if any, have been settled.
As at 31 December 2022, the Group has 56 availability-style Investments at FVPL (31 December 2021: 54), with cash and cash equivalents amounting to
£31.2 million (£26.9 million as at 31 December 2021).
A reconciliation of net cash (debt) as compared to net borrowings is as follows:
31 Dec 22
£ million
31 Dec 21
£ million
Cash and cash equivalent 31.2 26.9
Loans and borrowings (56.4) (0.2)
Unamortised debt issue costs/RCF related fees (1.1) 0.2
Outstanding loan drawdown (57.5) –
Net cash (debt) (26.3) 26.9
Three-year comparative of Investment Basis NAV 31 Dec 22 31 Dec 21 31 Dec 20
NAV (millions) 1,069.2 1,001.6 916.0
NAV per share (pence) 149.9 140.7 137.8
The Investment Basis NAV increased by 6.7 per cent to £1,069.2 million at 31 December 2022 (31 December 2021: £1,001.6 million), and by 6.6 per cent
on an Investment Basis NAV per share basis. The Investment Basis NAV per share is calculated by dividing the Investment Basis NAV by the number of
Company shares issued and outstanding at the end of the reporting period. This information presents the residual claim of each shareholder to the net
assets of the Group.
Financial Results continued
Annual Report 2022 37
Corporate governanceStrategic report
Financial statements
Alternative Performance Measures (‘APM’)
APM is understood as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure
defined or specified under IFRS. The Group reports a selection of APM as summarised in the table below and as used throughout this Annual Report.
The Management Board believes that these APM provide additional information that may be useful to the users of this Annual Report.
The APM presented here should supplement the information presented in the Financial Statement section of this Annual Report. The APM used are not
measures of performance or liquidity under IFRS and should not be considered in isolation or as a substitute for measures of profit, or as an indicator
of the Group’s operating performance or cash flows from operating activities, as determined in accordance with IFRS.
APM Explanation 31 December 2022 31 December 2021
Annualised total
NAV return
per share
On a compounded annual growth rate basis. This represents the steady state
annual growth rate based on the NAV per share at 31 December 2022 assuming
dividends declared since IPO in December 2011 have been reinvested
19
.
9.1% 8.8%
Annualised Total
Shareholder
Return Since IPO
(‘Annualised TSR’)
On a compounded annual growth rate basis. This represents the steady state
annual growth rate based on share price as at 31 December 2022, assuming
dividends declared since IPO in December 2011 have been reinvested.
Investment performance can be assessed by comparing this figure to the 7 per
cent to 8 per cent TSR target set at IPO.
8.8% 10.4%
Asset availability Calculated as a percentage of actual availability payments received, as a
percentage of scheduled availability fee payments. The Company targets a rate in
excess of 98 per cent. A high asset availability rate can be viewed as a proxy to
strong underlying asset performance.
99.9% 99.9%
Cash dividend
cover ratio
The cash dividend cover ratio is a multiple that divides the total net cash
generated in the period (available for distribution to investors) by the total cash
dividends paid in the period based on the cash flow from operating activities
under IFRS. A high cash dividend cover ratio reduces the risk that the Group will
not be able to continue making fully covered dividend payments.
1.47x 1.31x
Inflation linkage Represents the contractual, index-linked provisions, which adjust annually to
provide a positive and high-quality link to inflation. The measure represents the
increase in portfolio returns if inflation is one percentage point higher than our
modelled assumptions for all future periods. Under current assumptions, the
expected portfolio return would increase from 6.9 per cent to 7.4 per cent for a
one percentage point increase to our inflation assumptions.
0.5% 0.4%
Net cash (debt) This amount, when considered in conjunction with the available commitment
under the Group’s RCF (unutilised RCF amount of £171.4 million as at 31
December 2022), is an indicator of the Group’s ability to meet financial
commitments, to pay dividends, and to undertake acquisitions.
£(26.3) million £26.9 million
Ongoing charges Represents the estimated reduction or drag on shareholder returns as a result of
recurring operational expenses incurred in managing the Group’s consolidated
entities, and provides an indication of the level of recurring costs likely to be
incurred in managing the Group in the future.
0.87% 0.86%
Target dividend Represents the forward-looking target dividend per share. These are targets
only and are not a profit forecast. There can be no assurance that these targets
will be met or that the Company will make any distribution at all.
7.93 for 2023
8.40 for 2024
and 8.57 for
2025
7.48 for 2022
7.63 for 2023 and
7.78 for 2024
Ten-year beta Calculated using the FTSE All-Share, ten-year data representing the ten years
preceding 31 December 2022. This performance measure demonstrates the level
of volatility of the Company’s shares in comparison to the wider equity market.
0.24 0.18
Total Shareholder
Return since IPO
(‘TSR’)
The TSR combines share price appreciation and dividends paid since IPO in
December 2011 to represent the total return to the shareholder expressed as a
percentage. This is based on share price at 31 December 2022 and after adding
back dividends paid or declared since IPO.
152.6% 171%
Weighted average
portfolio life
Represents the weighted average, by value, of the remaining individual project
concession lengths. Calculated by reference to the existing portfolio at 31
December 2022, assuming no future portfolio additions.
20.2 20.3
19 Calculated using the Morningstar methodology.
38 BBGI Global Infrastructure S.A.
Reconciliation of Consolidated Income Statement
31 December 2022 31 December 2021
Investment
Basis
£ million
Adjust
£ million
Consolidated
IFRS
£ million
Investment
Basis
£ million
Adjust
£ million
Consolidated
IFRS
£ million
Income from Investments at FVPL 137.6 21.9 159.5 75.4 – 75.4
Other operating income 0.1 – 0.1 0.8 – 0.8
Operating income 137.7 21.9 159.6 76.2 – 76.2
Administrative expenses (11.7) – (11.7) (10.2) – (10.2)
Other operating expenses (1.5) (11.3)
(i)
(12.8) (2.5) – (2.5)
Net finance result (2.0) – (2.0) (2.0) – (2.0)
Net loss on balance sheet hedging – (10.6)
(i)
(10.6) (0.8) – (0.8)
Profit before tax 122.5 – 122.5 60.7 – 60.7
Tax expense – net (3.5) – (3.5) (2.7) – (2.7)
Profit from continuing operations 119.0 – 119.0 58.0 – 58.0
(i) For further clarity, commencing the year ended 31 December 2022, the Income from Investments at FVPL now includes the net effect of the foreign exchange hedging contracts. In prior years,
the effect of the foreign exchange hedging contracts was presented separately under ‘Other operating income/expenses’ and under ‘Net gain/(loss) on balance sheet hedging.
Reconciliation of Consolidated Statement of Financial Position 31 December 2022 31 December 2021
Investment
Basis
£ million
Adjust
(i)
£ million
Consolidated
IFRS
£ million
Investment
Basis
£ million
Adjust
£ million
Consolidated
IFRS
£ million
Investments at FVPL 1,097.0 5.8 1,102.8 975.2 – 975.2
Trade and other receivables 0.9 – 0.9 1.0 – 1.0
Other net liabilities (2.4) – (2.4) (2.4) – (2.4)
Net cash (debt) (26.3) – (26.3) 26.9 – 26.9
Derivative financial asset (liability) – (5.8) (5.8) 0.9 (1.1) (0.2)
NAV attributable to ordinary shares 1,069.2 – 1,069.2 1,001.6 (1.1) 1,000.5
(i) Under IFRS, unrealised positions on foreign exchange hedging contracts are reported separately under derivative financial asset (liability).
Reconciliation of Investment Basis to IFRS
Annual Report 2022 39
Corporate governanceStrategic report
Financial statements
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Risk
Risk reporting process
We follow a risk-based approach to internal
controls. Our risk management function facilitates
the Management Board’s duty to effectively
govern and manage the risks we face. Given the
nature of our assets and our interaction with the
capital markets, we do not operate in a risk-free
environment. In an uncertain environment, we
take proactive action to address risks, and to
achieve our business and investment objectives.
We identify, analyse, assess, report, and manage
all material risks, and aim to identify risks we
face as early as possible, so we can minimise
their impact.
We classify risks into the following risk
categories:
– Market risks
– Credit risks
– Counterparty risks
– Liquidity risks
– Operational risks
– Sustainability risks
We analyse all identified risks during the risk
reporting process to understand the range of
possible impacts on BBGI. By undertaking this
risk review, we can determine material risks to
analyse and respond to, and risks that require
no further attention. This gives the Management
Board a universal interpretation of risk.
Our risk management function performs a risk
assessment to determine the likelihood that a
predefined event will occur and any subsequent
impact; it also estimates risk levels for a
particular situation, compares these against
benchmarks or standards, and determines an
acceptable level of risk.
In the risk profile all identified risks are classified
according to risk type, in line with the risk
categories above. For material risks identified,
BBGI’s risk manager advises on key risk
indicators to include in the risk profile and
suggests appropriate quantitative and
qualitative limits to mitigate the potential
impact of those risks, which are discussed and
approved by the Management Board before
being formally included in the Risk Profile.
We have assessed inherent risk and have
applied relevant mitigating factors to arrive at
a remaining residual risk that the Management
Board deems manageable or acceptable.
This following table summarises our material
risks, but is not an exhaustive list of all the
potential risks BBGI faces. Previously reported
risks in relation to COVID-19 and SONIA
transition have been removed and others
have been updated. There may be other
unknown risks, or those regarded as less
material, that could, in the future, materially
impact our performance, our assets, and our
capital resources.
40 BBGI Global Infrastructure S.A.
Market risks
Risk description Risk mitigation
Volatility of
discount rates
We use a discounted cash flow methodology to
value our portfolio of investments. Higher discount
rates may have a negative impact on valuation and
the ultimate rate of return realised by our investors,
while lower discount rates may have a positive
impact.
Our most important judgement and variable
is the discount rate we apply to our portfolio of
investments. Appropriate discount rates are key to
deriving a fair and reasonable portfolio valuation.
Changes in market rates of interest (in particular,
government bond yields) may impact the discount
rate used to value our future projected cash flows,
and thus our valuation. In the event long-term
interest rates rise substantially further, this is likely
to affect discount rates.
BBGI primarily uses a market-based valuation to determine a base
discount rate for steady-state, operational investments, and we use
our judgement in arriving at the appropriate discount rates. We may
apply adjustments to the base rate to reflect variances from the
average benchmark when we determine investment-specific
characteristics and risk profile.
Government bond yields have increased significantly in 2022
coupled with the fact that there was limited transactional market
data available in the second half of 2022. BBGI has therefore
complemented its market-based approach by additionally using the
capital asset pricing model where risk free rates plus an equity risk
premium are used to calculate discount rates. This method is used
as a plausibility check for our market-based approach.
Our NAV is sensitivity-tested periodically for changes in discount
rates.
Inflation rates are positively linked to the NAV. An increase in
discount rates due to increased interest rates coincides currently
with significantly higher inflation rates. Higher actual and revised
short-term forecasted inflation rates offset, partially at least,
increased discount rates in our portfolio valuation calculation.
Interest rate increases also have a positive impact on interest earned
on cash deposits at our Portfolio Companies, which additionally
mitigates a portfolio value reduction arising from increased discount
rates.
An increase in long-dated government bond yields will not
necessarily result in an equivalent increase in discount rates.
Long-dated government bond yields have largely trended
downwards since BBGI’s IPO in 2011, but the market discount rate
applied to secondary transactions has not followed in lockstep.
We have provided a sensitivity analysis in the valuation section of
this report in relation to discount rates applied to our portfolio of
investments.
Foreign
exchange
A significant proportion of our underlying
investments – 68 per cent of the portfolio value at
31 December 2022 – are denominated in currencies
other than Sterling.
We maintain our financial statements, prepare the
portfolio valuation, and pay dividends in Sterling.
There is a risk that fluctuations in exchange rates
between Sterling and relevant local currencies will
adversely affect the value of our underlying
investments, distributions and the ultimate rate of
return realised by our investors.
Currency-hedging arrangements for portfolio distributions
denominated in Australian Dollar, Canadian Dollar, Norwegian
Krone and US Dollar are in place for a rolling period of four years
to mitigate some foreign exchange risk.
In addition to cash flow hedging, we also hedge a portion of the
non-Sterling, non-Euro portfolio value, and aim to reduce NAV
sensitivity to approximately three per cent for a 10 per cent adverse
foreign exchange movement.
Euro-denominated fund running costs currently provide a natural
hedge against the Euro-denominated portfolio distributions.
Furthermore, the ability to draw on the RCF in the currency of the
underlying asset distributions provides an additional hedging
alternative.
BBGI has investments in five currencies other than Sterling, resulting
in some natural diversification among underlying currencies.
A sensitivity analysis is provided in the valuation section of this
report in relation to foreign exchange rates.
Risk continued
Annual Report 2022 41
Corporate governanceStrategic report
Financial statements
Market risks
Risk description Risk mitigation
Interest and
deposit rates
Our performance may be adversely affected by
changes in interest rates. BBGI has an exposure to
interest rates through borrowings under the RCF,
debt at the Portfolio Company level and cash
deposits.
The Portfolio Companies typically have some cash
reserves and deposits. From a financial modelling
perspective, we assume that deposits can be placed
at a forecast rate, which varies depending on
country.
If deposit rates exceed or fall below projections
for short-term and long-term rates, the effect on
investment returns will depend on the amount of
deposits.
Our Portfolio Companies have sought to hedge substantially all
their floating rate interest liabilities against changes in underlying
interest rates with interest rate swaps.
At the Group level, we maintain deposits at low levels and only raise
capital when there is a clear strategy for deploying proceeds.
A sensitivity analysis is provided in the valuation section of this
report in relation to deposit rates and changes in the senior debt
rate of the Portfolio Companies.
Inflation We have observed inflationary pressure across all
our jurisdictions. Our valuation and the ultimate
rate of return realised by our investors may be
adversely or positively affected by lower or higher
than expected inflation. Prolonged periods of
deflation could result in defaults under Portfolio
Company loan arrangements.
The revenues and expenditure of our Portfolio
Companies developed under availability-style
schemes are often partly or wholly subject to
indexation.
From a financial modelling perspective, an
assumption is usually made that inflation will
increase at an assumed rate (which may vary
depending on country). The effect on investment
returns, if inflation exceeds or falls below the
projections for this rate, typically depends on how
each Portfolio Company’s costs are affected by
inflation, and any unitary charge indexation
provisions agreed with the client on any investment.
A scenario of persistent high inflation across our jurisdictions
presents the risk of declining real returns to investors.
We typically mitigate inflation risk for our Portfolio Companies to
some extent by seeking to match the indexation of the revenues
to the indexation of the operational cost.
It is also important to note that BBGI’s equity cash flows are
positively linked to inflation.
A sensitivity analysis is provided in the valuation section of this
report in relation to inflation rates of the Portfolio Companies.
However, the level of inflation linkage across the investments held
varies and is inconsistent. The consequences of higher or lower
levels of inflation than that assumed by the Company, will not
be uniform across our investments.
Risk continued
42 BBGI Global Infrastructure S.A.
Market risks
Risk description Risk mitigation
Changes to tax
legislation,
treaties, and
rates
There is a continued risk that enacted changes in
tax law, tax rates and global tax initiatives, including
the OECD’s recommendations in relation to base
erosion and profit shifting or tax treaty eligibility,
could have an adverse effect on our cash flows,
and reduce investors’ returns.
Certain risks, such as changes to corporation tax rates (including
due to fiscal constraints), cannot be prevented or mitigated.
We value our Portfolio Companies based on enacted tax rates. Our
management team works closely with our global tax advisers, and is
briefed periodically on relevant tax developments.
We are monitoring the evolution of draft legislation for excessive
interest and financing expenses limitation (‘EIFEL’) rules in Canada
and similar developments in Australia, and any potential impact on
our investments.
The draft EIFEL rules aim to limit the deduction of ‘interest and
financing expenses’ to a fixed percentage of earnings before
interest, tax, depreciation, and amortisation for Canadian income tax
purposes. The private sector made significant submissions to the
Department of Finance on the proposed legislation.
Following a review of submissions and open consultations with the
private sector, the Department of Finance released a revised draft of
the legislation in November 2022. This revised draft provides for an
exemption for third-party debt financing on PPP type projects,
similar to the public benefit entity concept in the UK.
Additionally, in Australia, expected amendments to the existing thin
capitalisation rules in order limit interest deductions are likely to
have an adverse NAV impact.
Overall, these new rules are expected to result in a decrease in NAV
of c.GBP12.5 million, which has been reflected in the December
2022 valuation.
Generally, BBGI has a globally diversified portfolio of assets, thereby
reducing the tax concentration risk of any one country.
A sensitivity analysis in relation to tax rates of the Portfolio
Companies is provided in the valuation section of this report.
Lifecycle or
operational
cost risk
During the life of an investment, components of our
assets (such as asphalt or concrete for roads and
bridges; or roofs and air handling plants for
buildings) are likely to need to be replaced or
undergo a major refurbishment.
There is a risk that the actual cost of replacement or
refurbishment of these lifecycle obligations will be
greater than the forecasted cost, or that the timing
of the intervention may be earlier than forecast.
There is also the general risk that costs may be
higher than budgeted. This typically relates to
insurance costs and management service contracts
Of the 56 assets in the BBGI portfolio, 20 Portfolio Companies retain
the lifecycle obligations. The remaining 36 assets have this obligation
passed down to the subcontractor.
Each Portfolio Company forecasts, models, and provides for the
timing and costs of such replacements or refurbishments. This is
based on internal or external technical advice to assist in forecasting
of lifecycle timings, scope of work and costs.
As part of acquisition due diligence, we review budgeted costs and
assess their adequacy.
A sensitivity analysis is provided in the valuation section of this
report in relation to lifecycle costs.
The risk of insurance cost increases is partly mitigated by a
contractual premium risk-sharing mechanism with certain public
sector clients. For other Portfolio Companies, the risk is borne
entirely by the public sector client but for a limited number of
Portfolio Companies there is no mitigation available.
Risk continued
Annual Report 2022 43
Corporate governanceStrategic report
Financial statements
Counterparty risks
Risk description Risk mitigation
Failure of
subcontractor
performance or
credit risk
(construction
contractors,
facility
managers,
operation, and
maintenance
contractors)
The risk of a subcontractor service failure, poor
performance or subcontractor insolvency, which is
sufficiently serious to cause a Portfolio Company to
terminate or to be required by the client or lenders
to terminate a subcontract.
There may be a loss of revenue during the time
taken to find a replacement subcontractor.
The replacement subcontractor may also levy a
surcharge to assume the subcontract, or charge
more to provide the services.
For assets under construction (c.0.5 per cent of the portfolio value),
there are several mitigants and steps we take to manage this risk:
– A construction joint venture with two or more counterparties is
typically jointly and severally liable: if one party fails, the other
is obligated to take over the obligations.
– We perform a contractor replacement analysis as part of our
initial investment due diligence. Most subcontractors of our
investments are well established, with several competing
providers. Therefore, we expect that a pool of potential
replacement supplier counterparties is available if a service
counterparty fails, although not necessarily at the same cost.
– Construction subcontractors are typically required by lenders
to provide a robust security package, often consisting of letters
of credit, parent company guarantees or performance bonding.
The latter two mitigants are also in place for investments once they
become operational. However, any liability of subcontractors is
typically capped at contractually agreed amounts.
Other mitigants during operations include:
– Periodic benchmarking of defined soft facility services on some
investments.
– A diversified group of subcontractors, with no substantial
concentration risk.
– Ongoing subcontractor monitoring for our investments, as well
as contingency plans as appropriate, to ensure we mitigate the
risk of counterparty failure.
Liquidity risks
Risk description Risk mitigation
Access to
capital
There is a risk that a disruption to the equity markets
could lead to an inability to raise new capital. Such a
disruption could limit our ability to grow and our
ability to repay debt drawn under our RCF.
To the extent that we do not have cash reserves
pending investment, we expect to bridge finance
further investments using the RCF.
Although we have had an RCF since July 2012
(subsequently refinanced), we cannot guarantee
this will always be the case, or that we will be able
to issue further shares in the market.
The need to issue new equity capital primarily relates to the
repayment of drawings under the RCF.
The Board and our Company’s brokers regularly assess market
sentiment.
Our RCF expires in May 2026. The Management Board can seek to
refinance the RCF to extend its maturity and reduce the near-term
requirement to repay drawings, though we do not intend to be
drawn for substantial periods of time.
Premium or
discount to
NAV
The risk of share price volatility, or trading at a
discount to NAV, leading to lower returns to
shareholders.
To assist BBGI in managing any share price premiums or discounts
to NAV, we can make annual market purchases of up to 14.99 per
cent of the ordinary shares in issue.
We offer a continuation vote to shareholders every two years; the
next will be proposed at our Annual General Meeting on 28 April
2023.
The Management Board meets regularly with shareholders and
receives regular briefings from our Company’s brokers to manage
investor relations.
Risk continued
44 BBGI Global Infrastructure S.A.
Operational risks
Risk description Risk mitigation
Poor
investment due
diligence
There is a risk that errors may be made in the
assumptions, calculations, or methodology during
an acquisition due diligence process.
In such circumstances, the figures and/or the
returns generated by the Portfolio Company and
the ultimate rate of return realised by our investors
may be lower than those estimated or projected.
BBGI has developed a robust asset acquisition due diligence process.
Our typical due diligence includes model, legal, tax, technical,
anti-money laundering, ESG, sustainability and insurance reviews.
Valuation The most significant risk of material misstatement
in our financial statements is the fair valuation of
the investment portfolio, the discount rates we
apply, and key assumptions when valuing these
investments.
There is a risk that errors may be made in the
assumptions, calculations or methodology used in a
periodic valuation process.
Financial models, either for the Group or our
underlying Portfolio Companies, may also contain
errors, or incorrect inputs, resulting in inaccurate
projections of distributions. These could adversely
impact the valuation on individual investments and
the overall assessment of our financial position.
Our portfolio valuation is prepared semi-annually by an experienced
internal team, overseen by our Management Board.
Furthermore, the valuation is reviewed by an independent,
third-party valuation expert, and is also reviewed and audited by the
Company’s external auditor.
All key assumptions used in the valuation process are in the
valuation report, some of which are subject to sensitivity testing.
However, sensitivity testing has its limitations: it cannot provide a
comprehensive assessment of every risk we face and should be
considered accordingly.
Construction
defects
The risk of certain operational costs in relation to
construction defects lies with the Portfolio
Company.
In general, Portfolio Companies can submit claims against
construction subcontractors for defects in the design, construction,
or commissioning of project assets. This ‘right to claim’ applies for a
pre-determined period following the completion of construction
(‘statutory limitations period’), and this may differ between
jurisdictions.
If disputes arise, an arbitration or court process may be used.
Once the statutory limitations period has ended, the remediation
of construction defects identified after this point typically fall to the
Portfolio Company itself, and thus become the risk of the Portfolio
Company. In addition, there may be other situations where the risk
would lie with the Portfolio Company, for example where a
subcontractor becomes insolvent, and may no longer be able
to fulfil its obligations to correct these defects.
Change in law
or regulation
Different laws and regulations apply in the countries
where BBGI and our Portfolio Companies are
located. There is a risk that changes in laws and
regulations may have an adverse effect on the
performance of the underlying investment, which
will then affect the cash flows derived from the
investments and/or the valuation of the investments.
The Management Board seeks regular briefings from its legal and tax
advisers to stay abreast of impending or possible changes in law.
Change in law provisions are included in some contracts, thus
providing further mitigation.
BBGI has a globally diversified portfolio of assets, thereby reducing
the Group’s exposure to changes in any single country.
Risk continued
Annual Report 2022 45
Corporate governanceStrategic report
Financial statements
Operational risks
Risk description Risk mitigation
Failing IT
systems or
cyber-attacks
A breach of data security could occur by accident or
as a result of an external cyber-attack. A cyber-
attack could affect our IT systems or those of our
Portfolio Companies, causing theft, loss of data,
or damage to the infrastructure’s control systems
and equipment.
The threat of cyber-attack means that businesses
can no longer afford to be reactive. A cyber-attack
could affect not only BBGI’s reputation, but could
also have legal, financial, and operational
repercussions for the Group.
BBGI has taken several measures to reduce the risk of a cyber-
attack, and we outline a few below.
We have outsourced the hosting of our IT platform to an industry
specialist. In doing so, we benefit from access to IT security experts,
with our platform monitored by an advanced IT security system. This
approach would be less cost-effective if our IT infrastructure was
maintained onsite.
Every year, we engage an external expert to carry out an intrusion
test on our IT platform to identify and patch any vulnerabilities.
We perform business continuity tests, carry out disaster recovery
tests every year, and our employees periodically undergo cyber
security training.
In a typical PPP structure, public sector clients have their own IT
systems. However, the majority of our Portfolio Companies do
not maintain their own IT systems. Instead, subcontractors of
a Portfolio Company (such as management service providers,
facility maintenance contractors for accommodation assets, and
maintenance contractors for transport assets) will have their own
IT systems, which will likely house data relating to a project.
In a typical PPP structure, such as those in BBGI’s portfolio, risks are
passed down to subcontractors by the Portfolio Company.
However, any liability is capped to contractually agreed amounts,
including risks relating to design and construction, warranties for IT
systems (such as a warranty that the system will meet specifications
requiring it to meet robust security requirements), and the risk of a
cyber-attack interrupting the provision of services to a project.
Voluntary
termination
There remains a risk that public sector clients of our
Portfolio Companies choose to exercise their right
to voluntarily terminate the contracts.
When this happens, the public sector is typically
contractually obliged to pay compensation on
termination to equity holders, debt providers, and
other parties, depending on the circumstances.
While provisions vary between contracts, they
generally ensure that our investors are paid either
market value for their equity interests, or a value
to achieve the originally projected IRR, and in
these cases, where the compensation amount is
less than current valuation levels, we would suffer
a material loss.
The Management Board believes there are mitigants or deterrents
to the risk of voluntary termination of contracts:
– In cases where debt or bond facilities were agreed when
interest rates were higher than current levels interest rate
swaps remain largely ‘out of the money’ for our Portfolio
Companies, and any public body wishing to terminate a
contract in the current interest rate environment would
also need to cover the cost of the swap breakage fee.
– Our Portfolio Company equity investors would, depending
on the particular contractual provisions, also need to be
compensated, as well as the public sector being required
to budget for the ongoing provision of the service.
Risk continued
46 BBGI Global Infrastructure S.A.
Sustainability risks
Risk description Risk mitigation
Sustainability
risk
Sustainability risk has been defined in Article 2(22)
of the Sustainable Financial Disclosure Regulation
as ‘an environmental, social or governance event or
condition that, if it occurs, could cause an actual or
potential material negative impact on the value of
the investment’.
For example, climate change can give rise to a
range of sustainability risks.
Financial risks from climate change can arise
through two primary channels:
i. physical risk, from abrupt and acute weather
events, or chronic longer-term shifts in climate
patterns, each causing disruptions to
businesses and economic activities
(and the value of investments in them); and
ii. transition risk, from a shift to low carbon and
climate resilient policies, laws and technologies
and changes in societal attitudes. Failure to
acknowledge climate change may also alienate
certain investors and reduce our access
to capital.
All sustainability risks can be broken down into
physical and transition risks, which could both
impact the performance of an asset or of BBGI itself,
and have a material negative impact on investment
returns.
For example, infringements of human rights could
have a significant impact on the financial
performance of an investment.
We seek to integrate and appraise material sustainability risks into
our processes in several ways:
– Alongside traditional financial criteria, we systematically
consider whether – and to what extent – financially material
sustainability risks might meaningfully impact our investments.
– In 2021 and 2022, we undertook a formal portfolio climate risk
assessment to better understand the impact of climate risk on
BBGI. The findings demonstrate a high degree of climate
resilience across our asset portfolio, both today and under
different climate warming scenarios.
– Although climate change is projected to increase physical risk
impacts across our portfolio, many of our assets, due to the
vital services they provide, have been designed and
constructed in consideration of potential physical risk impacts,
and are inherently more resilient to climate change.
– We typically mitigate events arising from adverse climate
change through insurance coverage, pass-down to
subcontractors and public sector client relief events. However,
in severe cases, adverse climate change events could lead to
early termination of concession agreements and compensation
payments, which are materially lower than our valuation.
– Aligned with our SFDR Article 8 product classification, our
focused approach of investing in core social infrastructure
assets that serve society should mitigate sustainability risk
linked to a social event or condition.
Risk continued
Annual Report 2022 47
Corporate governanceStrategic report
Financial statements
Environment, Social and Governance
As the ESG Committee,
we are pleased to report
on the progress made by
the Company and by our
56 Portfolio Companies.
We approached 2022 mindful of the ever-evolving
nature of ESG frameworks and regulations, and
the challenges of data collection. We take pride in
the close engagement we have maintained with
each of our assets. We continue to focus our
efforts to make improvements in key areas such
as GHG emissions monitoring and reduction,
climate-risk assessments, health and safety
standards, biodiversity and human rights. Our ESG
strategy is underpinned by a culture of robust
governance and stringent compliance, promoting
accountability and transparency, with a focus on
delivering positive outcomes for all stakeholders.
Sustainability Highlights
Our purpose is to deliver social
infrastructure for healthier, safer and
more connected societies, while creating
sustainable value for all stakeholders.
Our portfolio is focused on creating long-term
positive impacts for society, by investing in
infrastructure assets that provide citizens with
access to essential services, such as: health,
education, security, clean energy, social
housing, public services and safe transportation.
The sustainable and resilient portfolio of 56
social infrastructure investments that we
manage is aligned with our SFDR Article 8
classification, where we promote social
characteristics in combination with good
governance practices.
To support our SFDR-related social investment
objective, each of our investments is aligned
with at least one of six focused SDGs where
we can make the greatest contribution.
By maintaining social infrastructure assets for
our public sector clients, our portfolio aims to:
Facilitate education, healthcare and
well-being of local communities
Provide access to affordable housing
Support safe and accessible travel
on roads and public transport
Facilitate access to public services,
provide safety to local populations
and promote the rule of law
Connecting communities through
reliable transportation networks
and support the transition to
renewable energy sources
Remaining resilient and capable
of sustaining potential damages
caused by climate change
While we are proud to provide well-maintained
infrastructure that serves society, we recognise
that building and operating physical assets such
as schools, hospital, roads and hydroelectric
plants can harm the environment, impact
surrounding biodiversity and are subject to
climate hazards. As stewards of these assets,
our public sector clients entrust us with
safeguarding them during our concession
period. Our ESG approach systematically
integrates: greenhouse gas emissions
monitoring, climate-risk assessment, and
initiatives to restore natural ecosystems,
so that our portfolio does not significantly
harm other environmental objectives.
Duncan Ball Frank Schramm
Co-CEO Co-CEO
29 March 2023
On behalf of the ESG Committee
Lagan College, UK
48 BBGI Global Infrastructure S.A.
William R Bennett Bridge, Canada
Strategic ESG
integration
Social characteristics
in combination with
good governance
ESG monitoring
– ESG fully integrated in strategy and
business model.
– Management remuneration tied to
ESG targets within both STIP and
LTIP awards.
– 100 per cent of staff received
ESG training.
– Portfolio aligned with the social
investment objective of our SFDR
Article 8 product.
– 100 per cent of our investments align
with at least one of SDGs 3, 4, 9, 11 or
16 and have a ‘do no significant harm’
objective aligned to SDG 13.
– Social safeguards screening based on
UN Global Compact Ten Principles.
– Continuous engagement with all
Portfolio Companies and strong
ESG oversight.
– All Portfolio Companies completed
a 100+ questions proprietary ESG
KPI survey.
– 75 per cent of our assets have a
sustainability certification.
Climate resilient
portfolio
Net zero External ratings
– Voluntary disclosures aligned
with TCFD.
– Portfolio demonstrates a high degree
of climate resilience.
– Climate risk scores shared with over
98 per cent of Portfolio Companies’
boards and 80 per cent of clients.
– Net zero targets for our Corporate
and Financed emissions
20
.
– Certified as carbon neutral for
Corporate Emissions Scope 1, 2 and 3.
– Financed emissions (Portfolio
Companies) to be disclosed in
June 2023.
– UN PRI signatory: Investment &
Stewardship policy: ★★★★★
Direct Infrastructure: ★★★★✩
– Sustainalytics ESG Risk Rating 2021:
negligible (8.3).
– ISS Corporate ESG Rating 2022:
Prime B- (Decile Rank: 1).
20 2022 market-based Corporate Emissions: -13.7% reduction compared to 2019.
Environment, Social and Governance continued
Annual Report 2022 49
Corporate governanceStrategic report
Financial statements
Contribution to Sustainable Development Goals
Sustainable
Development Goals Sustainability indicators Impacts
Target 3:
Good health
and well-
being
41 healthcare
facilities
26 fire stations
c.600,000 m
2
managed
c.33,000 m
2
managed
c.4 million
managed
c.800,000 people
Hospitals, mental-health clinics and primary
healthcare centres provide access to healthcare
delivery for c.four million patients per year and
over 2,400 beds.
Fire stations provide c.800,000 people with
protection against fire-related injuries and
fatalities and mitigation of air, water and soil
pollution caused by fire incidents. Fire stations
also play a critical role as part of a first responders’
network, supporting local populations.
Target 4:
Quality
education
33 schools and
colleges
c.430,000 m
2
managed
c.36,000 pupils Schools and colleges provide c.36,000 pupils with
access to primary, secondary and adult education
in an effective learning environment.
Target 9:
Industry,
innovation
and
infrastructure
19 roads and
bridges
1 hydroelectric
generation station
c.2,800 single-
lane kms operated
132 MW installed
c.290 million
vehicles
c.80,000 homes
Roads and bridges provide local population with
reliable and resilient transport, and reduce travel
times for c.290 million vehicles a year.
The maintenance of road networks is necessary
and aims for a reliable and safe access, reducing
traffic congestion, and decreasing greenhouse gas
emissions by reducing transit times. Maintaining
road elements, signalling, surfacing, and other
security measures is crucial for a safe journey.
Hydroelectric power station supports the access
to clean and reliable electricity for over 80,000
homes, while providing flood control and
domestic water supply.
Target 11:
Sustainable
cities and
communities
1 fully electric
public transit line
3 affordable
residential housing
and 2 community
centres
c.39 kms
c.17,000 m
2
/
100 units
c.32 million
passengers
c.200 people
Urban rail transport is a safe and sustainable
means of public transport for c.32 million
passengers per year, given the fully autonomous
nature of the transit system, which is powered
by electricity.
Residential housing units support the access to
affordable housing for c.200 people per year,
complemented by sport and leisure centres for
the local community.
Target 16:
Peace, justice
and strong
institutions
4 police stations
3 modern
correctional
facilities
2 public
administration
buildings
c.16,000 m
2
managed
c.190,000 m
2
managed
c.37,000 m
2
managed
c.1.5 million
people
c.2,500 detainees
c.500,000
people
Police stations promote the rule of law and
provide safety for c.1.5 million people per year.
Modern correctional justice facilities promote the
rule of law and are a necessary link in the
functioning of judicial systems for c.2,500
detainees a year.
Public administration buildings provide c.500,000
people with access to public services.
Target 13:
Climate
action
100 per cent of
the portfolio
56 assets 100 per cent of assets screened for resilience and
adaptative capacity to climate-related hazards
and natural disasters.
Create positive social outcomes
Do no
significant
harm
The SDGs inform our entire ESG
and social impact management
process. Specifically, our
investment strategy seeks to
create measurable impacts
facilitated by our investments
and future acquisitions.
The SDGs are used to assess, measure and
monitor that we keep investing beyond mere
alignment and make a verifiable contribution
to positive social and environmental outcomes.
We acknowledge that through our direct
operations and investment portfolio we can
also create negative impacts and we address
some of these impacts in the relevant sections
of this report.
Our social infrastructure investment strategy
is focused on six SDGs and creates real-world
outcomes from the portfolio we invest in:
50 BBGI Global Infrastructure S.A.
Contribution to Sustainable Development Goals continued
Creating lasting positive impact through initiatives for local
vulnerable and disadvantaged people and communities in
or around our Liverpool & Sefton Clinics
BBGI and its partners have
worked together for several
years to support initiatives
that aim to create a positive
impact on vulnerable and
disadvantaged communities
in and around their Liverpool
& Sefton Clinics.
These clinics are part of the LIFT programme,
established in 2001 by the UK Government,
creating long-term public-private sector
partnerships that provide better healthcare
and social care facilities for local communities.
To make their buildings an integral part of their
communities, Liverpool & Sefton Clinics have
in the past provided spaces for community
groups and fundraising activities. In recent
years, the Portfolio Company established a
foundation with a dedicated budget to support
initiatives that benefit local communities and
create a lasting impact.
In 2022, BBGI proudly collaborated with
Liverpool & Sefton Clinics to fund and
provide space at the Kensington Health
Centre for the ‘Liverpool Through Our Lens’
photography programme, which enabled
vulnerable and disadvantaged people to
enjoy specially adapted photography lessons.
The programme was delivered in partnership
with Community Integrated Care (CIC is one
of UK’s largest and most successful social
care charities) and Liverpool’s Open Eye
Gallery, a recognised expert on socially
engaged photography. The participants of
the programme were volunteers with some
of the biggest health and social issues from
CIC’s Inclusive Volunteering Programme,
each supported by a carer/worker to ensure
their individual needs were met.
The photography programme ran from
October to early November 2022, coinciding
with the World Gymnastics Championships
held in Liverpool. This programme enabled
the volunteers to engage socially, access and
explore their community, and learn new life
skills and passions. The participants created
stunning photographs of the city that were
displayed for a week at a professional gallery in
the Fan Zone at the Championships, attended
by approximately 50,000 people. Participants
also had the opportunity to see the games,
meet gymnasts, manage the gallery display,
and participate in a wider supplementary
programme of inclusive activities at the World
Gymnastics Championships.
The photographs were also exhibited to
approximately 5,000 people at the Rugby
League World Cup and will be permanently
displayed at the Kensington Health Centre.
The programme made a lasting positive
impact on the lives of 30 people in need,
giving them new skills and inspiring them to
be more active and engaged. The programme
is an excellent example of how public-private
partnerships can provide a positive impact
on local communities, supporting individuals
and organisations in achieving their goals.
“
Based on the success of this amazing
programme, it will progress further
throughout 2023, building on the positive
impact provided to this group of volunteers.
We are also continuing to explore how we
can deliver similar community initiatives
based out of our other health centres.
”
Ian Tayler, Director at BBGI
“
Much more than learning how to use a
camera, the project inspires independence,
encouraging people to go out and visit their
city and share their photography experiences
with the group and carrying this skill on for
the rest of their lives.
”
John Hughes, Director of Partnerships
and Communities at CIC
“
It’s been great to see the volunteers grow
in their confidence as they learn more skills
and share their photographs and experiences
with other people. Every photograph tells a
powerful story, but it’s the stories behind the
lens that have the greatest impact.
”
Nuria Rovira Terradas, Assistant Creative
Producer at Open Eye Gallery
Case study
Annual Report 2022 51
Corporate governanceStrategic report
Financial statements
Who are the Company’s key stakeholders?
Why are these stakeholders important?
What actions are the Company taking to
build and maintain strong relationships
with its key stakeholders?
What are the types of engagement
and the metrics used by management,
to monitor and assess relationships
with stakeholders?
How has this stakeholder impacted
upon, and been taken into
consideration in the board
decision-making process?
Our people
Our people are the driving force behind our purpose.
They are well positioned to bring their expertise to our clients,
subcontractors and partners and deliver the results expected
by our investors.
Our relatively flat hierarchy allows our talented
people to be empowered to successfully deliver
our purpose. We promote an inclusive work
environment where all people are treated
equally and supported to achieve their potential.
– Annual and mid-year assessments
– Direct liaison with the Management Board
– Regular meetings
– Well defined expectations and targets,
including ESG targets for all executives
– Regular training
– Training metrics
– Whistleblower hotline
– Feedback from the individual assessments
are regularly discussed by the
Management Board.
– Adjusted our teleworking policy in
response, allowing our people to better
balance their work and personal lives,
improving their well-being and job
satisfaction.
Our public sector clients
Satisfied public sector clients are critical to our business model.
We aim to build trust by delivering well-
maintained and safe social infrastructure
facilities and services such that our public sector
clients are satisfied.
– Regular client meetings
– Service quality feedback
– Sharing results of our climate risk monitoring
– Ongoing reporting
– Net Promoter Score survey
– Meetings with our clients drives our asset
management approach and feeds directly
into our decision-making process; lessons
learned from one asset are adapted and
applied across the portfolio.
– Examples include early initiatives to
implement LED lighting and solar panels
on some of our assets, providing a sound
business case and encouraging further
adoption on other assets.
Our subcontractors
Our long-term subcontractors are critical to ensure that we provide
our public sector clients with operational and available assets. We
monitor our subcontractors to ensure that they conduct their
business according to the high standards of ethics and integrity
that we expect.
Our Portfolio Companies collaborate with the
subcontractors and strive to develop mutually
beneficial long-term relationships.
– Sub-contractor monitoring
– ESG onboarding
– Annual ESG KPI survey
– Ongoing ESG engagement topics and
joint initiatives
– Enhancing our monitoring of ESG practices
across all portfolio companies and their
supply chain through pre-existing
channels, such as the ESG KPI survey.
– Additionally, the Company led a series of
webinars for our subcontractors to assist
them in the process of gathering
GHG-related data. That data will assist us in
our goal to deliver positive ESG impacts.
Our communities and users
The positive experience of the people who use our assets and
the communities who live near to our assets are vital to ensuring
our success as a responsible global infrastructure investment
company.
We maintain critical social infrastructure assets
upon which people rely on a daily basis.
– Client satisfaction discussed at corporate and
Portfolio Companies’ level
– Partnership, sponsorship and donations
– Community engagement initiatives
– Supporting projects that benefit the
communities living near to our assets.
– In 2022, our Portfolio Companies donated
£150,000 to local charities, and offered
various employees volunteering.
– Please refer to the case study on Liverpool
and Sefton Health Centres on page 51 for
one such example.
Our investors
Our investors provide capital, feedback on our business model, and
help shape our future plans.
Our goal is to generate long-term, predictable,
and inflation-linked returns for our investors. We
measure progress against key KPIs.
– Investor relations activities, including
meetings, roadshows and discussions with
senior executives
– Close interactions and feedback with our
Corporate Brokers
– Annual General Meeting
– Annual Report
– ESG Report
– Website
– Focused engagement with selected ESG
ratings providers to ensure shareholders
have accurate and up-to-date insights into
BBGI’s ESG credentials.
– The Board continually keep under review
the returns we offer to our investors, along
with our ability to continue to deliver those
returns. This forms the basis of discussions
when determining dividends.
– The roadshows provide the Co-CEOs with
an opportunity to speak directly with our
investors, including on the topic of ESG, to
better understand their expectations of us.
Stakeholder
Engagement
As stewards of important social
infrastructure investments,
there are many stakeholders
impacted by our actions:
users of the infrastructure,
communities living in the
vicinity of our assets, our staff,
investors, public sector clients,
subcontractors, the environment,
and society at large. We take
this responsibility seriously.
Our stakeholders increasingly expect us
to consider and act on a broad range of
sustainability issues. We are guided by our
values of good governance, and our responsible
mindset drives what we do both at the
corporate level and Portfolio Companies’ level.
We expect all our staff and executives to always
engage with our stakeholders while keeping
these guiding principles in mind.
We have summarised here BBGI’s general
engagement approach with its key stakeholders,
representing the main groups that benefit,
are influenced by, or interact with our business
activities. In addition, in 2021, we performed
a comprehensive materiality assessment
(AA1000 Stakeholder Engagement Standard) to
identify the most material sustainability issues
that are priorities for our stakeholders and
where the impact of our operations is
most significant. As part of this assessment,
we engaged with key internal and external
stakeholders. Our stakeholder engagement
focused on our employees, investors, clients,
partners and subcontractors. The ten most
material topics define our ESG framework, each
tracked by a performance indicator and more
information is provided in our 2022 ESG report.
As a member of the AIC, BBGI acknowledges
Provision 5 of the AIC Code’s expectation for
all members to comply with the continuing
requirement under Section 172(1) CA2006 for
boards to take stakeholder interests into
account, and to report how they have done so
when performing their duties. Details of how
we adopt the spirit of those provisions and
consider our stakeholders are outlined here:
52 BBGI Global Infrastructure S.A.
Who are the Company’s key stakeholders?
Why are these stakeholders important?
What actions are the Company taking to
build and maintain strong relationships
with its key stakeholders?
What are the types of engagement
and the metrics used by management,
to monitor and assess relationships
with stakeholders?
How has this stakeholder impacted
upon, and been taken into
consideration in the board
decision-making process?
Our people
Our people are the driving force behind our purpose.
They are well positioned to bring their expertise to our clients,
subcontractors and partners and deliver the results expected
by our investors.
Our relatively flat hierarchy allows our talented
people to be empowered to successfully deliver
our purpose. We promote an inclusive work
environment where all people are treated
equally and supported to achieve their potential.
– Annual and mid-year assessments
– Direct liaison with the Management Board
– Regular meetings
– Well defined expectations and targets,
including ESG targets for all executives
– Regular training
– Training metrics
– Whistleblower hotline
– Feedback from the individual assessments
are regularly discussed by the
Management Board.
– Adjusted our teleworking policy in
response, allowing our people to better
balance their work and personal lives,
improving their well-being and job
satisfaction.
Our public sector clients
Satisfied public sector clients are critical to our business model.
We aim to build trust by delivering well-
maintained and safe social infrastructure
facilities and services such that our public sector
clients are satisfied.
– Regular client meetings
– Service quality feedback
– Sharing results of our climate risk monitoring
– Ongoing reporting
– Net Promoter Score survey
– Meetings with our clients drives our asset
management approach and feeds directly
into our decision-making process; lessons
learned from one asset are adapted and
applied across the portfolio.
– Examples include early initiatives to
implement LED lighting and solar panels
on some of our assets, providing a sound
business case and encouraging further
adoption on other assets.
Our subcontractors
Our long-term subcontractors are critical to ensure that we provide
our public sector clients with operational and available assets. We
monitor our subcontractors to ensure that they conduct their
business according to the high standards of ethics and integrity
that we expect.
Our Portfolio Companies collaborate with the
subcontractors and strive to develop mutually
beneficial long-term relationships.
– Sub-contractor monitoring
– ESG onboarding
– Annual ESG KPI survey
– Ongoing ESG engagement topics and
joint initiatives
– Enhancing our monitoring of ESG practices
across all portfolio companies and their
supply chain through pre-existing
channels, such as the ESG KPI survey.
– Additionally, the Company led a series of
webinars for our subcontractors to assist
them in the process of gathering
GHG-related data. That data will assist us in
our goal to deliver positive ESG impacts.
Our communities and users
The positive experience of the people who use our assets and
the communities who live near to our assets are vital to ensuring
our success as a responsible global infrastructure investment
company.
We maintain critical social infrastructure assets
upon which people rely on a daily basis.
– Client satisfaction discussed at corporate and
Portfolio Companies’ level
– Partnership, sponsorship and donations
– Community engagement initiatives
– Supporting projects that benefit the
communities living near to our assets.
– In 2022, our Portfolio Companies donated
£150,000 to local charities, and offered
various employees volunteering.
– Please refer to the case study on Liverpool
and Sefton Health Centres on page 51 for
one such example.
Our investors
Our investors provide capital, feedback on our business model, and
help shape our future plans.
Our goal is to generate long-term, predictable,
and inflation-linked returns for our investors. We
measure progress against key KPIs.
– Investor relations activities, including
meetings, roadshows and discussions with
senior executives
– Close interactions and feedback with our
Corporate Brokers
– Annual General Meeting
– Annual Report
– ESG Report
– Website
– Focused engagement with selected ESG
ratings providers to ensure shareholders
have accurate and up-to-date insights into
BBGI’s ESG credentials.
– The Board continually keep under review
the returns we offer to our investors, along
with our ability to continue to deliver those
returns. This forms the basis of discussions
when determining dividends.
– The roadshows provide the Co-CEOs with
an opportunity to speak directly with our
investors, including on the topic of ESG, to
better understand their expectations of us.
Stakeholder Engagement continued
Annual Report 2022 53
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Financial statements
Sustainable Finance Disclosure Regulation
The EU Sustainable Finance
Disclosure Regulation (‘SFDR’)
is a set of regulations that aim
to increase transparency and
standardisation of disclosures
within financial markets. SFDR
aims to ensure that investors
can make informed decisions
and have a clear understanding
of the sustainability
characteristics of the financial
products in which they invest.
We welcome this legislation because the financial
sector can make an important contribution to a
more sustainable economy.
BBGI promotes social characteristics. In accordance
with its Article 8 SFDR classification, a minimum
proportion of 75 per cent of our investments
qualify as sustainable investments with a social
objective, while 100 per cent of our investments
do not significantly harm any environmental or
social objective and follow good governance
practices.
In 2022, BBGI updated its sustainability-related
disclosures to comply with SFDR Level II
requirements.
BBGI has disclosed how we consider the social
characteristics of any potential acquisitions
when making our investment decisions, as well
as the extent to which each asset is aligned with
at least one of our six focused SDGs. We also
have disclosed the methodology used to assess
the social characteristics of our investments,
how they do no significant harm to any other
environmental objective and promote good
governance practices. This includes any
indicators or metrics used, and how they
are integrated into investment decisions.
In addition, we have provided more detailed
information on how we engage with Portfolio
Companies on sustainability issues, and the
extent of sustainability risk considerations
influence our remuneration policies.
– The Pre-contractual disclosure for SFDR
specifically address the Company’s
disclosure obligations under Article 8
of SFDR, supplemented by Commission
Delegated Regulation (EU) 2022/1288
of 6 April 2022 and Commission
Delegated Regulation (EU) 2023/363
of 31 October 2022.
– The Entity level, sustainability risks and
principal adverse impacts disclosure for
SFDR specifically address the Company’s
disclosure obligations under Articles 3, 4, 5,
6, and 7 of SFDR.
– The Product level disclosure for the SFDR
specifically address the Fund’s disclosure
obligations under Article 10 of SFDR,
supplemented by Commission Delegated
Regulation (EU) 2022/1288 of 6 April 2022.
– The Periodic disclosure for SFDR specifically
address the Company’s disclosure
obligations under Article 11 of SFDR,
supplemented by Commission Delegated
Regulation (EU) 2022/1288 of 6 April 2022
and Commission Delegated Regulation (EU)
2023/363 of 31 October 2022.
A copy of the Periodic disclosure is available
at: www.bb-gi.com/esg/sustainability-
related-disclosures/sfdr/periodic-
disclosure/2022
For BBGI’s SFDR disclosures, please visit the
dedicated Sustainability-related disclosures
page in the ESG section of our website;
www.bb-gi.com/esg/sustainability-related-
disclosures/
As of June 2023, there will be a requirement to
disclose our consideration of principal adverse
indicators through the disclosure of a Statement
on principal adverse impacts of investment
decisions on sustainability factors, which we
will make available on our website.
54 BBGI Global Infrastructure S.A.
Pathway to net zero
We remain committed to
achieving our net zero ambitions
and supporting our portfolio
companies in their transition to
be net zero emissions by 2040.
During the year, we continued to explore net
zero measurement frameworks and considered
how to best apply them to BBGI’s asset class.
There is no one-size-fits-all solution to the
climate challenge, and the nature of each
business dictates the specific goals and path
taken. Our pathway to net zero will not be
linear, but we remain committed to reporting
on the progress against our targets as we work
towards the ambitions of the Paris Agreement.
Net zero targets
BBGI’s corporate targets to reach net zero
emissions by 2040 align to the Science Based
Targets initiative (‘SBTi’) framework dedicated
to Small and Medium Enterprises (‘SMEs’).
As signatories to the Net Zero Asset Managers
Initiative (‘NZAM’), BBGI’s targets to reach net
zero emissions across our portfolio by 2050 or
sooner were set in line with the Paris Aligned
Investment Initiative (‘PAII’) Net Zero Investment
Framework (‘NZIF’) and the specific guidance
for the Infrastructure sector, following a 1.5°C
reduction pathway.
While the guidance and tools to assess financed
emissions and track progress towards net zero
will evolve, we recognise our responsibility to
ensure GHG emissions are fully and adequately
accounted for across our operations (‘Corporate
Emissions’) and Portfolio Companies’ emissions
(‘Financed Emissions’). Our targets were validated
and approved by the Institutional Investors
Group on Climate Change (IIGCC) in March 2023.
Emissions profile
The most significant source of GHG emissions
comes from our Financed Emissions. While our
own Corporate Emissions have negligible impact
compared with those of our Portfolio Companies,
we recognise our responsibility to ensure our
own business operations are fully accounted for.
Engagement
To achieve the decarbonisation of our portfolio,
our greatest leverage is through engagement
with our key stakeholders. The main driver for
achieving Financed Emissions reduction targets
will come from the increasing alignment of
Portfolio Companies with net zero pathways.
BBGI rarely has operational control at its
Portfolio Companies, so the achievement of
the targets and objectives ultimately relies on
shared ambitions and collaboration with our
public sector clients.
Remuneration tied to net zero targets
The Management Board has remuneration
targets tied to GHG emission reduction
pathways. Having our executive team consider
climate change in their decision-making process
is an effective and transparent incentive for
meeting long-term objectives. In 2022 additional
remuneration targets for the Management Board
were introduced tied to targets related to our
Portfolio Companies. 20 per cent of LTIP
remuneration is now tied to ESG targets.
Climate solutions
Investing in climate solutions that provide
tangible reductions in emissions, and which
are mitigation solutions to climate change is
another real opportunity to achieve our targets.
Our long-term and forward-looking approach
to portfolio diversifications led us to invest in a
renewable energy infrastructure asset in 2022.
Carbon neutrality and offsetting
BBGI has been carbon neutral since 2021
and will maintain its carbon neutrality going
forward. Corporate emissions for 2019 and
2020, which were calculated in 2021, were
retrospectively offset by planting trees and
purchasing verified offsets. Our GHG emissions
have been independently verified each year
since our 2019 inventory. BBGI is a certified
CO₂ Assessed organisation.
Despite all our efforts to join the collective efforts
to reduce GHG emissions, some emissions will
remain unabatable. A successful approach to
net zero is to actively reduce our footprint
where possible, and compensate unavoidable
emissions with credible nature-based removal
solutions, until technological solutions become
more viable. As a general principle, we do not
use purchased offsets at the portfolio level to
achieve our decarbonisation goals. We also do
not offset emissions in one part of our portfolio
through accounting for avoided emissions in
another part. When using offsets, it is only where
there are no technologically or financially viable
alternatives to eliminate emissions.
BBGI’s success in achieving its net zero
pathway will continue to evolve, along with
the progresses made by all other participants
in the industry. We commit to keeping our
net zero targets a strategic priority, in order to
support global decarbonisation goals, protect
societies from uncertainties ahead and build
a more resilient economy.
Find out more in our ESG Report.
Biodiversity
As investors, we recognise that most negative
impacts on biodiversity are locked in and
mitigated when the project is built. Encouraging
nature-based restoration measures during
expansion and operation phases can be effective.
Our assets are built in compliance with local
regulations and various nature preservation
measures are in place such as:
– Noise and pollution reduction measures.
– Designs to minimise impacts on local
species’ natural habitats.
– Wildlife crossing corridors.
During the concession period, we focus on
promoting restoration efforts to improve
degraded or removed ecosystems that act as
natural carbon sinks and can improve resilience
to climate-related damages, such as:
– Habitats for indigenous species (i.e. bat
boxes, insect hotels, beehives, wild bee
hotels, fish ladders).
– Expansion of green spaces in urban areas
(i.e. planting indigenous tree species,
shrubs and flower meadows).
As part of our standard set of policies, we have
also started to roll out a biodiversity policy across
our portfolio since 2021, which 93 per cent of our
Portfolio Companies currently have implemented.
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Late mowing preserving biodiversity along E18 Motorway, Norway
Supporting the growth in bee populations and improving
biodiversity across our assets
BBGI is committed to increasing
the creation of suitable new
and improved nesting and
feeding areas for bees at many
of our assets, which are vital
sources of habitat and food
for bee species.
These initiatives help to grow bee and
insect populations and increase biodiversity.
We have good support from our public sector
clients for our initiatives.
BBGI has access to large extensions of land
alongside its transport projects, which lend
themselves perfectly to creating new bee
habitats, and we have launched such
initiatives at some of our transport projects.
Examples of such initiatives include the
E18 Motorway (Norway), Northwest Anthony
Henday (Edmonton, Canada), Northeast
Stoney Trail (Calgary, Canada), and Golden
Ears Bridge (Vancouver, Canada). Additionally,
some of our social assets initiated the creation
of bee hotels on their roofs or surrounding
areas, being Rodenkirchen schools (Cologne,
Germany) and Liverpool & Sefton clinics
(Liverpool area, UK). Altogether, these
initiatives have already created approximately
150 bee habitats, which are homes to
c.10 million bees.
A critical factor in the success of restoring
bee numbers and habitats is the creation,
improvement and growth of surrounding
vegetation for them to feed. Across our assets
approximately 200 acres were set aside and
planted with wildflowers and forage areas.
Examples of such initiatives include: wild
flowers field planted on one of Rodenkirchern
school’s rooftops. At E18 the green areas
around the road are mowed only once in late
summer, resulting in increasing wildflowers
and their density. Along North East Stoney
Trail and Northwest Anthony Henday we
created approximately 80 hectares of ponds,
drawing wildlife and vegetation back to the
area, allowing native vegetation and birds
to flourish.
The 125 beehives at E18 produce on average
six metric tonnes of wild flower honey,
and 2022 was an exceptional year with
approximately 11 metric tonnes produced.
BBGI works with a local beekeeper, who
manages the hives. The honey is collected
and packaged to meet local health standards,
with donations made to a local food bank
in Luxembourg.
We are proud to support
the expansion of nesting
and feeding areas for bees
and insects. Based on the
success from these initiatives,
we plan to share our learnings
across BBGI and explore the
feasibility of implementing
similar programmes in
other locations”
Trond Heia,
Director E18 Portfolio Company
Case study
Pathway to net zero continued
56 BBGI Global Infrastructure S.A.
Climate-related
risks
We remain committed to
aligning our business with the
TCFD recommendations, and
over the past year, we have
made progress in several areas
related to climate strategy, risk
management, and metrics
and targets.
These initiatives include:
– Deepening our understanding of our
portfolio’s risk exposure through a deep
dive analysis of 20 assets with the highest
risk exposure or strategic importance to us.
– Conducting a sensitivity analysis on each
asset, integrating site-level mitigation
already in place and engineering of our
assets to refine modelled physical risk
severities and financial impacts.
– Quantifying the revised risk exposure to
each asset and the portfolio as a whole.
– Starting a GHG inventory across all our
Portfolio Companies, to assess BBGI’s
Financed Emissions, in line with the GHG
Protocol.
– Producing a bespoke climate factsheet for
each asset, providing a summary of the
overview risk exposure and the key driving
perils identified.
– Sharing climate factsheets with public
sector clients with the objective of a
collective action through influence and
stewardship where necessary (e.g.
mitigation, risk transfer).
– Setting net zero targets in line with
science-based targets to achieve global net
zero emissions by 2050, or sooner.
– Expanding the use of metrics and targets,
including those related to GHG emissions,
into our Management Boards’
remuneration targets.
– Publishing our Net Zero Plan, which focuses
on reducing our carbon footprint in our
Corporate and Financed Emissions.
– Formalising our internal ESG due diligence
process to identify and evaluate material
climate risks and opportunities for all new
acquisitions.
Mersey Gateway Bridge, UK
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TCFD Disclosures
We are pleased to present our
third voluntary disclosure against
all 11 of the recommended
TCFD disclosures.
As the Company is considered an investment
trust it does not fall in the scope of the Financial
Conduct Authority’s (‘FCA’) requirement for
commercial companies with a premium listing
to make TCFD disclosures. Notwithstanding this
exemption, the Management Board recognises
the importance of the TCFD and its related
disclosures and has, as a result, taken the
voluntary decision to report against the
TCFD recommendations.
In the following section we report the progress
we have made across each of the TCFD’s four
pillars: Governance; Strategy; Risk Management;
and Metrics and Targets. We have made
material improvements towards assessing
our climate-related risks and opportunities,
embedding stronger climate governance and
risk management and developing a robust
awareness of risk metrics and targets we can
use to monitor and track progress.
Governance
TCFD Recommendation Progress to date
1 Describe the Board’s
oversight of climate-
related risks and
opportunities.
Our Supervisory Board and Management Board recognise the importance of climate-related risks and
opportunities. The Management Board has established an executive-led ESG Committee as a sub-committee,
comprising the Co-CEOs, the CFO, the ESG/Sustainability Director and the Corporate Secretary to govern all
climate and ESG-related activities. The Management Board considers climate-related issues when setting
strategy, considering new investment opportunities, approving annual budgets, monitoring performance
metrics and targets and approving climate change-related disclosures.
The Supervisory Board’s constituted Remuneration Committee designs reward structures for our Management
Board to foster long-term value-creation and reinforce the organisation’s ability to achieve
its climate change goals and targets. In 2022, the Remuneration Committee added additional ESG targets to
the LTIP award which, since 2021, has contained objectives related to reducing GHG emissions.
More details on our remuneration policy are provided in the Remuneration Report section of
our Annual Report.
2 Describe management’s
role in assessing and
managing climate-
related risks and
opportunities.
The ESG Committee meets at least quarterly, in relation to environmental matters and reviews both the
climate-related risks facing the Company and its GHG emissions reductions targets. The Risk Manager
and the Management Board ensure that any risks/opportunities can be addressed through the Company
strategy, risk management procedure and responsible investment approach.
Our ESG Committee is led by our dedicated ESG Director, and, together with the Management Board,
maintains our ongoing commitment to manage the dual impacts of both physical risk events on our
assets and the transition towards becoming a low-carbon business.
The Management Board’s roles covers the following areas:
– The investment decisions incorporate ESG and climate-related risks and opportunities assessments
during the due diligence phase for new acquisitions. All existing and all new investment opportunities
are screened for climate risks and ESG factors.
– The Risk Management Function assesses the firm’s exposures across all risks compared with its stated risk
appetite, including the long-term consequences of climate change along our asset’s concession periods.
– Corporate governance obligations and oversight responsibilities in relation to climate-related risks and
the review of the Company’s approach to disclosures, including those relating to climate change.
– The Compliance Function undertakes an internal compliance monitoring programme, including our
policies relating to sustainability including climate change.
Full responsibilities of our ESG Committee are outlined in our ESG Committee Terms of Reference:
www.bb-gi.com/esg/policies
58 BBGI Global Infrastructure S.A.
Strategy
TCFD Recommendation Progress to date
3 Describe the climate-
related risks and
opportunities the
organisation has
identified over the short,
medium and long term.
Physical risk insights
Overall, scenario analysis has highlighted that the majority of BBGI’s portfolio is very resilient to
climate hazards both today and under future climate warming scenarios.
– Out of 56 assets modelled, only two have a high risk under a ’high emissions’ scenario by 2050.
The potential exposure identified from flood risk, coastal inundation and extreme winds only extends
to one specific building within the two asset and the theoretical impact on the NAV is not considered
material. For both assets, we note that our concession period terminates between 2035 and 2050,
and thus we do not expect them to have material impacts on our wider portfolio.
– Under a ‘Paris-Aligned’ scenario there are no assets with a high-risk exposure across the same timeline.
– All 20 of BBGI’s top 20 assets have a low or very low risk exposure today and in 2050 under ’Paris-
Aligned’ and ‘High emissions’ scenarios once existing resilience and mitigation measures are considered.
– The risk profile of BBGI’s portfolio remains constant for 52 assets over the next 30 years; the climate risk
profile of BBGI’s portfolio remains relatively constant for most assets, particularly when overlaying our
concession periods, which do not extend beyond 2051 for any asset.
– Beyond 2051, the period when our concessions end and assets revert to public sector clients, climate risk
is projected to increase for 17 assets, most notably under a ‘high emissions’ scenario. While BBGI will not
have a financial interest in the assets during this future period, it may create opportunities for BBGI to
propose and invest in climate mitigation and adaptation measures.
– Under a ‘Paris-Aligned’ scenario BBGI may take advantage of opportunities arising from energy
transition investment plans from the public sector, during planned retrofit interventions or for
additional investments.
Our assessment considered climate impacts over short (1–5 years), medium (5–10 years) and long-term
(10+ years) time horizons up until 2050, covering the maximum investment life duration of our current
portfolio. We note that modelling currently only considers present-day government-funded defence
infrastructure in place. When local mitigation measures are also considered, the exposure of our assets
to climate change may reduce further.
Transition risk insights
We recognise the effects transition risks have on our business. BBGI are working to understand the impact
transition risks will have on the portfolio, particularly where rapid, unexpected changes in legislation or
government policy occur.
In the table below, we outline the potential impacts of policy, technology, reputational and market risks across
the infrastructure sector.
Transition risk category Industry trends Mitigating actions
Policy and legal risk
Legislation enacted by national
and local governments to price
and penalise GHG emissions.
We anticipate that, as society
attempts to reduce global
warming, the cost of carbon
taxation will increase and
potentially impact businesses.
Carbon pricing and exposure
to litigation may also increase
globally, encouraging businesses
to reduce their own GHG
emissions.
We are actively seeking ways to
reduce our carbon footprint in
order to align with our net zero
targets. Our main focus is on
reducing Corporate and
Financed Emissions
Our Net Zero Plan provides
more details on this: www.
bb-gi.com/media/2226/
bbgi-net-zero-plan-dec-2022-
final.pdf
TCFD Disclosures continued
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Strategy
TCFD Recommendation Progress to date
3 Describe the climate-
related risks and
opportunities the
organisation has
identified over the short,
medium and long term.
Transition risk category Industry trends Mitigating actions
Technology risk
Disruptive technology changes in
key sectors of the economy
responding to changing energy
needs.
Technology risks may arise across
infrastructure assets where
changes and adaptations to new,
low-carbon materials and
technologies arise.
To achieve our goals, we are
exploring the use of more
sustainable and environmentally
friendly materials in our assets.
This includes low-carbon
alternatives for road surfaces,
electric vehicles charging
infrastructure, and energy-
efficient or motion sensor
equipment. Additionally, we are
investigating the possibility of
energy purchase contracts
prioritising renewable sources
of energy.
Reputational risk
Investor and client sentiment
influenced by Company’s actions
to manage climate change risk.
Globally, there is increasing focus
on businesses to minimise their
carbon footprint. Reputational
risk may arise where companies
do not take sufficient action to
decarbonise or integrate
sustainability across their
operations.
We have set a target of
achieving net zero by 2050 or
sooner. To achieve this, we are
also working with our public
sector clients.
Market risk
Market disruption, changes in
client preferences, cost of capital
and valuation changes as
investors prioritise returns from
low-carbon companies.
Transitioning into a low-carbon
society has potential implications
on client and investor appetite
and demand.
In order to comply with investor
priorities and ESG and
sustainability regulations, we
report in line with SFDR Level II
requirements, make voluntary
TCFD disclosures, and monitor
future ESG and sustainability
regulations and reporting
requirements to maintain our
compliance.
TCFD Disclosures continued
60 BBGI Global Infrastructure S.A.
Strategy
TCFD Recommendation Progress to date
4 Describe the impact of
climate-related risks and
opportunities on the
organisation’s
businesses, strategy and
financial planning.
We are committed to ensuring our investment strategy, financial planning and decision-making accounts
for climate-related risks and opportunities, ensuring we work with our clients to consider appropriate risk
mitigation, adaptation and resilience measures where necessary.
In 2021–2022 we engaged with a climate modelling specialist firm, leveraging their expertise in climate risk,
to conduct a detailed climate change impact assessment for our entire portfolio to identify and assess
climate-related risks and opportunities across various climate scenarios. The results of this in-depth exercise
continue to inform our long-term strategy and has set the foundation.
During the same period, we also commissioned an independent carbon footprint assessments and verification
of our Corporate Scope 1, 2 and 3 GHG emissions.
The results of the quantitative climate change assessment have fed into our Company’s strategy in a number
of ways. It informs us on the type of climate risk each of our assets is exposed to, the magnitude of that risk
(from low risk to high risk, if any) and the corresponding reinstatement value (i.e. the potential cost of damage
from physical climate risks).
There is currently no climate-related cost forecasted in our financial models but this may change in relation
increased insurance premiums; however, there is a degree of contractual protection from increased insurance
costs.
The screening of physical climate-related risks is systematically embedded for each asset in the due diligence
and monitoring phases of our investment cycle.
The results of the deep dive assessments materialised in a bespoke factsheet which we have started to share
with our public sector clients and across the Portfolio Companies’ boards, helping to raise awareness and drive
our engagement initiatives on mitigation measures where physical risks may materialise.
Our Net Zero Plan lays the foundation of how BBGI intends to transition to a low-carbon business as we
leverage the outcomes of the quantitative climate-change assessment to set our targets and objectives, as well
as inform future acquisition screening and strategic portfolio construction.
Our Net Zero Plan can be found here:
www.bb-gi.com/media/2228/bbgi-net-zero-plan-dec-2022-final.pdf
5 Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario.
Portfolio-level findings from the quantitative climate change assessment confirm a high-degree of resilience
to climate change impacts under the various scenarios tested, see page 59.
The climate modelling demonstrates that our investment strategies focus our investments into infrastructure
assets which are built to the latest engineering standards and which, due to the long-term nature of these
assets, consider the long-term effects of climate change when they are built. In our capacity as an investor
we are developing our resilience by transitioning to net zero through a mix of portfolio decarbonisation,
engagement with key stakeholders and an ESG integrated investment approach. A transition to a lower
carbon economy may also present a number of opportunities for client-supported change orders and
new investment, should the business case support it.
TCFD Disclosures continued
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Risk Management
TCFD Recommendation Progress to date
6 Describe the
organisation’s processes
for identifying and
assessing climate-
related risks.
The Company’s approach to internal controls is risk based. All material risks are identified, analysed, assessed,
reported and managed. Since outlining our goal to better improve our understanding of climate-related risks
and opportunities we have chosen to focus on two areas: 1) embedding climate due diligence into our on
boarding process for new acquisitions, and 2) better quantifying our corporate GHG emissions footprint to
support identification of future risks as well as opportunities for engagement arising as we develop our
decarbonisation strategy.
In accordance with our commitment to executing due diligence on new acquisitions, within six months of an
asset integrating into our portfolio we perform a systematic screening for various risks and identification of
climate-related risks is carried out through physical risk due diligence. A summary of the risk exposure is
provided under a ‘Paris-Aligned’ scenario and a ‘High emissions’ scenario from today and then in decadal time
steps until 2100. The output from the screening is a bespoke climate factsheet.
To ensure our portfolio remains resilient to climate risk, we continue to embed these insights into our
investment screening process, ensuring physical climate risk impacts are assessed for all new investments.
7 Describe the
organisation’s processes
for managing climate-
related risks.
Climate risks identified through our climate risk modelling are managed by our Risk Manager and the
Management Board with work continuing to ensure climate risk considerations are formally embedded within
risk management procedures.
Recognising that climate risk cuts across both our value-driven asset management approach and the essential
infrastructure we provide to our clients, work is ongoing to ensure climate risks, where identified, will be
shared with public sector clients with the objective of a collective action through influence and stewardship
where necessary (e.g. mitigation, risk transfer). It should be noted that BBGI rarely has operational control at its
Portfolio Companies, so achieving the targets and objectives is highly dependent on successfully influencing
stakeholders (typically our public sector clients) into taking action.
We have systematically reviewed all existing investments for physical climate change exposure against eight
climate perils through quantitative scenario-analysis.
– In Q1 2022, we conducted further work on 20 assets performing deep dives. For each asset, a bespoke
climate factsheet was produced, providing a summary of the risk exposure.
– In Q4 2022, we extended our systematic review for physical climate change exposure to also include our
two new acquisitions. We expect to continue this due diligence process for all new acquisitions.
By voluntarily applying the TCFD regulatory framework, BBGI is gradually reinforcing numerous aspects of
sustainability: risk and opportunities identification, management of climate-risk exposure and disclosure of
relevant metrics and targets.
8 Describe how processes
for identifying,
assessing, and
managing climate-
related risks are
integrated into the
organisation’s overall
risk management.
Climate-related risks have been integrated into our risk management procedures.
Where material climate risks are identified, these are escalated where necessary to the Management Board,
ensuring risks can then be appropriately assessed, managed and monitored per our risk management
procedure.
To ensure our portfolio remains resilient to climate risk, we will embed our findings into our investment
screening process which ensures physical climate risk impacts are assessed for all new investments.
TCFD Disclosures continued
62 BBGI Global Infrastructure S.A.
Metrics and Targets
TCFD Recommendation Progress to date
9 Disclose the metrics
used by the organisation
to assess climate-related
risks and opportunities
in line with its strategy
and risk management
process.
Through scenario analysis conducted in 2021 and 2022, we continue to embed enhanced physical risk metrics
across our risk management processes and climate-related risks and opportunities in line with our strategy.
– We have quantified both physical severity risk scores and potential projected financial impacts from
2020 to 2100 for every asset under each warming scenario assessed.
– For each time horizon and for each warming scenario, each asset is scored with a climate risk score,
on a scale from very low to very high.
– For the 20 assets which have undergone a deep-dive assessment, we conducted a further sensitivity
analysis that considers all existing resilience measures and the engineering of our assets in the climate
risk score.
We recognise the importance of continually improving both our climate scenario analysis methodology and
the metrics we use to track and monitor exposures across our portfolio. We will review and update our results
and key metrics as necessary to ensure we maintain an up-to-date picture of climate risk across our
investments and future acquisitions.
More information about our climate modelling methodology can be found in the ‘Climate-related risks’
section of our ESG report.
BBGI is required to comply with SFDR. As of June 2023, BBGI will disclose the following climate-related metrics
in line with SFDR Level II requirements, as part of its Principal Adverse Impact Statement:
– GHG emissions;
– Carbon footprint;
– GHG intensity of portfolio companies;
– Exposure to companies active in the fossil fuel sector;
– Share of non-renewable energy consumption and production;
– Energy consumption as per high impact climate sector; and
– Breakdown of energy consumption by type of non-renewable sources of energy.
More information about our SFDR disclosures can be found here:
www.bb-gi.com/esg/sustainability-related-disclosures/
TCFD Disclosures continued
Annual Report 2022 63
Corporate governanceStrategic report
Financial statements
Metrics and Targets
TCFD Recommendation Progress to date
10 Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 GHG emissions,
and the related risks.
Corporate Emissions
– BBGI’s total market-based Corporate Emissions are 242.53 tCO₂e (location-based are 240.80 tCO₂e).
– The most significant emission source is flights accounting for 67 per cent of the total market-based
Corporate Emissions.
– Total market-based Corporate Emissions have decreased by 13.7 per cent against the baseline year
(2019), largely due to the reduction in flights.
Scope Activity 2022 Tonnes CO₂e
Scope 1 Gas 9.90
Scope 1 Sub Total 9.90
Scope 2
Electricity (location-based) 5.24
Electricity (market-based) 6.98
Scope 2 Sub Total (location-based) 5.24
Scope 2 Sub Total (market-based) 6.98
Scope 3
Flights 162.37
Well-to-tank 28.12
Employee commuting 13.00
Computing 11.98
Personal vehicles for business
purposes
4.86
Home-working 2.08
Taxi travel 1.23
Waste 0.73
Hire cars 0.56
Electricity transmission &
distribution
0.43
Paper 0.18
Rail travel 0.07
Water (and wastewater) 0.04
Bus travel 0.02
Scope 3 Sub Total 225.65
Location-based total tonnes of CO₂e 240.80
Market-based total tonnes of CO₂e 242.53
Financed Emissions
– In 2022, we worked in direct collaboration with our Portfolio Companies and subcontractors to feed our
proprietary ESG KPI survey with the necessary data inventory, to adequately calculate a GHG inventory
across all our investments.
– As of June 2023, we will be disclosing annually our Portfolio Companies’ Scope 1, 2 and where relevant
material Scope 3 emissions (Financed Emissions) in line with the GHG Protocol operational control
approach.
– The disclosures will be part of our Principal Adverse Impact Statement disclosure, in line with SFDR Level
II requirements.
TCFD Disclosures continued
64 BBGI Global Infrastructure S.A.
Metrics and Targets
TCFD Recommendation Progress to date
11 Describe the targets
used by the organisation
to manage climate-
related risks and
opportunities and
performance against
targets.
Climate-risk targets:
In 2022, we performed deep dives on our assets with the greatest risk exposure and those that are strategically
important investments for BBGI. For 20 of our assets, a bespoke climate factsheet was produced, which we
continue to utilise when engaging with clients. To date we have shared the climate factsheet or the climate risk
score in the following circumstances:
– Portfolio Company’s boards: 100 per cent of projects.
– Public sector clients: 84 per cent of projects.
– Formal meeting with client to discuss conclusions of climate modelling and potential joint ‘next steps’
– 14 per cent of projects.
Net zero targets:
Corporate emissions (Scope 1, 2 and 3): BBGI commits to reduce absolute Scope 1, 2 and 3 GHG emissions
50 per cent by 2030 from a 2019 baseline and to reach net zero by 2040.
BBGI has aligned its approach with the SBTi guidance for Private Equity Sector and the SBTi guidance for SMEs,
BBGI has not taken the steps to have its targets officially approved as there are no applicable industry
standards for infrastructure investment at this time. However, BBGI has used the SBTi target setting tool to
model its targets in line with SBTi approved criteria and methods.
Financed Emissions (Portfolio Companies’ Scopes 1, 2 and material Scope 3) We aim for 70 per cent of
our Financed Emissions to be ‘net zero’, ‘aligned’, or ‘aligning’ to net zero by 2030. This means that by 2030,
70 per cent of AUM (portfolio companies by value) will have a long-term goal to be net zero by 2050 or
sooner. We have a goal to have 100 per cent of our Financed Emissions to be ‘net zero’ or ‘aligned’, by 2040.
BBGI has set its targets in line with the Paris Aligned Investment Initiative Net Zero Investment Framework
and the specific guidance for the Infrastructure sector.
Read more on our net zero targets in our ESG Report.
Note on TCFD disclosures
The purpose of climate scenario analysis is to support an understanding of potential future risk outcomes rather than ‘predict’ absolute future impacts.
Current modelling takes into account individual asset archetypes. Archetypes are used to assess the vulnerability of different asset components to
physical risk and building-specific characteristics (e.g. a hospital’s typical building materials, number of storeys, type of construction) and embeds
present-day government-funded defence infrastructure in place; local/site-specific mitigations have not been included within the model due to limited
data availability. With this in mind, we recognise that scenario analysis is a gradual process to be improved iteratively as models themselves improve
and our own asset portfolio requires it. The methodology outlined in this Report has been structured to offer both quantitative and qualitative
perspectives on future physical risk outcomes and enables us to repeat our analysis as necessary.
We note that while internally we have granular, component-based outputs to support decision making and inform risk management processes, for the
purposes of simplifying our reporting here, we have aggregated our risk scoring to the asset level. Asset-level physical risk scores are calculated using a
weighted representation of total risk which reflects both each individual component risk severity and its rebuild value.
Both physical and transition risk are key considerations for BBGI. We also note that many of our investments are relatively new and benefit from having
climate change considerations incorporated into the design and construction of the infrastructure. Many of the financial consequences resulting from
climate-related perils have been mitigated by having insurance in place.
The results presented in this Report are based on best-available data and judgements of subject-matter experts both internally and externally, where
required. Climate scenario models may differ in meaningful ways from traditional macroeconomic scenarios; they are neither forecasts nor predictions
and should be used for ‘insights, not numbers’.
TCFD Disclosures continued
Annual Report 2022 65
Corporate governanceStrategic report
Financial statements
3 years
<1 year
4 years
1 year
<1 year
0 4
Independent
Non-independent
62.5%
37.5%
Male
Female
5
3
Non-Executive Directors
Executive Directors
5
3
*Comprises the Supervisory and Management Boards
37.5%
Female representation on the Board
Read more about our Board diversity
in the Nomination Committee Report
starting on page 78
*Comprises the Supervisory and Management Boards
1 2 3
Corporate governance
Governance at a glance
Our Board Stakeholder engagement
Committee meetings this year
5
Supervisory
Board
4
Nomination
Committee
5
Audit
Committee
5
Remuneration
Committee
62.5%
Independence on the Board
Sarah Whitney
Andrew Sykes
Jutta af Rosenborg
Chris Waples
June Aitken
Board tenure (number of years)
Board diversity*
Board independence*
Executive and Non-Executive
Directors split
Investor meetings and engagement with
75% of the register
Client satisfaction discussed
at Board meetings
For more information
Refer to the stakeholder engagement
section on page 52 for more information
Refer to our website to view key
governance policies: www.bb-gi.com/
investors/policies/
66 BBGI Global Infrastructure S.A.
Relevant Application of European Union
and Luxembourg Law
BBGI is regulated by the CSSF under Part II of
the amended Luxembourg law of 17 December
2010 on undertakings for collective investments,
and is subject to the Luxembourg amended law
of 12 July 2013 on Alternative Investment Fund
Managers (‘AIFM Law’) that implemented the EU
Alternative Investment Fund Managers Directive
(‘AIFMD’) into national legislation.
AIFM
There have been no material changes during
the year in respect of Art. 20 Para. 2(d) of the
AIFM Law that warrant further disclosure to
our shareholders.
Material risk takers
There has been no change in our material risk
takers, who are the members of the
Management Board, in accordance with
Luxembourg’s AIFM law of 12 July 2013.
Compliance statement
As an internally managed investment company,
effective internal controls secure the sound
financial and operational performance of our
investments.
BBGI is a member of the Association of
Investment Companies (‘AIC’) and reports
against the AIC Code of Corporate Governance
(the ‘AIC Code’).
We have considered the Principles and
Provisions of the AIC Code, which addresses
the Principles and Provisions set out in the
UK Corporate Governance Code 2018 (the ‘UK
Code’), and sets out additional Provisions on
issues that are of specific relevance to BBGI as
an investment company. BBGI considers that
reporting against the Principles and Provisions
of the AIC Code, which has been endorsed
by the Financial Reporting Council, provides
relevant information to our shareholders.
For the most part, we have complied with
the Principles and Provisions of the AIC Code
and where we do not, we have provided an
explanation. We have outlined below the
specific Provisions where we do not comply,
with a section reference for an accompanying
explanation:
– AIC Provision 17 (in relation to establishing
separate Management Engagement
Committee): See Committees of the
Supervisory Board on page 75.
– AIC Provision 23 (All directors should be
subject to annual re-election by the
shareholders): See Management Board
– General section on page 74.
Board attendance
As at 31 December 2022
Name Function Independence Age
Original
appointment
Next
renewal
date
Attendance at Meetings
(total meetings held in the year)
Supervisory Board Supervisory
Board (5)
Audit
Committee (5)
Nomination
Committee (4)
Remuneration
Committee (5)
Sarah
Whitney
(i)
Chair of
Supervisory Board
and Nomination
Committee
Independent 59 01-May-19 28-Apr-23 5/5 3/3 4/4 5/5
Andrew
Sykes
(ii)
Senior Independent
Director and
Chair of the
Remuneration
Committee
Independent 65 29-Apr-22 28-Apr-23 3/3 2/2 2/2 3/3
Jutta af
Rosenborg
(iii)
Chair of Audit
Committee
Independent 64 01-Jul-18 28-Apr-23 5/5 5/5 4/4 4/5
Chris Waples Director of the
Supervisory Board
Independent 64 01-May-21 28-Apr-23 5/5 5/5 4/4 5/5
June
Aitken
(iv)
Director of the
Supervisory Board
Independent 63 29-Apr-22 28-Apr-23 3/3 2/2 2/2 2/2
Howard
Myles
(v)
Senior Independent
Director
Independent 73 03-Oct-11 n/a 3/3 3/3 2/2 2/2
(i) Ms Whitney stepped down from her membership of the Audit Committee on 29 April 2022, having attended all prior Committee meetings. Ms Whitney continues to be invited to attend
the Audit Committee meetings as an observer.
(ii) Mr Sykes was appointed with effect from 29 April 2022, and attended all meetings held following his appointment.
(iii) Ms af Rosenborg was unable to attend one meeting of the Remuneration Committee due to a prior engagement.
(iv) Ms Aitken was appointed with effect from 29 April 2022, and attended all meetings held following her appointment.
(v) Mr Myles retired from the Supervisory Board and all Committee roles on 29 April 2022, having attended all meetings held prior to his retirement.
These tables set out the expiry dates of the current terms of the Directors’ appointments, and Committee meeting attendance. All appointments may
be renewed in accordance with the provisions of the Company’s Articles.
Corporate governance continued
Annual Report 2022 67
Corporate governanceStrategic report
Financial statements
Biographies of Directors
Supervisory Board
Sarah Whitney
Chair, Supervisory Board and
Nomination Committee
Andrew Sykes
Chair, Remuneration Committee
and Senior Independent Director
Jutta af Rosenborg
Chair, Audit Committee
Andrew Sykes has a wealth of financial services
and non-executive experience and spent 26 years
of his executive career at Schroders plc. He was
Chair of SVG Capital plc from 2012 until 2017,
serving on the Board from 2010. He was also
Chair of Smith & Williamson from 2013 to 2020.
He is an experienced director of UK-listed
companies with deep knowledge of the
financial services sector and of Corporate
Governance requirements.
Mr Sykes holds a Master’s degree in Modern
Languages from Oxford University.
Mr Sykes is currently a non-executive director
and Senior Independent Director of
Intermediate Capital Group plc.
Mr Sykes additionally serves as the Deputy Chair
of the Governing Body of Winchester College.
Mr Sykes was appointed by shareholders at
the Company’s 2022 AGM as a Non-Executive
Director, and became Senior Independent
Director and Chair of the Remuneration
Committee on 29 April 2022.
Jutta af Rosenborg has extensive experience in
management and strategy from her background
as an Executive and from senior operational roles.
Ms af Rosenborg served as Chief Financial
Officer, Executive Vice President of Finance and
IT, and Member of the Board of Management
at ALK-Abelló A/S until 2010. Before this, Ms af
Rosenborg worked at Chr. Hansen Holding A/S
as Vice President of Group Accounting from
2000 to 2003. From 1978 to 1992, she worked at
Deloitte, Denmark, serving international clients.
Ms af Rosenborg became a Non-Executive
Director on 1 July 2018 and Chair of the Audit
Committee on 31 August 2018.
Ms af Rosenborg holds an MSc in Business
Economics and Auditing from Copenhagen
Business School and qualified as a state-
authorised public accountant in 1992.
Ms af Rosenborg is an experienced non-
executive director of listed companies and
serves currently on three other listed companies;
RIT Capital Partners plc, Nilfisk Holding A/S and
JP Morgan European Growth & Income plc.
Sarah Whitney has a 35-year career advising
on strategy, corporate finance, real estate, and
economic matters. Her executive roles include
Corporate Finance Partner at PwC; she set up
and led the Government & Infrastructure Team
at CB Richard Ellis; and before that was Head of
Consulting & Research at DTZ Holdings plc
(now Cushman & Wakefield).
For over 20 years, Ms Whitney’s career has
focused on providing consultancy services to
national and local governments, investors, and
real estate companies on real estate, economic
growth, infrastructure, and investment. In her
early career, she was an investment banker
advising major corporates on M&A transactions.
Ms Whitney became Chair of the Supervisory
Board on 31 July 2020. She is also Chair of the
Nomination Committee.
Ms Whitney has a BSc in Economics & Politics
from the University of Bristol and is a Fellow
of the Institute of Chartered Accountants of
England and Wales.
Ms Whitney serves as a non-executive director
at JPMorgan Global Growth & Income plc
(where she also serves as Chair of the Audit
Committee), Tritax EuroBox plc (where she
also serves as Senior Independent Director)
and Bellway plc, (where she also serves as
Senior Independent Director). She is a Member
of the Council of University College London.
68 BBGI Global Infrastructure S.A.
Chris Waples CDir FloD has 35 years’ global
experience of managing the acquisition,
construction, and divestment of infrastructure
projects. Mr Waples has an extensive track record
of asset management in progressive high-profile
companies, including 12 years with the John
Laing Group plc where he was Executive Director
Asset Management, leading the international
public-private partnership asset portfolio across
Europe, North America, and Asia Pacific regions.
Mr Waples was a member of the executive team
that oversaw the successful £1 billion market
capitalisation IPO of the John Laing Group plc
in February 2015. He was also Chair of the
Investment Committee, Chair of the Investment
Portfolio Committee and Trustee of the John
Laing Charitable Trust. He previously served
as Managing Director of Amey plc for public
and private sector clients, leading to its
acquisition by Groupo Ferrovial. Before this,
he held senior positions with Scottish Power plc
and Blue Circle plc.
Mr Waples is a Fellow and Chartered Director
of the Institute of Directors and holds a
Postgraduate degree in Management Studies
and Agricultural Engineering LICG.
Mr Waples became a Non-Executive Director
at BBGI on 1 May 2021.
Mr Waples does not hold any non-executive
director positions at any other listed company.
June Aitken has over 30 years of experience
in global equity markets as an institutional
stockbroker. She has held numerous senior
roles at HSBC Bank plc, London, including
as Global Head of Emerging Market Equity
Distribution and Head of Strategy Management.
Previously, Ms Aitken was a Managing Director
at UBS (AG), Head of Global Equity Product,
and Global Head of Asian Equities. Ms Aitken
was a founding partner and investor of Osmosis
Investment Management LLP, a specialist
investment manager focused on environmental
and responsible investment mandates for
pension funds and endowments globally.
Ms Aitken has been involved in establishing
fund structures in multiple jurisdictions and
has previously served on a number of financial
services and fund boards.
Ms Aitken holds a degree in Politics, Philosophy
and Economics from Oxford University, is a
member of the Chartered Banker Institute and
acts as a mentor to female entrepreneurs.
Ms Aitken was appointed by shareholders at
BBGI’s 2022 AGM as a Non-Executive Director
from 29 April 2022.
Ms Aitken is a non-executive director at CC
Japan Income & Growth Trust plc, JPMorgan
Asia Growth and Income plc, Greengage Global
Holding and Schroder Income Growth Fund plc.
She is Chair of PEAL Capital Partners UK Limited.
Chris Waples
Independent Director
June Aitken
Independent Director
Biographies of Directors continued
Annual Report 2022 69
Corporate governanceStrategic report
Financial statements
1 2
3
Biographies of Directors continued
70 BBGI Global Infrastructure S.A.
1
Duncan Ball
Co-CEO and member of
the Management Board
Duncan Ball has been Co-CEO of BBGI since
its inception. He was actively involved in its
IPO in 2011 and BBGI’s subsequent growth
from 19 assets to 56 assets at the end of the
reporting period.
Mr Ball has worked in the infrastructure sector,
investment banking and advisory business
for over 30 years. As Co-CEO of BBGI, he is
responsible for BBGI’s overall strategy and
management. He is one of three members
of the Management Board and sits on the
Group’s Investment and ESG Committees.
He also is a shareholder representative and
holds directorships in key investments of BBGI.
2
Frank Schramm
Co-CEO and member of
the Management Board
Frank Schramm has been Co-CEO of BBGI since
its inception. He was actively involved in its
IPO in 2011 and BBGI’s subsequent growth
from 19 assets to 56 assets at the end of the
reporting period.
Mr Schramm has worked in the infrastructure
sector, investment banking and advisory
business for over 25 years. As Co-CEO of BBGI,
he is responsible for BBGI’s overall strategy
and management. He is one of three members
of the Management Board and sits on the
Group’s Investment and ESG Committees.
He is also a shareholder representative and
holds directorships in key investments of BBGI.
3
Michael Denny
CFO and member of
the Management Board
Michael Denny has over 20 years’ experience
in corporate finance, with a focus on the
infrastructure and real estate sectors.
He joined BBGI in early 2012, shortly after
its IPO. As CFO of the Group, he is primarily
responsible for all corporate financial matters
including financial reporting, UK listing
requirements, taxation, foreign exchange
hedging and regulatory compliance. Mr Denny
is a member of the Management Board and sits
on the Group’s Investment and ESG Committees.
Board attendance
As at 31 December 2022
Name Function Independence Age
Original
appointment
Next
renewal
date Attendance at Meetings
Management Board Management Board (20)
Duncan Ball Member of the
Management Board
Non-independent 57 05-Oct-11 05-Oct-23 20/20
Frank Schramm Member of the
Management Board
Non-independent 54 05-Oct-11 05-Oct-23 20/20
Michael Denny Member of the
Management Board
Non-independent 45 30-Apr-13 30-Apr-23 20/20
These tables set out the expiry dates of the current terms of the Directors’ appointments, and Committee meeting attendance. All appointments may
be renewed in accordance with the provisions of the Company’s Articles.
Biographies of Directors
Management Board
Annual Report 2022 71
Corporate governanceStrategic report
Financial statements
Our governance structure
BBGI is internally managed and operates with
a two-tier governance structure, comprising
a Management Board and a Supervisory Board.
The respective responsibilities of each Board
are outlined below.
The Supervisory Board consists of independent
Non-Executive Directors and the Chair, who
was considered independent at the time of her
appointment. The directors on the Management
and Supervisory Boards are accountable under
the Listing Rules, as the Listing Rules do not
distinguish between different types of directors.
While BBGI’s shares are listed on the Official
List of the UK Listing Authority, the Supervisory
Board and the Management Board act as one in
approving any circular or corporate action where
the Listing Rules require the recommendation
of the board of a publicly-listed company (or
where recommendation is customarily given).
Any responsibility applied to directors under
the Listing Rules applies to all our directors.
Stakeholder engagement
Effective engagement with our stakeholders is
a key part of realising our vision and purpose.
While BBGI is a non-domiciled publicly-listed
entity on the UK London Stock Exchange, to which
the UK Companies Act 2006 (the ‘CA2006’) has
limited application, we recognise the value added
by all our stakeholders. BBGI acknowledges the
continuing requirement under Section 172(1)
CA2006 for boards of UK large or publicly-listed
companies to take stakeholder interests into
account, and to report how they have done so
when performing their duties. Furthermore, as a
member of the AIC, we recognise the stated
intention of the AIC Code that the matters set out
in Section 172 are reported on by all companies,
irrespective of domicile, provided this does not
conflict with local company law.
Under AIC Code Provision 3, the Co-CEOs of the
Management Board regularly engage with our
major shareholders to understand their views on
significant matters. The Chairs of the Supervisory
Board and its delegated Committees are also
always available to engage at our shareholders’
request.
Details of how we adopt the spirit of those
provisions, consider our stakeholders, and our
commitment to generating positive and
sustainable outcomes for all our stakeholders are
outlined in the ESG section of this Annual Report
Board leadership and purpose
Management Board
The Management Board is responsible for
managing BBGI and its representation
vis-à-vis third parties (e.g. entry into
agreements on BBGI’s behalf). Its principal
responsibilities lie in all our operational
management activities, including the
discretionary investment management
of our investments, and setting and
implementing the Group’s overall strategy.
The Management Board is ultimately
responsible for implementing risk
management, monitoring operational
risks and measures related to risks.
In carrying out the function of investment
manager via the Management Board, we do
not engage an external investment manager
to provide investment management services.
Accordingly, as Executive Directors, none of
the Management Board sit on the
Supervisory Board, nor on its formally
constituted Committees.
The Management Board is also responsible
for BBGI’s overall administration, including
preparing our semi-annual valuations;
statutory financial statements; management
accounts and our business plan, which defines
our active approach to asset management.
Given its investment manager role, the
Management Board is the primary interface
for our investor relations and engages with the
Supervisory Board on our shareholders’ behalf.
The duties of the Supervisory Board are:
a. to appoint and, where relevant, dismiss
members of the Management Board;
b. to supervise the Company’s management
by the Management Board, without being
authorised to interfere with the
management; and
c. to exercise its powers attributed by our
Articles, including:
– Supervising and monitoring the
appointment of our service providers
and those of our subsidiaries.
– Reviewing remuneration and
compensation levels and structure,
and other benefits and entitlements
of our Management Board officers
and BBGI employees.
– Considering any prospective issues,
purchases, or redemptions of shares
proposed by the Management Board.
– Reviewing and monitoring compliance
with our corporate governance
framework and financial reporting
procedures.
– Reviewing and (if thought fit) approving
interim and annual financial statements.
– Providing general supervisory oversight
to the Management Board and Group
operations.
Supervisory Board
72 BBGI Global Infrastructure S.A.
General Meetings
2022
The AGM was held on 29 April 2022. There were
no other shareholder meetings held during
the year.
2023
BBGI’s next AGM will be held on Friday 28
April 2023. The Notice of Meeting, proposed
Resolutions and Explanatory Notes, and the
associated Proxy Form, will be circulated to
shareholders in accordance with the regulatory
deadlines, and available on our website.
Substantial shareholdings
As at 31 December 2022, BBGI had 713,331,077
shares in issue. Pursuant to DTR5 of the FCA’s
Disclosure Guidance and Transparency Rules, we
had received notice of substantial interests (five
per cent or more) in the total voting rights of
BBGI as shown in the table opposite, in
compliance with DTR 7.2.6R.
Board members and other interests
The Management Board members are also BBGI
Management HoldCo S.à r.l. managers. Mr Ball
and Mr Schramm both hold service contracts
and Mr Denny holds a management contract
in respect of BBGI Management HoldCo S.à r.l.
No other Group member held service or
management contracts during 2022. Notice
periods to and from the Company of 12 months
apply for each Management Board member.
No loan has been granted to, nor any guarantee
provided for the benefit of, any director by
the Company.
Ms Whitney, Mr Sykes, Ms af Rosenborg,
Mr Waples and Ms Aitken are all considered
independent Board members, as they:
i. Have not been employees of BBGI.
ii. Have not had material business
relationships with BBGI.
iii. Have not received performance-based
remuneration from BBGI.
iv. Do not have family ties with any of BBGIs
advisers, directors, or senior employees.
v. Do not hold cross-directorships or have
links with other directors through
involvement on other companies.
vi. Do not represent a significant shareholder.
vii. Have not served on the Board for more
than nine years.
Details of Directors’ holdings in BBGI’s shares
are disclosed in the Remuneration Report.
Internal controls
The Management Board has established an
ongoing process and system of robust internal
controls to help BBGI manage risks. We have
processes to manage risk, oversee the internal
control framework, and determine the nature
and extent of principal risks we are willing to take
to achieve our long-term strategic objectives.
As well as ongoing monitoring, we review these
policies and procedures at least annually.
We recognise that effective control systems
can only seek to manage and mitigate the risks
of failure to achieve business objectives. They
cannot eliminate them. By their very nature,
these procedures are unable to provide absolute
assurance against material misstatement or loss.
During 2022, our Compliance and Risk functions
reviewed, assessed, and reinforced our robust
governance and risk controls frameworks.
With the general removal of COVID-19
restrictions, many of our colleagues have resumed
undertaking delegates and due diligence
process monitoring through in-person meetings
and on-site attendance at delegates’ offices.
– The Supervisory Board monitors our
investment performance against our stated
objectives and reviews our activities on a
quarterly basis, to ensure that our
Management Board is adhering to our
investment policy and guidelines, including
clearly defined investment criteria, return
targets, risk profile and compliance
framework. During these meetings, the
Management Board reports KPIs on
operating performance, cash projections,
investment valuations and corporate
governance matters.
– The Head of Compliance and Risk presents
our Interim and Annual Risk Report and
quarterly Compliance Reports separately to
the Management Board and Supervisory
Board, or to the Audit Committee, with all
directors of both Boards present.
– The ESG Committee oversees the
management of material ESG activities,
including climate-related issues, and
reports to the Management Board on any
recommendations and proposed actions
following each Committee meeting. The
ESG Committee meets at least quarterly,
and membership comprises the Co-CEOs,
the CFO, the Director ESG/Sustainability,
and the Company Secretary. Through the
ESG Committee, the Management Board
remains informed about the dual risks to
BBGI of transitioning to a low-carbon
economy (with associated increased
regulation) and the risk of financial,
operational, and direct, physical impacts of
climate change on our portfolio assets.
We perform Internal Audit reviews as part
of our triennial audit plan, as agreed by the
Management Board and Audit Committee and
communicated to the CSSF. The nature, timing,
and extent of our internal audit procedures
are determined by assessing the risk related
to specific activities, and the complexity and
sophistication of our operations and systems,
including how we control information
processing. The Internal Audit Summary Report
is presented to the Audit Committee in March
each year and then submitted to the CSSF.
Name Held % of total share capital
1
M&G plc 59,502,903 9.42%
Schroders plc 56,304,964 8.48%
Newton Investment Management Limited 39,947,825 8.46%
Investec Wealth & Investment Limited 31,569,569 5.01%
Evelyn Partners 28,885,124 5.00%
1 The percentage of voting rights detailed in the table above was calculated at the time of the relevant disclosure made in
accordance with Rule 5 of the Disclosure Guidance and Transparency Rules, and the shareholders’ percentage interests in
BBGI may have changed since that date.
Board leadership and purpose continued
Annual Report 2022 73
Corporate governanceStrategic report
Financial statements
Division of Responsibilities
Supervisory Board
General
The Supervisory Board has five Non-Executive
Directors, all of whom are independent. All
Supervisory Board members are elected for a
period ending at the Company’s AGM in April
each year, when they are required to retire, in
accordance with the Articles. The members can
offer themselves for re-election by shareholders.
However, re-appointment is not automatic.
The Supervisory Board meets at least four times
a year and between these formal meetings,
the Management Board and the Company’s
corporate brokers have regular contact.
Where necessary, both Supervisory and
Management Board members have access
to independent professional advice at BBGI’s
expense. It considers items laid out in the
Notices and Agendas of meetings, which are
formally circulated to its members before each
meeting as part of the Board papers. At each
meeting, members must advise of any potential
or actual conflicts of interest before discussion.
It also meets at least quarterly to review
investment performance and associated matters,
compliance and risk profile, the performance of
key service providers, investment and financial
controls, marketing and investor relations,
general administration, peer group information,
industry issues and other matters relevant to
fulfil its oversight remit.
The Supervisory Board has formally established
Audit, Remuneration and Nomination
Committees. Further details are below
and in each Committee Report.
Management Board
General
The Management Board comprises three
members, each contractually engaged by
BBGI Management HoldCo S.à r.l., a direct
consolidated 100 per cent-held BBGI subsidiary.
As a result, no member is deemed independent
under AIC Code Provision 10. However, the
Management Board’s functions are overseen
by the Supervisory Board, which meets the
independence criteria set out in Provision 10.
While our two-tier structure is not explicitly
covered by the AIC Code, our independent
Supervisory Board ensures we are compliant
with AIC Code Provision 10.
The Company’s Articles require the re-election of
the Management Board’s members every year by
the Supervisory Board, and not by shareholders.
This does not meet the requirements of AIC Code
Provision 23, which requires that directors are
subject to election by shareholders. However,
as the Management Board carries out the role
of investment manager, the Supervisory Board
deems it appropriate that it elects the members
of the Management Board. The Articles also
require that the members of the Supervisory
Board are subject to annual election by
shareholders, who may also dismiss any
member. We consider this procedure satisfies
the requirements of AIC Code Provision 23.
Performance evaluation and re-appointment
As stated above, the Management Board carries
out the functions of BBGI’s investment manager.
Management Board Directors are appointed
by the Supervisory Board for a year, and these
appointments are then renewed. Mr Ball and
Mr Schramm were both appointed on 5 October
2011 for BBGI’s IPO, with Mr Denny appointed
to the Management Board on 30 April 2013.
Delegated functions
We are required to have dedicated Risk
Management, Compliance, and Internal Audit
functions under AIFM Law; and each function
must be functionally and hierarchically separate
from our operating unit functions. Accordingly,
we have appointed Grant Thornton Vectis as
Internal Auditor, for the year ended 31
December 2022.
Our Head of Risk and Compliance is
authorised by the regulator to perform the
risk management and compliance functions,
and reports to our Management Board and
Supervisory Board, or one of its formally
constituted Committees, as well as reporting
to respective Designated Board Members,
who retain responsibility for overseeing the
performance of the respective functions.
Our Management Board has overall
responsibility for the correct and effective
operation of the delegated functions.
Our shares trade on the main market of the
London Stock Exchange. In this context, Link is
our depository, receiving agent and UK transfer
agent. During 2022, and in accordance with the
Dematerialisation Law, our remaining shares
issued in registered form were converted into
dematerialised form.
LuxCSD acts as the Company’s EEA-based CSD.
BIL acts as the required intermediary between
the Company and LuxCSD. Both LuxCSD and
BIL are classified as delegates and are subject
to the appropriate level of delegate oversight
in accordance with our delegate oversight
framework.
BBGI is registered under the UK’s National
Private Placement Regime (‘NPPR’), allowing us
to continue to market our shares in the UK.
Other key delegates and providers:
Central Administrative Agent, Depositary,
Paying Agent, Registrar and Transfer Agent:
RBC Investor Services Bank S.A (‘RBC’)
Depository (UK): Link Market Services Trustees (Nominees)
Limited (‘Link’)
Central Securities Depository: LuxCSD S.A. (‘Lux CSD’)
Principal Agent: Banque Internationale à Luxembourg S.A.
(‘BIL’)
Information Technology: G.I.T.S. PSF
74 BBGI Global Infrastructure S.A.
Audit Committee
In accordance with provision 29 of the AIC Code
and the Disclosure Guidance and Transparency
Rules (‘DTR’) rule 7.1, the Company has a formally
constituted Audit Committee, to which the
Supervisory Board has delegated responsibility
for the general oversight and monitoring of the
Company’s compliance with various financial
and regulatory controls, in accordance with
AIC Code and Disclosure and Transparency
Rules requirements.
The Audit Committee operated throughout
2022 in accordance with the AIC Code and
within clearly defined terms of reference, which
are regularly reviewed, including all matters
indicated by DTR 7.1 and the AIC Code.
The Audit Committee reports its findings to the
Supervisory Board, identifying matters where
it recommends action or improvement. If there
is a conflict between the provisions of the AIC
Code and the provisions of the law on the Audit
Profession, we comply with the provisions of
the law on the Audit Profession, and disclose
any conflict.
As External Auditor, PWC attends specific Audit
Committee meetings to consider BBGI’s Annual
and Interim Financial Statements, where PWC
presents the conclusions of its work, and
whenever the Audit Committee considers
necessary.
The Audit Committee meets at least three times
per year, and whenever the Audit Committee
Chair may require. Any member of the Audit
Committee, or the External Auditor may request
additional meetings. Other Directors and third
parties may be invited by the Audit Committee
to attend meetings when appropriate. Sarah
Whitney, as the Chair of the Supervisory Board
is not a member of the Committee but is invited
to attend each of its scheduled meetings.
Remuneration Committee
In accordance with AIC Code provision 37, the
Company has a formally constituted Remuneration
Committee, to which the Supervisory Board has
delegated its responsibilities for establishing
the general principles of the policy for Directors’
remuneration and for setting remuneration for
the Management Board, as well as supervising
the general remuneration structure and levels
for other employees.
After reviewing the levels and structure of the
remuneration, compensation and other benefits
and entitlements of BBGI’s Management Board,
the Remuneration Committee reports its
findings and any recommendations to the
Supervisory Board.
The Remuneration Committee meets at least
twice a year, and whenever the Remuneration
Committee Chair may require. Additional
meetings may be requested by any member
of the Remuneration Committee, if necessary.
Other Directors and third parties may be invited
by the Remuneration Committee to attend
meetings as and when appropriate.
Nomination Committee
In accordance with AIC Code provision 22, the
Company has a formally constituted Nomination
Committee, to which the Supervisory Board has
delegated its responsibilities for appointing the
members of the Management Board and the
appointment of any further Supervisory Board
members.
The Nomination Committee meets to consider
the renewal of the appointments of the
Management Board members (renewable
annually for one year), the appointment of
new Supervisory Board members, to review the
succession plans for both the Management and
Supervisory Boards, and oversight of the annual
performance evaluation of the Supervisory
Board and its formally constituted Committees.
In recruiting new directors, the Nominations
Committee actively seeks greater diversity by
gender, ethnicity, nationality, and other criteria,
and is committed to selecting members based on
merit, who possess relevant and complementary
skills to help BBGI maximise stakeholder value.
The Nomination Committee meets at least
two times a year, and at other times as the
Nomination Committee Chair requires,
in accordance with its Terms of Reference.
If necessary, Nomination Committee members can
request additional meetings. Other Directors and
third parties may be invited by the Nomination
Committee to attend meetings when appropriate.
The Chair does not chair any Committee
meeting where her succession is discussed,
in accordance with AIC Code provision 22.
Further details on the roles of each Committee
and their activities during 2022 are set out in the
individual Committee reports which form part of
this Annual Report. The respective Committee
Chairs attend each Company AGM where they
are available to respond to any shareholder
queries on their Committee’s activities.
Management Engagement Committee
Oversight of delegates and key service providers
is highly regulated by the Luxembourg CSSF,
including formal reporting structures, regular
oversight visits and compliance monitoring
plans, in accordance with the Company’s
Oversight of Delegated Activities framework.
Given the Management Board’s primary
involvement in the process, the internal
management of the Company, and the size of
the Supervisory Board, the Supervisory Board
conducts the functions of a management
engagement committee, with Ms Whitney as
Chair. As a result, we consider it unnecessary
to have a separate management engagement
committee, as prescribed under AIC Code
Provision 17, as there is no material benefit
to BBGI and our shareholders.
In its role as Management Engagement
Committee, the Supervisory Board met four
times in 2022 to consider, together with the
Management Board, the performance,
effectiveness and appropriateness of the
ongoing appointments of our third-party service
providers under Principle H of the AIC Code.
During these meetings, the Management
Board provided feedback and key findings
from any onsite meetings with third-party
service providers, as part of our programme of
oversight of delegates and key service providers.
Division of Responsibilities continued
Annual Report 2022 75
Corporate governanceStrategic report
Financial statements
We believe all Supervisory Board members have
an appropriate combination of skills, experience,
and knowledge to fulfil their obligations. They
also have a breadth and diversity of experience
relevant to BBGI, and we believe any future
changes to the composition of the Supervisory
Board can be managed without undue
disruption to the Company. We are unaware
of any circumstances that are likely to impair,
or could appear to impair, the independence
of any of the Supervisory Board members.
Board composition, tenure, and diversity
The Nomination Committee and the
Management Board regularly review BBGI’s
succession plans, but ultimate decision making
rests with the Supervisory Board. As part of our
structured succession plan, Non-Executive
Directors are expected to retire on a staggered
basis. Since IPO, we have recruited new
Non-Executive Directors to retain and enhance
our Board’s knowledge and experience. At the
conclusion of our 2022 Annual General Meeting,
Mr Howard Myles retired as a member of the
Supervisory Board and each of the Committees,
including his role as Senior Independent Director
and Chair of the Remuneration Committee.
He had served as an independent Non-Executive
Director since our IPO. He was replaced by
Andrew Sykes, who was appointed Non-
Executive Director at the same AGM. Mr Sykes
also took on the roles of Senior Independent
Director and Chair of the Remuneration
Committee. At our 2022 AGM, our shareholders
appointed Ms June Aitken as an Independent
Non-Executive Director. Both Ms Aitken and Mr
Sykes are members of each of our Committees.
Our Management and Supervisory Boards
take the gender and ethnic diversity of their
composition into full consideration. We fully
acknowledge the goals of FTSE Women Leaders
(formerly the Hampton-Alexander Review on
Women on Boards) and the Parker Review on
Ethnic Diversity on Boards. Female representation
on our Supervisory Board at the reporting
date stood at 60 per cent, exceeding the FTSE
Women Leaders target of at least 40 per cent
representation of women on the Boards of FTSE
350 companies. We also meet the target set by
the Parker Review for FTSE 250 companies to
have at least one director from a minority ethnic
group on the Board by 2024.
We are one of the few FTSE 350 companies with
both a female Chair and Audit Committee Chair.
As part of our commitment to the FTSE Women
Leaders and the Parker Review’s goals, the
Nomination Committee also regularly reviews
our policies on diversity, equity and inclusion.
Our gender composition goals include our
Management Board, and their direct reports.
As at 31 December 2022, our 26 colleagues
included 17 different nationalities. Given our
relatively low employee turnover and the small
number employed across the Group, the
Management and Supervisory Boards are
mindful of the naturally limited opportunities
to promote greater diversity of gender and
ethnicity to senior roles within BBGI, but we
still take all reasonable and practical steps to
evolve diversity throughout the Group.
Further details on Board composition, tenure,
and diversity are given in the Nomination
Committee Report.
Re-election of Supervisory Board members
In accordance with the Articles, Supervisory
Board members are elected for a period
ending each AGM, when they are eligible for
reappointment. All members of the Supervisory
Board will offer themselves for re-election at
our forthcoming AGM in 2023 and, as a result
of the successful performance evaluation,
the Supervisory Board recommends the
re-election of each of its members.
Re-election of Management Board members
The Supervisory Board evaluates the performance
of the Management Board and its Directors
annually to ensure they operate effectively and
efficiently, and that the appointment of the
individual Directors is in the best interests of
BBGI and its shareholders. Satisfied with the
evaluations carried out in 2022, the Supervisory
Board resolved to renew Mr Denny’s
appointment for a further year with effect
from 30 April 2022, and those of Mr Ball and
Mr Schramm for a further year with effect from
5 October 2022.
Composition, Succession and Evaluation
Board Gender Diversity
Male: 5
Female: 3
See the Nomination Committee Report
on page 78 for further information on
Board diversity
Supervisory Board Gender Diversity
Male: 40%
Female: 60%
For more information about our approach
to diversity, please see our separate
ESG Report
76 BBGI Global Infrastructure S.A.
Administration
Incorporation and administration
The ordinary shares were created in accordance
with Luxembourg law and conform to the
regulations made thereunder, have all necessary
statutory and other consents, and are duly
authorised according to, and operate in
conformity with, the Articles.
Articles of Association
The Articles were originally approved and
formalised before a Luxembourg notary public
on 24 November 2011. The Articles are filed
with the Luxembourg Registre de Commerce et
des Sociétés and are published in the Mémorial.
The Articles may be amended in accordance
with the rules set out in article 32 of the Articles.
A copy of the current Articles, which were
most recently amended by shareholder
approval on 30 November 2020, is available
for inspection on our website. Refer to www.
bb-gi.com/investors/policies/articles-of-
association/
Annual Report 2022 77
Corporate governanceStrategic report
Financial statements
Nomination Committee Report
Annual statement
from Nomination
Committee Chair
I am pleased to present the
Nomination Committee (the
‘Committee’) report for the
financial year ended 31
December 2022 on behalf of the
Supervisory Board.
Responsibilities
The Committee and its Chair are appointed by
the Supervisory Board. Membership is confined
to Independent Non-Executive Directors.
Each of the five Independent Non-Executive
Directors is a Committee Member. The
Nomination Committee’s responsibilities
include reviewing:
– The renewal of the appointments
of the Management Board members
(appointments are renewable annually
for one year only).
– The composition of the Supervisory Board
and the appointment of new Supervisory
Board members (subject to annual
shareholder approval).
– Succession planning for the Management
and Supervisory Boards.
– The annual performance evaluation of
the Supervisory Board and its formally
constituted Committees.
Key activities during the year
During the year, the Committee met four times,
with all members present.
Supervisory Board composition,
tenure and diversity
As was reported in last year’s Annual Report,
in accordance with our succession plans,
Howard Myles retired as a Non-Executive
Director of the Supervisory Board and his
respective Committee appointments at the
2022 AGM, with Andrew Sykes appointed to
serve as his replacement on the Supervisory
Board. Mr Sykes also succeeds Mr Myles as
Senior Independent Director, Chair of the
Remuneration Committee and as a member
of the Audit and Nomination Committees.
Ms June Aitken was also appointed at the
2022 AGM, as an additional member of the
Supervisory Board, and additionally serves
as a member of the Audit, Nomination and
Remuneration Committees. We are grateful
for the support received from shareholders in
favour of their appointments, which we believe
complement existing Board members and
provide us with a well-balanced and experienced
Supervisory Board and Committees, allowing us
to effectively serve our shareholders in carrying
out our duties of oversight of the Company
and Management Board.
We strongly support initiatives and regulatory
changes to encourage gender and ethnic equality
within publicly-listed corporate entities, including
the FTSE Women Leaders and Parker Reviews.
We believe the Supervisory Board’s effectiveness
is greatly enhanced by our diversity, and are
proud of having 60 per cent female
representation, as well as being one of the few
FTSE 350 companies with both a female Chair
of the Supervisory Board and a female Audit
Committee Chair. During the year we also
achieved the Parker Review target for FTSE 250
companies to have at least one director from
an ethnic minority background on the Board,
two years ahead of the 2024 deadline.
Notwithstanding any regulatory requirements,
we remain committed to ensuring that the
members of our Board and Committees bring
a varied range of skills and expertise to the
benefit of the Company’s stakeholders and we
have achieved this whilst also meeting these
additional expectations of diversity.
Succession planning
During the year, the Committee reviewed its
former policy on the Appointment and Tenure
of the Supervisory Board Chair. Following a
reassessment of the Board’s position on
succession planning, we decided to revise the
existing policy and extend its application to all
members of the Supervisory Board all members.
The Committee recognises that the AIC does
not explicitly preclude a director from serving
more than nine years, but states that serving
over nine years is one of several factors that
could lead to a director losing independent
thinking. Separately, the Committee members
recognise market sentiment towards excessive
periods of tenure beyond nine years – the
stated limit in the FCA’s Corporate Governance
Code. Our Supervisory Board Tenure policy
limits the tenure of its members and the Chair
to nine years from their first appointment to
the Board, although we will allow an extension
of the Chair in exceptional circumstances to
facilitate an effective succession plan and the
development of a diverse Board.
The Committee reviewed the composition and
membership of the Management Board, the
Supervisory Board, and their formally constituted
Committees. The Committee has determined
that, with the addition of Mr Sykes and Ms
Aitken, further appointments are not necessary.
Every year, we consider and formally discuss the
issue of succession, both at the directorship
levels and below, reporting into the Management
Board. We consider existing skills and experience,
potential future departures, and key person risks,
as well as supporting and nurturing talent within
the Company. Where necessary, the Committee
will engage external recruitment consultants
to assist with identifying suitable candidates.
Committee membership Meeting attendance
Sarah Whitney
4/4
Andrew Sykes
2/2
Jutta af Rosenborg
4/4
Chris Waples
4/4
June Aitken
2/2
Howard Myles
1
2/2
1 Mr Myles retired from the Supervisory Board and all
Committee roles on 29 April 2022, having attended
all meetings held prior to his retirement.
78 BBGI Global Infrastructure S.A.
The Management Board is tasked with the
general recruitment of colleagues, including
all senior positions below Board-level, and it
regularly keeps the Committee and Supervisory
Board appraised of existing and potential future
human resourcing requirements.
The process of appointing any new Directors is
led by the Nomination Committee. Our approach
is to make appointments across all levels based
on the merit, and the strengths, skills and
experience that individual candidates bring to the
composition and balance of the Management
and Supervisory Boards, or Company.
Annual Committee planning
and member development
During the year, the Committee formalised
annual commitments and activities into an
annual committee plan. This ensures individual
Committee members regularly consider all
material matters, and that the Committee
allocates sufficient time to discuss any matters
at respective meetings.
The Committee also re-evaluated the induction
process for new Non-Executive Directors,
referring to positive feedback on the process
from Mr Sykes and Ms Aitken. We have enhanced
the NED induction plan by expanding on the
content covered during meetings and
presentations for new directors.
We maintain an internal register of training
undertaken by all colleagues and Directors.
Members of the Supervisory Board are required
to provide evidence of relevant training
undertaken in the year and are additionally
encouraged to take part in staff-wide training,
such as cyber-security and Anti-Money
Laundering (‘AML’) and Counter-Terrorism
Financing (‘CTF’), if they have not done similar
training externally. The Committee also reviews
training undertaken to determine the ongoing
commitment and suitability of each Supervisory
Board member as an independent Non-
Executive Director of the Company. I am pleased
to say that each Supervisory Board member
has undertaken training to remain up-to-date
with the latest regulatory and operational
developments relevant to BBGI’s business.
Annual performance evaluation
Progress made against the actions identified by
the 2021 performance evaluation of the Board’s
effectiveness is detailed above.
During the year, the Supervisory Board
conducted its own annual evaluation, as well as
that of its Chair and each of the Committees,
and considered the term and independence of
each member. Having undertaken an external
evaluation in 2020, the 2022 evaluation was
conducted internally. It consisted of a detailed
questionnaire covering the Supervisory Board
and its Chair, and its three Committees: the Audit
Committee, the Nomination Committee, and
the Remuneration Committee. All members of
the Supervisory Board formally considered and
discussed the conclusions from each evaluation.
The 2022 evaluation concluded that the
Supervisory Board and its Committees comprise
an appropriate balance of experience, skills and
knowledge to enable them to discharge their
responsibilities properly, and the Board has
operated effectively throughout the year.
The new Board and Committee structure and
the annual work programmes introduced last
year are functioning well, and the two newly
appointed directors benefitted from the
improved induction programme. Some minor
changes to the management of the Board’s
business will be implemented to improve the
effective working of the Board. In the changing
macroeconomic environment, the evaluation
process recognised the need to keep the
Company’s strategy and risk management
processes in focus.
As the Senior Independent Director, Mr Sykes
evaluated my performance as Chair of the
Supervisory Board, in accordance with provision
14 of the AIC Code, and he concluded that I
continue to perform my role effectively.
I have also evaluated the performance of each
Supervisory Board member, and concluded that
each member performed their duties effectively
throughout the reporting period, and has
sufficient capacity to carry out their duties
properly, with no single member overboarded
by other directorships.
Renewal of Executive Director mandates
The Supervisory Board reviewed the performance
of each Management Board member. Each
member is considered to have performed their
duties effectively, and has been reappointed
for another year.
The Committee reviewed the plans for all senior
positions for succession planning. These plans
are regularly updated by the Management
Board and reviewed by the Nomination
Committee at least annually.
The year ahead
The Committee will meet regularly in 2023
to assess capacity within the organisation,
key man risk and the continuous development
of appropriate succession plans, which continue
to be key focus areas for the Management and
Supervisory Boards. The Committee will strive
to achieve the best results for all stakeholders
in 2023, including the selection process for
engaging an independent third party to
facilitate the external performance evaluation
process in 2023, in accordance with AIC Code
provision 26, and in actioning the outcomes
of the 2022 evaluation.
Approval
This Report was approved by the Board on
29 March 2023 and signed on its behalf by:
Sarah Whitney
Nomination Committee Chair
Area of focus Actions taken
Greater ESG expertise
required on the
Supervisory Board
The Supervisory Board was enlarged by one member, and a search
undertaken for an appropriately skilled individual, resulting in the
appointment of June Aitken.
Individual board member training undertaken where appropriate.
Committee work
planning
All Committees now have annual workplans in place setting out
the year’s business.
Nomination Committee Report continued
Annual Report 2022 79
Corporate governanceStrategic report
Financial statements
Audit Committee Report
Annual statement from
Audit Committee Chair
I am pleased to present
the Audit Committee
(the ‘Committee’) report
for the financial year ended
31 December 2022 on behalf
of the Supervisory Board.
Terms of Reference
The Committee functioned throughout 2022
according to its defined Terms of Reference,
which are prepared in accordance with the
Disclosure and Transparency Rule 7.1 and the
AIC Code, which are reviewed at each formal
meeting scheduled by the Committee and are
available to view on the Company’s website.
Any amendments recommended on the Terms
of Reference are referred to the Supervisory
Board for approval. The roles and responsibilities
of the Committee, as set out in its Terms of
Reference, are reviewed at least annually, and
consider relevant regulatory changes and
recommended best practice. There were no
material amendments to the Terms of Reference
during 2022.
Committee membership
The Committee and its Chair are appointed by
the Supervisory Board. The Committee currently
consists of four Independent Non-Executive
Directors, all of whom sit on the Supervisory
Board, and membership is at all times confined
to Independent Non-Executive Directors.
Ms June Aitken and Mr Andrew Sykes were
appointed as Committee members from
29 April 2022, with Mr Howard Myles and
Ms Sarah Whitney stepping down from the
Committee on the same day. Ms Whitney
remains a Non-Executive Director. As Chair
of the Supervisory Board, she is invited to
attend each Committee meeting as an observer.
The biographies of each Committee member
are in the Corporate Governance section of this
Annual Report. The Supervisory Board considers
that at least one Committee member has
recent and relevant financial experience for the
Committee to discharge its functions effectively.
Responsibilities
The key responsibilities of the Committee
include:
– Advising the Supervisory Board on whether
the Group’s annual and interim reports
and financial statements, taken as a whole,
are fair, balanced, and understandable
and provide the information necessary for
shareholders to assess the Group’s position
and performance, business model
and strategy.
– Monitoring the integrity of the financial
statements of the Group and any formal
announcements relating to the Group’s
financial performance, satisfy themselves
that the financial statements are compliant
with relevant accounting standards and
that any significant financial reporting
issues and judgements raised by the
External Auditors are appropriately
considered.
– Reviewing the semi-annual valuations
of BBGI’s investment portfolio.
– Reviewing the effectiveness of the
Group’s internal financial controls and risk
monitoring including consistency of
accounting policies and practices on a
year-to-year basis, the Group’s internal
control and risk management systems,
including reviewing the Internal Auditors’
Annual Regulatory Report.
– Reviewing and monitoring the effectiveness
of the Group’s Internal Audit function,
including the appointment and removal of
the third-party service provider of Internal
Audit and review and approve the
tri-annual internal audit plan.
– Formally reporting and making
recommendations to the Supervisory Board
for resolutions to be put to shareholders
at the AGM, to approve the appointment,
re-appointment, and removal of the
External Auditor, and keep under review
their associated remuneration and terms
of engagement.
– Reviewing and monitoring the External
Auditor’s independence and objectivity
and the effectiveness of the audit process,
taking into consideration relevant UK and
Luxembourg professional and regulatory
requirements.
– Ensuring implementation of a policy on
non-audit services, considering relevant
guidance and legislation regarding the
provision of non-audit services by the
external audit firm.
– Reviewing the adequacy and security of the
Group’s arrangements for its employees
and stakeholders to raise concerns, in
confidence via BBGI’s whistleblower hotline,
about possible wrongdoing in financial
reporting, fraud, bribery and other matters.
These responsibilities form the basis of the
Committee’s annual work plan. The Committee
is authorised to seek any information it requires
from the Management Board, and external
parties and to investigate issues or concerns as
it deems appropriate. The Committee may also
obtain independent professional advice at the
Company’s expense, in order to perform its
duties. No independent advice was required
in 2022.
The External Auditor is invited to attend
Committee meetings where we consider the
Annual and Interim Reports, and they meet the
Committee or some of its members, without
representatives of the Management Board being
present. The Committee has direct access to
PwC as our External Auditor, and to members of
the Management Board, and reports its findings
and recommendations to the Supervisory Board.
Committee membership Meeting attendance
Sarah Whitney
1
3/3
Andrew Sykes
2/2
Jutta af Rosenborg
5/5
Chris Waples
5/5
June Aitken
2/2
Howard Myles
2
3/3
1 Ms Whitney stepped down from her membership of
the Audit Committee on 29 April 2022, having attended
all prior Committee meetings. Ms Whitney continues to
be invited to attend the Audit Committee meetings as
an observer.
2 Mr Myles retired from the Supervisory Board and all
Committee roles on 29 April 2022, having attended
all meetings held prior to his retirement.
80 BBGI Global Infrastructure S.A.
Valuation of investments
During the year, the Committee discussed a
range of topics with the Management Board,
the External Auditor, and the Internal Auditor.
Consistent with prior reporting periods, the
Committee concluded that the most significant
risk of material misstatement in our financial
statements relates to the fair valuation of our
underlying investments.
Twice a year, the Management Board carries out a
valuation of the underlying investments, including
NAV sensitivity analyses, which are reviewed by
an independent third-party valuation expert.
Management Board members were available
during the Committee review process to
respond to challenges and to provide detailed
explanations of the rationale used for the
valuation of investments and the assumptions,
judgements and methodology applied.
The Committee invited the External Auditor to
present and discuss the results of its audit and
review procedures. The External Auditor, including
its valuation specialist, has reviewed and reported
on the adequacy of the valuation of the underlying
investments, paying particular attention to the
discount rates applied, the macroeconomic
backdrop and the key assumptions used in
deriving the fair valuation of the investments.
The External Auditor briefed the Committee
on the outcome of its controls testing and
the audit procedures performed. This risk of
material misstatement is carefully considered
when the Committee reviews the Annual and
Interim Financial Statements.
Following this valuation process and ensuing
reviews, the Committee concluded that the
valuation process of our investments for 2022
had been carried out appropriately, and the
value of investments was reasonable.
External Auditor independence
and effectiveness
In assessing the ongoing independence of the
External Auditor, the Committee:
– Reviewed the External Auditor’s report
outlining the extent of non-audit services
provided by them and related parties to the
Company and its subsidiaries.
– Received confirmation from the External
Auditor as to its compliance with ethical
requirements regarding independence and
the application of appropriate safeguards,
along with the arrangements in place to
identify, manage and disclose conflicts of
interest and that it has remained
independent of the Group in accordance
with Regulation (EU) No 537/2014.
– Considered existing engagements with the
External Auditor having been entered into
prior to their appointment as External
Auditor, along with associated changes in
personnel to maintain independence.
In assessing the ongoing effectiveness of the
External Auditor, the Committee considered;
– The External Auditor’s fulfilment of the
agreed audit plan and variations.
– Reports highlighting the major issues that
arose during the audit.
– Feedback from the Management Board
evaluating the performance of the audit team.
– The Financial Reporting Councils (‘FRC’s)
Annual Report on audit quality inspections.
The Committee is satisfied PwC has acted
in accordance with its terms of engagement
and that the audit process carried out by
the External Auditor remains independent,
objective, and effective.
Key activities during the year
At these meetings, the Committee
considered, inter alia:
The Committee’s Terms of Reference.
The Committee’s annual plan.
The Semi-Annual Valuation Reports
with respect to our investment portfolio,
including assumptions used, sensitivity
scenarios, External Auditor and third-party
independent valuation specialist observations.
Management’s proposals for the interim
dividends, including any benchmarking
conducted against market peers.
Our 2021 Annual Report, 2022 Interim
Report and the appropriateness and
consistency of our accounting policies.
The relevance of changes to IFRS reporting
standards.
The change in External Auditor, including
PwC’s terms of appointment and remuneration,
and overseeing their independence, particularly
the provision of non-audit services and
legacy services pre-dating its appointment
as External Auditor.
The effectiveness of the audit and
recommendation to the Supervisory Board
for approval of the External Auditor’s plan
for the financial year and the key business
risks relevant to the audit.
The External Auditor’s reports to
the Committee.
Discussions with management on our
existing tax structure and tax risks.
The introduction of more comprehensive
climate-related disclosures.
Our overall Risk Profile and Key Risk
Indicators, and the effectiveness of our
risk monitoring.
An annual review of the Charters and
Policies relevant to the Committee.
The effectiveness of our Internal Auditor,
the Internal Auditor’s Annual Regulatory
Report for 2021 and scope of review for the
2020–2022 triennial internal audit plan.
The Russian invasion of Ukraine and the
potential macroeconomic consequences,
in particular the impact on interest rates
and inflation.
Following the revocation of most of the
health measures in relation to COVID-19
in March 2022, a reflection on the overall
non-financial impact of the pandemic,
and in particular the effectiveness of our
business continuity plan throughout.
The effectiveness of an externally conducted
cyber-security risk assessment for BBGI and
a review of controls in place and adaptations
made to mitigate the global escalation in
cyber-attacks.
Initial expectations around the impact
and relevance of the UK BEIS Audit and
corporate governance reforms, considering
our size and UK listing.
The Committee, with the presence of all
Supervisory Board members, received
quarterly presentations from the Head of
Compliance and Risk on the work undertaken
by the Compliance function, including;
– Discussions around our AML/CFT controls
and new reporting requirements from the
Luxembourg regulator, which required
support from outgoing External Auditor.
– A look through exercise on the beneficial
ownership of our share capital in
response to the significant level of sanctions
imposed by regulators on Russia and
Russian-related interests.
– Whistleblowing arrangements.
– Periodic updates on the conclusion of
the process to dematerialise our share
register.
Audit Committee Report continued
Annual Report 2022 81
Corporate governanceStrategic report
Financial statements
Non-audit services
The Committee considered the level of
non-audit services provided by the External
Auditor. To the extent that non-audit services
are not prohibited, the Committee will continue
to review and, where appropriate, approve
non-audit service engagements performed by
the External Auditor on controlled subsidiaries.
As a general principle, we will not use the
External Auditor for non-audit services, unless
there is a valid and specific justification.
For the financial year ended 31 December 2022,
the External Auditor provided us with limited
non-audit services related to ESMA Annex IV
reporting. This arose as the result of a legacy
engagement pre-dating PwC’s appointment as
the External Auditor. Fees for this service in
2022 amounted to c.£5,000. We have since
performed the production of this reporting
in-house. There were no other non-audit
related fees paid to PwC during the year
ended 31 December 2022.
Internal controls and risk management
The Committee review the effectiveness of
the Group’s internal financial control systems.
The Committee considers the three lines of
defence model to assess the effectiveness of
the internal control systems. The first line of
defence, management controls, is monitored
on an ongoing basis by the compliance and
risk management functions, which make up
the second line of defence. The third line of
defence is the internal audit function.
– Risk management: The Committee
members attended the presentation of the
Annual Risk Report and the Semi-Annual
Risk Report presented by BBGI’s Risk
Manager. Committee members had the
opportunity to challenge the Risk Manager
and members of the Management Board,
enabling an appropriate level of direct
oversight. Additionally, the Committee
reviews regular risk profile updates and
related key risk indicators during the
year, prepared by the Risk Manager.
– Compliance: The Committee members
received and considered the quarterly
compliance reports prepared by BBGI’s
Head of Compliance, describing the work
performed by the compliance function,
and covering all compliance topics,
including, but not limited to, AML/CTF,
delegate oversight, conflicts of interest,
training, regulatory watch, data protection,
fraud, cyber-security, implementation and
update of policies, ESG and personal
transactions. The Management Board
members and other representatives were
available to respond to the Committee
members’ queries and requests for further
clarification. The Head of Compliance
additionally presented the Annual
Compliance Report for the Financial Year
ended 31 December 2021, required to be
submitted to the CSSF. This report was
presented at a Committee meeting where
all directors, including the Supervisory
Board Chair, were in attendance.
– Internal audit: As described in the
responsibilities section earlier, the
Committee undertook a review of the
Internal Auditor’s effectiveness, the 2021
Internal Auditor’s Annual Regulatory Report
and the 2020–2022 triennial internal audit
plan. As part of this process, the Committee
received a presentation from the Internal
Auditor, which covered their specific
approach to engagement, a detailed
outline of their scope of work, the audit
objectives and their conclusions resulting
from the 2021 engagement.
Members of the Committee are presented
with the information required to monitor the
effectiveness of all three functions. For 2022,
the Committee concluded that Risk Management,
Compliance, and Internal Audit had performed
effectively with adequate processes in place.
Annual Committee planning
During the year, the Committee formalised
its activities into an Annual Committee Plan.
Individual Committee members deliberate all
material matters requiring the Committee’s regular
consideration, and we allocate sufficient time to
these issues when they are discussed at meetings.
The adoption of the formalised Annual
Committee Plan facilitates the Committee’s
ability to regularly undertake further analysis
of topics of current relevance or material
interest to Committee members or the
Company’s stakeholders.
First line
of defence
Supervisory Board
Management Board
Second line
of defence
Third line
of defence
Information technology
Finance and accounting
Information security
External
auditor
CSSF
Operational
Management
Internal
control
measures
Audit Committee Report continued
System of internal control
Internal audit
Risk control
Compliance
82 BBGI Global Infrastructure S.A.
Cyber-security risk assessment
With two new members, and a new External
Auditor, the Committee has benefitted from
fresh perspectives on the effectiveness of
existing controls for cyber-security. The
Management Board has a considerable
understanding of risks within and outside the
business, and has effective controls in place and
a Business Continuity Plan to address cyber-
threat risks, including additional measures
implemented during the reporting period. As a
result, the Committee considers a robust control
environment is in place, and the Management
Board, through the support of external cyber-
security experts, are well informed of potential
cyber-threats and are taking appropriate action
to mitigate those risks to the extent possible.
Tax
The Committee recognise the relevance of local
and global tax initiatives to the Group, with an
increasing trend for greater transparency
around tax policies and reporting requirements.
Mitigation of our tax-related risks, and the
adoption of any active policies on tax
management sits with the Management
Board. In 2023, as part of its annual plan,
the Committee will continue to receive updates
from the Management Board on the topic of
taxation as it impacts upon the Group.
Going concern and viability statements
Having regard to our assets and liabilities
(refer to the Consolidated Statement of
Financial Position for more detail), the
Committee considered the Viability and
Management Board Responsibilities Statements,
and processes and assumptions underlying
the statements, considering:
– BBGI’s investment policy and investment
pipeline.
– The long-term and contractual nature of
BBGI’s investments.
– Investment reviews.
– BBGI’s risk profile and key risk indicators
(including principal risks and uncertainties)
and mitigating actions put in place.
– Relevant financial and economic
information and long-term assumptions.
– Scenario testing.
– Annual and semi-annual valuations of the
investments.
– Whether the Management Board has
diligently carried out its responsibilities in:
– selecting suitable accounting policies and
applying them consistently.
– making judgements and estimates that
are reasonable and prudent.
– stating whether applicable accounting
standards have been followed, subject to
any material departures disclosed and
explained in the financial statements.
– preparing the financial statements on a
going concern basis, unless it is
inappropriate to presume that the Group
will continue in business.
– maintaining proper accounting records
that disclose with reasonable accuracy
the Group’s financial position and enable
it to ensure the financial statements
comply with all relevant regulations.
– safeguarding the Group’s assets and
taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
Having considered all the above, and
discussions held with the Management Board,
the Committee is satisfied the Viability
Statement and the Management Board
Responsibilities Statement are prepared on an
appropriate and reasonable basis.
Regulatory environment
The Committee was kept informed of regulatory
changes throughout 2022, including changes in
scope or interpretation by the regulator, and
potential future developments. This monitoring
and update process is facilitated by our
Regulatory Watch, maintained by our Compliance
Function and included in the regular compliance
reporting to Committee members by the Head
of Compliance and Risk and the Designated
Management Board Member for Compliance.
Focus for 2023
In addition to monitoring the integrity of our
financial disclosures, the effectiveness of the
internal and external audit functions, and our
response to material regulatory changes, a key
focus for the Committee during 2023 will be
the continued oversight of PwC’s engagement
as External Auditor.
Additionally, as part of its implemented annual
plan, the Committee will undertake further
analysis of relevant topics, being ESG and tax
strategy in 2023.
Notwithstanding the official lifting of health
measures and restrictions in response to
COVID-19 in March 2022, and our proven
robust business model, we will continue to
monitor closely the effectiveness of our
business continuity plan and controls to
mitigate potential risks.
The Committee will also continue to evaluate
the impact of political, tax and regulatory
developments in relevant geographies, in
particular developments in the UK around
audit and corporate governance reforms,
and developments relating to ESG both in
the UK and Europe.
Together with all Committee members,
I am available at the AGM to respond to
any shareholder questions regarding the
Audit Committee’s activities.
Approval
This report was approved by the Board on
29 March 2023 and signed on its behalf by:
Jutta af Rosenborg
Committee Chair
Audit Committee Report continued
Annual Report 2022 83
Corporate governanceStrategic report
Financial statements
Remuneration Committee Report
Annual Statement
from Remuneration
Committee Chair
I am pleased to present the
Remuneration Committee
(the ‘Committee’) report
for the financial year ended
31 December 2022 on behalf
of the Supervisory Board.
Composition of the Committee
The Committee consists of a minimum of three
members. The Supervisory Board appoints
Committee members and the Chair (who
cannot be the Supervisory Board Chair) and
membership is confined to independent
non-executive directors.
On 29 April 2022, I was appointed as Chair of
the Committee when Howard Myles retired
from the Board. June Aitken was also appointed
as a member of the Committee. Each of our five
Independent Non-Executive Directors is also a
Committee member. Refer to the Biographies
section of this Annual Report on page 68.
Key activities during the year
The Committee met five times during the year.
Responsibilities
The Committee is responsible for establishing the
general principles and terms of the Remuneration
Policy for our Directors and employees, and for
setting the remuneration of the Management
Board and Supervisory Board, in accordance
with the Principles and Provisions of the Code,
and the terms of the Remuneration Policy.
This Remuneration Report has been prepared in
compliance with reporting obligations outlined in
the relevant Luxembourg legislation. To provide
greater transparency to shareholders and
employees alike, we have again voluntarily
disclosed additional remuneration detail beyond
our legal reporting obligations. We continue
to comply with the provisions of the AIC Code
on remuneration.
Performance in 2022
Despite the challenging economic environment,
BBGI’s portfolio continued to perform well with
no reported lock-ups in Portfolio Companies,
a strong increase in NAV per share and robust
dividend cover. Rising inflation, particularly in
the second half of the year, has highlighted the
importance of high-quality inflation linkage in the
portfolio. Preserving and enhancing the value of
the portfolio was a key management focus.
BBGI’s proven investment strategy and the
management team’s proactive management of
low-risk, inflation linked, availability-based
assets supported a 6.7 per cent increase in NAV
to £1,069.2 million and a 6.6 per cent increase
in NAV per share in 2022. We met our full-year
dividend target of 7.48pps, an increase of 2 per
cent compared to the prior year, with strong
coverage of 1.47x.
Both the Management Board and the Supervisory
Board believe that sound ESG practices are
integral to building a resilient business and
creating long-term value for our investors and
other stakeholders. Investing sustainably and
responsibly in social infrastructure is central to
BBGI’s business model. Most of our employees
have ESG-related targets, and the Management
Board’s remuneration framework includes both
LTIP and STIP metrics related to ESG.
Further progress on ESG was made during the
year, including establishing the framework to
achieve our strategic ESG objectives. The year saw
some notable milestones such as completion
of the portfolio level climate risk assessment,
our designation as an Article 8 Company under
SFDR for reporting on the criteria for a socially
beneficial investment, the development of
BBGI’s Net Zero Plan, and the publication of
the Company’s first ESG report in March 2022.
Key decisions during the year
The Committee commissioned an independent
review of BBGI’s overall remuneration framework
in 2020/21 and we continued to work within
this framework in 2022.
The Committee’s work in 2022 included the
following key decisions:
– Approval of the annual Remuneration
Committee cycle.
– Approving Management Board salary
increases, taking account of the inflationary
environment and the framework and
approach to pay increases for BBGI
employees.
– Assessing performance against the 2021
STIP targets and approving the outcome.
– Formalising the assessment of the 2018 LTIP
outcome.
– Setting ESG metrics for the 2021 LTIP award
and considering the inclusion of additional
ESG metrics in the 2022 LTIP award
21
.
– Reviewing and approving an increase to
Supervisory Board fees.
– Reviewing and updating the Company’s
Remuneration Policy.
We will carry out an independent review of the
Management Board’s remuneration in 2023.
21 The 2022 LTIP award was granted in February 2023 with effect December 2022. The vesting period under these awards is from December 2022 to December 2025.
Committee membership Meeting attendance
Sarah Whitney
5/5
Andrew Sykes
3/3
Jutta af Rosenborg
4/5
Chris Waples
5/5
June Aitken
2/2
Howard Myles
1
2/2
1 Mr Myles retired from the Supervisory Board and all
Committee roles on 29 April 2022, having attended
all meetings held prior to his retirement.
84 BBGI Global Infrastructure S.A.
Detailed decisions of the Committee
Salary increases
The Committee reviewed Management
Board salaries with effect from 1 May 2022,
considering salary levels relative to the market,
and the level of pay increases for BBGI
employees. It also considered the impact of
the volatile and inflationary macroeconomic
environment on all our employees. Management
Board members were awarded a salary increase
of 5 per cent for 2022, which is below the
average increase we awarded to our employees.
Annual bonus (FY22) outcome
For the financial year ended 31 December 2022,
the Co-CEOs and CFO were each eligible for a
maximum bonus of 150 per cent of base salary
as at 31 December 2022. The Committee
assessed the award of this annual bonus against
a range of stretching financial and strategic KPIs
(see further in this report). The Management
Board delivered excellent performance and
progress against targets, with the annual bonus
outcomes at 100 per cent of the maximum
opportunity for the 2022 financial year.
One-third of the earned bonus will be used to
purchase shares, to be held for three years.
LTIP outcome (2019 award)
In December 2019, LTIP awards were granted
to the Co-CEOs and CFO. These equated to an
award value of 150 per cent of salary for the
Co-CEOs, and EUR 100,000 for the CFO, and
were based on stretching TSR and NAV growth
targets. The 2019 awards will be released
following the publication of the Company’s
2022 audited accounts, vesting at 43.1 per
cent and 50 per cent of the maximum for the
Co-CEOs and CFO respectively. These reflect
performance against targets for the three-year
period to 31 December 2022.
No discretion was exercised in determining
the annual bonus and incentive outcomes
described above.
Supervisory Board remuneration
As Supervisory Board fees had not been changed
since 2017, they were reviewed in 2022. Following
this review, the Chair’s base fee was increased
to £80,000, and the Non-Executive Director
base fee to £55,000, with effect from 1 October
2022. Further details are provided later in
this report.
Andrew Sykes
Remuneration Committee Chair
29 March 2023
Remuneration Committee Report continued
Annual Report 2022 85
Corporate governanceStrategic report
Financial statements
Key remuneration principles
BBGI’s remuneration framework is based on the
following key principles:
The objectives of the Company’s Remuneration
Policy are to:
– Attract and retain highly qualified
executives and employees with a history
of proven success.
– Align the interests of BBGI’s Management
Board and employees with shareholders’
interests, executing our investment policy
and fulfilling our investment objectives.
– Support strategy and promote our
long-term sustainable success.
– Establish performance goals that, if met, are
accretive to long-term shareholder value.
– Link compensation to performance goals
and provide meaningful rewards for
achieving these goals. This incorporates
both financial and non-financial
performance indicators, including key
ESG goals and health and safety factors.
In considering Management Board
remuneration during 2022, the Committee
acknowledged the principles of transparency,
clarity, simplicity, risk management,
proportionality and alignment to culture.
Risk and conduct
BBGI’s Remuneration Policy encourages sound
and efficient management of risks and does
not encourage excessive risk-taking. The
Remuneration Policy is consistent with sound
and effective risk management through:
– Implementing a sound governance
structure for establishing goals and for
communicating performance goals to
colleagues to ensure transparency.
– Including financial and non-financial
objectives in performance and result
assessments.
– Ensuring an appropriate mix of fixed and
variable compensation to discourage
inappropriate risk-taking.
Ex-post risk adjustment mechanisms, in the
form of market standard malus and clawback
arrangements, are in place for the Management
Board, who are all identified as material risk
takers, in accordance with Luxembourg’s AIFM
law of 12 July 2013.
In evaluating the components of variable
remuneration, we consider long-term
performance, and current and future risks
associated with it, and the lifetime of the
assets under management.
During the year, the Committee reviewed the
remuneration policy and its implementation,
and concluded that the relevant remuneration
processes and procedures were implemented in
accordance with the policy. Furthermore, the
Management Board remuneration framework summary
Element
Base salary Base salaries effective from 1 May 2022:
Co-CEOs: C$902,839 and €596,035
22
CFO: €381,754
Pension and
benefits
Co-CEOs and CFO: 15 per cent of salary (cash allowance).
The Co-CEOs receive a monthly car allowance.
Annual bonus
(STIP)
Co-CEOs and CFO: performance measures established entitling
beneficiaries to 50 per cent of salary at threshold performance, 75 per
cent of salary at target and 150 per cent at maximum.
One-third of bonus is used to purchase shares to be held for three years.
STIP is based on a balance of strategic, financial, operational, compliance
and ESG, metrics, with robust quantitative and qualitative performance
requirements set for threshold, target, and maximum performance.
Long-Term
Incentive Plan
(LTIP)
Co-CEOs: performance measures established entitling beneficiaries to 50
per cent of salary at threshold performance, 100 per cent of salary at
target and 200 per cent at maximum.
CFO: threshold: 50 per cent of salary, target: 75 per cent of salary,
maximum: 150 per cent of salary.
Performance is measured over three years. For the 2022 LTIP awards, 80
per cent of the award is subject to stretching NAV Total Return targets; 10
per cent is subject to reducing corporate GHG emissions and 10 per cent
subject to progress in the implementation of net zero targets related to
BBGI’s Portfolio Companies.
Shareholding
requirements
All Management Board members are required to build and maintain a
minimum holding of BBGI shares with a value of 200 per cent of salary
23
.
Post-employment shareholding requirements: Management Board
members are required to hold 100 per cent of salary in shares for two
years after leaving BBGI.
Single figure table – Management Board Duncan Ball (Co-CEO) Frank Schramm (Co-CEO) Michael Denny (CFO)
In Sterling 2022 2021 2022 2021 2022 2021
Salary 553,435 495,275 500,097 484,872 320,307 310,555
Benefits 15,594 13,956 14,032 13,605 – –
Annual bonus 843,542 728,093 762,245 712,799 488,210 456,540
Pension 84,354 74,804 76,225 73,233 48,821 46,905
LTIP
(i)
239,942 490,259 240,822 522,452 40,134 95,170
Other – – – – – –
Total fixed 653,384 584,035 590,354 571,709 369,128 357,460
Total variable 1,083,484 1,218,352 1,003,067 1,235,252 528,343 551,710
Total remuneration 1,736,868 1,802,387 1,593,421 1,806,961 897,471 909,170
(i) The 2019 LTIP vests by reference to performance in the three-year period to 31 December 2022. The associated shares will be released to the Management Board members following the
publication of BBGI’s 2022 audited accounts.
22 The Co-CEOs, Duncan Ball and Frank Schramm, are paid in Canadian Dollars and Euro, respectively. The CFO is paid in Euro.
23 This minimum holding is calculated based on the Director’s salary at 1 May 2020 and is fixed for three years.
Remuneration at a glance
86 BBGI Global Infrastructure S.A.
Committee concluded that the remuneration
policy remains consistent with and promotes
sound and effective risk management, and does
not encourage risk-taking, which is inconsistent
with the risk profile of BBGI.
On the previous page, we have set out total
remuneration for each Management Board
member for the year ending 31 December 2022
24
.
Additional disclosures for
the single figure table
Management Board members receive an
annual base salary, payable monthly in arrears.
The Committee reviewed Management Board
salaries from 1 May 2022, considering salary
levels relative to the market and pay increases
for BBGI employees generally. Executive
Directors were awarded an increase of 5.0
per cent, which is below the average increase
awarded to our employees.
Base salary
31 December
2022
31 December
2021
Duncan Ball £551k £501k
Frank Schramm £528k £477k
Michael Denny £338k £305k
Both Mr Denny and Mr Schramm receive salaries
in Euro (€381,754 and €596,035 respectively
from 1 May 2022). Mr Ball receives his salary in
Canadian Dollars (C$902,839 from 1 May 2022).
The figures in the table above are reported in
Sterling, the Group’s reporting currency, and
therefore, on a comparative basis, reflect not
only the base salary increase of 5.0 per cent, but
also the impact of exchange rate movements.
The combined annual base salary received
by the members of the Management Board
during the year ended 31 December 2022
was £1,373,839 (2021: £1,290,702).
Taxable benefits and pension-related
benefits
The Co-CEOs received a car allowance amounting
to a total amount of £29,627 (2021: £27,561) for
2022. The Co-CEOs and the CFO also received an
annual cash payment for pension, retirement, or
similar benefits, equating to 15 per cent of their
annualised base salary as at 31 December 2022.
BBGI has less than 30 employees across six
different countries and individual pension
arrangements across the team vary by location.
In Luxembourg, where most of our colleagues
are located, normal pension contributions
are made up of: 8 per cent of salary from the
employer, 8 per cent of salary from the state
and 8 per cent from the employee.
STIP – annual bonus for year ended
31 December 2022
The following table summarises the STIP
performance metrics and achievements in
respect of the financial year ended 31 December
2022. The maximum STIP opportunity for the
Co-CEOs and the CFO is 150 per cent of base
salary. The Remuneration Committee is
responsible for determining both whether the
relevant financial and non-financial performance
objectives have been satisfied and the level
of award under the STIP for the relevant year.
The Management Board delivered excellent
performance and progress against the targets
set at the start of the year and as a result
achieved the maximum outturn. No payment
under the STIP is made if performance is below
the threshold criteria.
For 2022, awards of 150 per cent of base salary
were achieved by the Co-CEOs and CFO.
One-third of the earned bonus will be settled
in shares, with the net number of shares after
settling the associated tax liability to be held
for a period of three years. The remaining STIP
Assessment and performance criteria and weighting
Performance measure
Assessment and performance achievement
Weighting
Outturn
(% of maximum)
Threshold performance
(33% vesting equating to
50% of base salary)
Target performance
(50% vesting equating to
75% of base salary)
Maximum performance
(100% vesting equating to
150% of base salary)
Key financial targets
– dividends
A dividend of 7.48pps was declared for 2022, representing dividend growth of
2 per cent.
15% 100%
Key financial targets
– NAV per share
For 2022, distributions from Portfolio Companies exceeded forecasts, with NAV
increasing by 6.7 per cent to £1,069.2 million and NAV per share increasing by
6.6 per cent to 149.9 pence.
Operational financial
targets – ongoing
charge, cash
management and
budgetary controls
– BBGI maintained the lowest comparative ongoing charge in its sector at
0.87 per cent, through efficient and cost-effective internal management.
– Cash management was consistently effective, maintaining appropriate cash
balances, ensuring robust dividend cover while also limiting potential cash drag.
– Expenses were well controlled, with an outturn below budget in line with
maximum performance.
10% 100%
The figures in the table on the previous page are derived from the following:
a. Base salary Salary earned over the year, shown in the reporting currency of the Group (Sterling). Both Mr Denny and Mr Schramm
receive all cash entitlements in Euro. Mr Ball receives all cash entitlements in Canadian Dollars. The Sterling amounts
are converted using the average exchange rate for the respective financial year. For the year ended 31 December 2022,
the relevant average exchange rates were £1 = C$1.6054 and £1 = €1.1729.
b. Benefits The taxable value (gross) of benefits received in the year. These are principally car allowance.
c. Annual bonus
(STIP)
The value of the bonus earned in respect of the financial year: one-third will be paid in shares and held for three years.
Below we describe achievements against the performance measures for the latest financial year.
d. Pension The pension figure represents the cash value of any pension contributions, including any cash payments in lieu of
pension contributions made in the year.
e. Long-term
incentives
The value of LTIP shares vesting, calculated by the estimated number of shares that vest in respect of the 2019 LTIP award
multiplied by the average share price over the last quarter of the year ended 31 December 2022 (£1.58).
Remuneration at a glance continued
24 The detail provided in the table above goes significantly beyond that required to be disclosed under the relevant Luxembourg law.
Annual Report 2022 87
Corporate governanceStrategic report
Financial statements
Performance measure
Assessment and performance achievement
Weighting
Outturn
(% of maximum)
Threshold performance
(33% vesting equating to
50% of base salary)
Target performance
(50% vesting equating to
75% of base salary)
Maximum performance
(100% vesting equating to
150% of base salary)
Disciplined
growth
The Committee assessed the value and quality of projects considered and acquired
during the year, in line with the Company’s strategy to grow and diversify our
portfolio while maintaining strategic discipline. The Committee considered BBGI’s
performance was strong in:
– Investment of approximately £64 million during 2022, including two new projects
in Canada and Germany, which all earn availability-based revenue in return for
providing essential public services.
– All new investments screened for factors, including climate-change resiliency
and alignment with six UN Sustainable Development Goals.
– Appropriate discipline in rejecting certain opportunities, which did not meet BBG’s
strict acquisition criteria, thereby further reinforcing the alignment of interest
between the Company’s management and shareholders.
25% 100%
Portfolio
management
The Committee considered management performance against key metrics including
portfolio controls; organisational effectiveness; and project risk management.
The Committee considered that performance continued to be very strong in the
following key areas:
– High levels of asset availability at 99.9 per cent.
– No material lockups or defaults.
– 100 per cent availability-based revenue stream.
25% 100%
Compliance
and regulation
The Committee considered management’s compliance with AIFMD and other regulatory
requirements during the year. Achievements include the following:
– Strong risk management with high-quality reporting of regulatory risks.
– Effective oversight of key delegates.
– Full and continued compliance with AIFMD.
– Strong regulatory performance relating to FATCA, IFRS, CSSF and UKLA.
– Proactive planning for potential future regulatory challenges.
10% 100%
ESG The Committee considered the significant progress against the Company’s ESG
objectives during the reporting period, including the following achievements:
– Strong ratings from UN PRI on our Transparency Report.
– Completed a climate risk assessment deep dive for all assets. The findings from
which demonstrate that the portfolio is very resilient to climate hazards.
– BBGI’s Net Zero Plan published.
– Full compliance with the Sustainable Finance Disclosure Regulation.
– Voluntary compliance with TCFD disclosure requirements.
15% 100%
Overall bonus out-turn (% of maximum) 100%
Remuneration at a glance continued
awards will be paid in cash after the release
of the annual results for financial year ended
31 December 2022. During the year ended
31 December 2022, the total amount accrued in
respect of the 2022 STIP amounted to £2,093,997
(2021: £1,897,433). Cash payments under the
STIP are made in Canadian Dollars and Euros.
LTIP – awards granted with effect during the
financial year
LTIP awards of 200 per cent of base salary were
granted to the Co-CEOs in February 2023 with
effect from December 2022. The CFO’s maximum
LTIP award is set at 150 per cent of base salary.
All awards granted are within the approved
limits under the current LTIP Plan.
For awards issued in February 2023, 80 per cent
of the performance target will be subject to
stretching Net Asset Value (‘NAV’) Total Return
targets. NAV Total Return reflects both capital
returns generated and dividends returned
to shareholders.
20 per cent of the award will be linked to
key climate-related environmental metrics,
comprising (i) 10 per cent linked to a reduction
in corporate GHG emissions (Scopes 1, 2 & 3)
(against a 2019 baseline) and (ii) 10 per cent
linked to progress in the implementation of net
zero targets related to BBGI Portfolio Companies
(Financed Emissions) by value, in accordance
with published targets related to BBGI’s
commitments as a signatory of the Net Zero
Asset Managers Initiative.
For the Co-CEOs, 25 per cent and 50 per cent
of the maximum award vests for threshold and
target performance respectively. The award
vests in full for maximum performance.
For the CFO, 33 per cent and 50 per cent of the
maximum award vests for threshold and target
performance respectively. The award vests in
full for maximum performance.
A key feature of these awards is that they will
be settled entirely in BBGI shares and not cash.
All LTIP awards settled by shares, fall under the
scope of IFRS 2 ‘Share-Based Payments’ and its
specific reporting requirements. We continue to
engage Ernst & Young to value our LTIP awards
falling under the scope of IFRS 2. Refer to Note
21 of the Consolidated Financial Statements
on page 130 for further details on share-based
payments.
88 BBGI Global Infrastructure S.A.
Performance metric Threshold performance Target performance Maximum performance
NAV growth per share + dividends paid
(expressed as a percentage of opening NAV)
(80% of weighting)
15% 17% 22%
ESG – percentage of corporate GHG
emissions (Scope 1, 2 & 3)
(10% weighting)
GHG emissions as a percentage of 2019 baseline (at 31 December 2025)
73% 70% 67%
ESG – the implementation of net zero
plans across BBGI assets (by value)
(10% weighting)
The percentage of asset by value meeting the criteria for ‘net zero’, ‘aligned’ or ‘aligning’
23% 26% 30%
Single Total Figure Table
– Supervisory Board Base fee
Senior Non-Executive
Director Committee Chair
Other –
additional fees
1
Total
In Sterling 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
June Aitken
2
32,788 – – – – – – – 32,788 –
Howard Myles
3
14,835 45,000 1,648 5,000 1,648 5,000 – 5,000 18,132 60,000
Jutta af Rosenborg 47,500 45,000 – – 5,000 5,000 – 5,000 52,500 55,000
Andrew Sykes
4
32,788 – 3,365 – 3,365 – – – 39,519 –
Chris Waples 47,500 30,000 – – – – – 5,000 47,500 35,000
Sarah Whitney 68,750 65,000 – – – – – 5,000 68,750 70,000
Total 244,162 185,000 5,014 5,000 10,014 10,000 – 20,000 259,190 220,000
1 In addition to the standard fees, each of the sitting Directors was entitled to an additional fee in 2021 in relation to an equity issue.
2 June Aitken was appointed to the Supervisory Board with effect from 29 April 2022.
3 Howard Myles retired from the Supervisory Board with effect from 29 April 2022.
4 Andrew Sykes was appointed to the Supervisory Board with effect from 29 April 2022. Mr Sykes replaced Mr Myles as Senior Non-Executive Director and as Chair of the Remuneration Committee.
In line with previous years, no expense was
accrued for the LTIP awards granted with effect
in December 2022.
During the year ended 31 December 2022,
we settled our 2018 award obligation by issuing
the respective share entitlement to each
Management Board member. In total, we issued
and allotted 346,203 shares by way of settlement,
which equated to the net entitlement after taxes.
As at the date of this Report, there are no
amounts set aside, needing to be set aside or
accrued by the Company to provide pension,
retirement, or similar benefits to any
Management Board members.
Total basic and variable remuneration
for the financial year
The total basic remuneration paid to all
employees (including Management Board) during
2022 was £3.37 million (2021: £3.15 million).
The total amount accrued for cash-settled
variable remuneration at 31 December 2022 was
£1.97 million. The total variable remuneration
paid in cash in 2022 relating to the 2021 financial
year was £1.79 million (2021: £1.75 million).
Restricted share plan
We operate a restricted share plan for most
employees (excluding the Management Board
members) with ordinary BBGI shares awarded,
subject to a three-year vesting period. During
2022, we recorded an expense of £0.2 million
(2021: £0.1 million) for these restricted share
awards. The primary vesting condition is
continued employment at BBGI.
Payments made to former Directors and
payments for loss of office during the year
In 2022, we made no payments for loss of office
and no payments to any former Management
Board member.
Single total figure table – Supervisory Board
The Supervisory Board members are our
Independent Non-Executive Directors and
they are paid a fixed quarterly fee in GBP.
The Remuneration Committee consider the
Non-Executive Directors’ fees annually within
the approved maximum aggregate remuneration
cap, as approved by the Company’s shareholders.
No member of the Supervisory Board is
entitled to vote on his or her own individual
remuneration. Supervisory Board members are
not entitled to any other fees, pension payments,
incentive plans, performance-related payments,
or any other form of compensation; except for
reasonable out-of-pocket expenses and ex gratia
fees, which were considered for an exceptional
or substantial increase in the members’ workload.
Single total figure of remuneration –
Supervisory Board
During the year ended 31 December 2022,
the Supervisory Board received fees totalling
£259,190 (2021: £220,000). The table at the
bottom of this page outlines the fees paid
in Sterling to each of the Supervisory
Board members.
Supervisory Board fees
Details of Supervisory Board fees are below.
Supervisory
Board fees
In Sterling
Fees with
effect from 1
October 2022
Fees from 1
January 2021
Chair 80,000 65,000
Non-Executive
Director 55,000 45,000
Senior
Independent
Director
1
5,000 5,000
Committee Chair
1
5,000 5,000
1 These additional fees are paid to the Senior Independent
Director, Remuneration Committee Chair and the Audit
Committee Chair.
Supervisory Board fees were unchanged since
2017. During the year the members of the
Remuneration Committee, except for Sarah
Whitney who abstained in accordance with
Company’s Remuneration Policy, approved an
increase in the Supervisory Board Chair fee from
£65,000 to £80,000 per annum. Furthermore, the
Supervisory Board Chair, after consultation with
the Co-CEOs, approved an increase in the base
Remuneration at a glance continued
Annual Report 2022 89
Corporate governanceStrategic report
Financial statements
Remuneration at a glance continued
fee of the Non-Executive Directors from £45,000 to £55,000 per annum. All fee increases were with effect from 1 October 2022. Under this revised fee
arrangement ex gratia fees will no longer be paid to the Non-Executive Directors for the additional work associated with equity capital raises.
The fees paid to the Supervisory Board are subject to a shareholder approved maximum aggregate remuneration cap of £400,000.
Share interests and statement of Directors’ shareholdings
Total share interests as at 31 December 2022
The Directors’ interests and those of their connected persons in BBGI’s ordinary shares as at
31 December 2022 are below.
Shares owned by Directors:
Management Board
At
31 December
2022
At
31 December
2021
Duncan Ball 870,983 635,660
Michael Denny 504,004 412,415
Frank Schramm 829,184 600,000
Supervisory Board
At
31 December
2022
At
31 December
2021
June Aitken
1
31,000 –
Howard Myles
2
n/a –
Jutta af Rosenborg – –
Andrew Sykes
1
40,000 –
Chris Waples 17,321 17,321
Sarah Whitney 39,000 39,000
1 Appointed with effect 29 April 2022.
2 Retired from the Supervisory Board with effect 29 April 2022.
Awards under share plans:
Management Board Award
At
31 December
2021
1
Granted in
the year
2
Vested in
the year
Lapsed or
forfeited in
the year
At
31 December
2022
Duncan Ball LTIP 1,866,080 697,693 (281,567) (87,578) 2,194,628
Frank Schramm LTIP 1,891,648 662,556 (300,057) (93,328) 2,160,819
Michael Denny LTIP 658,142 318,270 (54,657) (3,001) 918,774
1 Reflects maximum potential number of shares under all the awards granted, including the 2018 award settled in May 2022.
2 This LTIP award was announced in February 2023 with effect in December 2022.
Shareholding guidelines:
The Committee has adopted a shareholding guideline for the Management Board, which requires a shareholding equivalent to 200 per cent of salary.
The respective Management Board members achievement of this guideline at 31 December 2022 is summarised below:
Management Board
Shares
counting
towards the
guideline at
31 December
2022
Required
shareholding
to achieve
1
Percentage of
shareholding
requirement
achieved
Duncan Ball 870,983 576,190 151.2%
Frank Schramm 829,184 576,190 143.9%
Michael Denny 504,004 375,000 134.4%
1 Two times the revised base salary with effect from 1 May 2020 divided by the Company share price on date revised terms were agreed. The minimum holding requirement is fixed for a period of
three years and will be reset in 2023.
90 BBGI Global Infrastructure S.A.
Post-employment shareholding
requirements: Management Board members
are required to hold shares to the value of 100
per cent of salary for a period of two years after
leaving the Company.
Other information
Advisers
Deloitte LLP is engaged to provide independent
advice to the Committee as required. Deloitte is
a member of the Remuneration Consultants
Group and voluntarily operates under the Code
of Conduct in relation to executive remuneration
consulting in the UK. Deloitte LLP’s fees for
providing remuneration advice to the Committee
were £13.1k for 2022. The Committee regularly
assesses if Deloitte’s appointment remains
appropriate or should be put out to tender,
while considering the Remuneration Consultants’
Group Code of Conduct.
Consideration by the Directors of matters
relating to Directors’ remuneration
Committee responsibilities and composition
BBGI’s Remuneration Committee comprises
five members: Andrew Sykes, Sarah Whitney,
Jutta af Rosenborg, June Aitken and Chris
Waples. Andrew Sykes was appointed as
Remuneration Committee Chair in April 2022,
succeeding Howard Myles, who retired as a
Supervisory Board member at the conclusion
of the 2022 AGM.
The Terms of Reference for the
Remuneration Committee are available
here www.bb-gi.com/investors/policies/
remuneration-committee-terms-of-
reference/
The Committee is responsible for establishing
the general principles of the policy for Directors’
and staff remuneration and for setting the
remuneration for the Management Board
and for the Supervisory Board. In doing so,
the Committee is responsible for ensuring that
the remuneration of the Management supports
the delivery of BBGI’s strategic and operational
goals without encouraging undesirable
risk-taking behaviour. This is achieved through
the Committee overseeing and approving all
aspects of Management Board remuneration,
including development of the remuneration
policy, and monitoring pay arrangements for
the wider workforce.
There were five scheduled Committee meetings
plus further ad-hoc meetings during the year.
During the year, all members of the Committee
were and remain independent, and represent a
broad range of backgrounds and experience to
provide balance and diversity.
The following parties may attend Committee
meetings by invitation during the year in
relation to its consideration of matters relating
to Directors’ remuneration: Co-CEOs, CFO,
Company Secretary and Deloitte LLP. No
Management Board member is involved in
deciding their own remuneration outcome
and no attendee is present when their own
remuneration is being discussed.
Remuneration and AIFM law
In 2013, the European Securities and Markets
Authority (‘ESMA’) published its final guidelines
on sound remuneration policies under the
AIFMD. These guidelines indicate that
remuneration disclosures may be made on
a ‘proportional’ basis and acknowledge that
the application of proportionality may lead
exceptionally to the ‘disapplication’ of some
requirements, provided this is reconcilable
with the risk profile, risk appetite and strategy
of the AIFM and the AIFs it manages.
According to the guidelines, the different
risk profiles, and characteristics among AIFMs
justify a proportionate implementation of the
remuneration principles and, where a company
chooses to disapply requirements, it must be
able to explain the rationale to a competent
authority. No such requirements were
disapplied by the Company during or for 2022.
Employee remuneration
BBGI provides development opportunities for
employees to build their careers and enhance
their skills. We encourage and embrace
employee diversity, equality and inclusion.
We support and invest in individuals to achieve
their potential across the business.
Our remuneration components combine
to ensure an appropriate and balanced
remuneration package that reflects our business
units, the job grade and professional activity,
as well as market practice.
Statement of implementation of Directors’
Remuneration Policy for the financial year
commencing 1 January 2023
Base salary
Management Board salaries were reviewed with
effect from 1 May 2022 and are as follows:
Duncan Ball Co-CEO £551k
Frank Schramm Co-CEO £528k
Michael Denny CFO £338k
The next expected review will be in May 2023.
As previously noted, both Mr Denny and Mr
Schramm receive salaries in Euro (€381,754
and €596,035 respectively from 1 May 2022).
Mr Ball receives his salary in Canadian Dollars
(C$902,839 from 1 May 2022).
Annual bonus (STIP)
The maximum bonus opportunity for 2023
will remain at 150 per cent of salary for the
Co-CEOs and the CFO. The target opportunity
will be 50 per cent of maximum. One-third of
any bonus earned will be used to buy BBGI
shares, to be held for a period of three years.
Payment of the annual bonus is subject to
stretching financial and strategic targets, which
are commercially sensitive and therefore remain
confidential. However, the Committee will
disclose an overview of the bonus performance
measures and out-turns in the 2023 Directors’
Remuneration Report.
LTIP
The Committee intends to recommend the
grant of ongoing annual maximum LTIP awards
of 200 per cent of salary to the Co-CEOs and
150 per cent of salary to the CFO, subject to
stretching NAV Total Return and climate-related
ESG targets.
Approval
This Report was approved by the Board on
29 March 2023 and signed on its behalf by:
Andrew Sykes
Chair of the Remuneration Committee
Remuneration at a glance continued
Annual Report 2022 91
Corporate governanceStrategic report
Financial statements
Viability
Viability Statement
As part of their ongoing process of monitoring
risk, and as required by the AIC Code Principle
N and Provision 36, the Management Board
have considered BBGI’s viability and prospects
for the next five years.
While the average remaining life of the portfolio
of assets is 20.2 years, we continue to consider
that five years is an appropriate and acceptable
length of time to consider the risks of BBGI
continuing in existence. In making this
judgement, the Management Board consider
detailed information provided at Board
meetings, including:
– BBGI’s investment policy and the
investment pipeline.
– The long-term and contractual nature of
BBGI’s investments.
– Investment reviews.
– BBGI’s risk profile and key risk indicators
(including the principal risks and
uncertainties).
– Relevant financial and economic
information and long-term economic
assumptions.
– Scenario testing.
– Annual and semi-annual valuations.
This judgement forms part of BBGI’s overall
annual risk review process. All principal risks
and uncertainties, detailed descriptions of the
areas and factors of the risks, and the processes
by which the Management Board monitors,
reviews, and assesses them, are in the Risk
section of this Annual Report.
We have a robust risk and internal controls
framework to reduce the likelihood and impact
of poor decision making, risk-taking above
agreed levels, and human error.
Our Management Board regularly reviews and
assesses the principal risks we face, including
those that could threaten our business model,
strategy, solvency, liquidity, and future
performance. All risks we identify are assessed
based on:
– Probability or likelihood of occurrence.
– Impact.
– Mitigation measures.
They are then scored and ranked in accordance
with remaining residual risk and monitored on
an ongoing basis by the Management Board.
In addition to the risk management and the
mitigation measures in place, a valuation of
each individual asset is carried out every six
months at each of our financial half-year and
year-ends (30 June and 31 December). Such
valuations are based on long-term discounted
future cash flows; themselves predominantly
based on long-term contracts and other
assumptions. Together, these form a key part of
the overall viability assessment. Once complete,
an independent third-party valuer reviews each
portfolio valuation, which is also subject to
audit and review by our External Auditor, and
internal challenge by our Audit Committee.
A key part of the viability assessment is analysing
how our NAV could be impacted in stressed
macroeconomic scenarios. This provides further
insight into how BBGI could perform if affected
by variables and events outside the control of
our Management Board and our risk
management framework. A more detailed
description of the valuations, assumptions and
stress-testing applied is in the Valuation section
of the Strategic Report.
Following the assessment, the Management
Board has a reasonable expectation that BBGI
will be able to continue in operation and meet
all its liabilities as they fall due, up to March
2028. This assessment is subject to the
following conditions: that the availability of
sufficient capital and market liquidity continues
to allow for the refinancing/repayment of any
short-term recourse RCF obligations that may
be due; and that BBGI’s investments are not
materially affected by changes to government
policy, laws, regulations, or other risks that
we do not consider material or probable.
BBGI is also subject to a biennial shareholder
continuation vote, and the next is scheduled
to take place at the AGM on 28 April 2023.
92 BBGI Global Infrastructure S.A.
Management Board
Responsibilities Statement
The Management Board of the Company is responsible for ensuring
proper preparation of BBGI’s Annual and Interim Reports and financial
statements for each financial period, in accordance with applicable laws
and regulations, which require it to:
– Give a true and fair view of the assets, liabilities, financial position
and profit or loss of the Group as of and at the end of the financial
period, in accordance with International Financial Reporting
Standards as adopted by the European Union and the Listing Rules.
– Give a true and fair view of the development and performance
of the business and the position of the Group.
– Give a true and fair description of the principal risks and
uncertainties the Group may encounter and put in place an
appropriate control framework designed to meet the Group’s
particular needs and the risks to which it is exposed.
In addition, the Management Board is responsible for ensuring that BBGI
complies with applicable company law and other UK or Luxembourg
applicable laws and regulations.
In preparing these financial statements, the Management Board is
responsible for:
– Selecting suitable accounting policies and applying them
consistently.
– Making judgements and estimates that are reasonable and prudent.
– Stating whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements.
– Preparing the financial statements on a going concern basis, unless it
is inappropriate to presume that the Group will continue in business.
– Maintaining proper accounting records that disclose with reasonable
accuracy the Group’s financial position and enable it to ensure that
the financial statements comply with all relevant regulations.
– Safeguarding the assets of the Group and taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Management Board Responsibilities Statement
We confirm that to the best of our knowledge:
– The financial statements have been prepared in accordance with the
applicable set of accounting standards and give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company and Group included in the consolidation.
– The Chair’s Statement and the Report of the Management Board
(‘Strategic Report’) include a fair review of the development and
performance of the business and the position of the Company and
Group included in the consolidation, together with a description of
the principal risks and uncertainties that it faces.
Luxembourg, 29 March 2023
Duncan Ball Frank Schramm Michael Denny
Co-CEO Co-CEO CFO
Annual Report 2022 93
Corporate governanceStrategic report
Financial statements
Audit Report
To the Shareholders of BBGI Global Infrastructure S.A.
Our opinion
In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of BBGI Global
Infrastructure S.A. (the “Company”) and its subsidiaries (the “Group”) as at 31 December 2022, and of its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
What we have audited
The Group’s consolidated financial statements comprise:
• the consolidated statement of financial position as at 31 December 2022;
• the consolidated income statement for the year then ended;
• the consolidated statement of other comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards
on Auditing (ISAs) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our responsibilities under the Law
of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the “Responsibilities of the “Réviseur d’entreprises agréé”
for the audit of the consolidated financial statements” section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International
Independence Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the
CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements. We have fulfilled our other ethical
responsibilities under those ethical requirements.
94 BBGI Global Infrastructure S.A.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements
of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Investments at fair value through
profit or loss
Refer to the consolidated financial statements
(Note 3, summary of significant accounting
policies; Note 9, Investments at FVPL).
Investments at fair value through profit or loss,
GBP 1.1 billion, is the most significant balance on
the consolidated statement of financial position.
It consisted of availability-style social
infrastructure investments through public private
partnership and/or public finance initiatives or
similar procurement models (“investments”)
generating long-term predictable cash flows.
The valuation of the investments is determined
using the discounted cash flow methodology.
It relies on significant unobservable inputs
and requires significant judgments from the
Management Board. A small change in these
assumptions could result in a significant impact
on the fair value of the investments. As a
consequence, there is an inherent risk that
the fair value of these investments may not
be appropriate.
Taking this into account, coupled with the
magnitude of the amounts involved, we consider
this area as a key audit matter.
In assessing the valuation of investments at fair value through profit or loss, we performed the
procedures outlined below:
We assessed that the investments valuation policy was in compliance with the applicable
accounting framework.
We understood and evaluated the design and implementation of key controls, including relevant
information technology systems and controls, in place around the valuation of investments at fair
value through profit or loss.
We tested key controls performed in the valuation process of investments in relation to the
financial data included in the valuation models, the “look back” comparison of the forecast vs
actual cash flows for the previous financial year, as well as other investment model review controls.
The key controls on which we placed reliance for the purposes of our audit were appropriately
designed and implemented and were operating effectively.
In addition, we obtained substantive audit evidence over the valuation of investments at fair value
through profit or loss as follows:
- We inquired into the qualification of the Management Board and its internal valuation team
and concluded that they have sufficient experience and expertise.
- We obtained the overall fair value reconciliation of opening to closing fair value and
corroborated significant fair value movements during the year, thereby assessing the
reasonableness and completeness of the movement in fair value for the year.
- With the support of our own valuation experts, we assessed that the Group’s valuation
methodology was in compliance with the International Private Equity and Venture Capital
Valuation Guidelines and market practice based on our knowledge of the investments held
by the Group and experience of the industry in which the Group operates.
- For a sample of assets selected via risk and value-based targeted sampling, we assessed that
the key macroeconomic assumptions such as inflation, deposit rates, corporate tax rates,
base discount rate setting were appropriate and/or within acceptable ranges based on
market search. We also checked that the selected asset specific discount rates were within
acceptable ranges.
- We obtained and read the valuation report prepared by Management’s external valuation
expert which confirmed that the portfolio value prepared by the Management Board was
appropriate.
- Finally, for the entire portfolio, we obtained external confirmation over the existence and
percentage of ownership of the investments held by the Group.
Audit Report continued
To the Shareholders of BBGI Global Infrastructure S.A.
Annual Report 2022 95
Corporate governanceStrategic report
Financial statements
Other information
The Management Board is responsible for the other information. The other information comprises the information stated in the annual report but does
not include the consolidated financial statements and our audit report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing
so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit,
or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Management Board and those charged with governance for the consolidated financial statements
The Management Board is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs
as adopted by the European Union, and for such internal control as the Management Board determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Management Board is responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management Board
of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the consolidated financial statements
The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with
ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
Management Board;
• conclude on the appropriateness of the Management Board’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our audit report. However, future events or conditions may cause the Group to cease to continue
as a going concern;
• evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
• obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
Audit Report continued
To the Shareholders of BBGI Global Infrastructure S.A.
96 BBGI Global Infrastructure S.A.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the
consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our audit report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on other legal and regulatory requirements
The annual report is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements.
We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders on 28 March 2022 and the duration of our
uninterrupted engagement, including previous renewals and reappointments, is one year.
PricewaterhouseCoopers, Société coopérative
Represented by
Emanuela Sardi
Luxembourg, 29 March 2023
Audit Report continued
To the Shareholders of BBGI Global Infrastructure S.A.
Annual Report 2022 97
Corporate governanceStrategic report
Financial statements
Consolidated Income Statement
For the year ended 31 December 2022
In thousands of Sterling Notes 2022 2021
Income from investments at fair value through profit or loss 9 159,545 75,443
Other operating income 83 734
Operating income 159,628 76,177
Administrative expenses 6 (11,756 ) (10,234 )
Other operating expenses 7 (12,781 ) (2,492 )
Operating expenses (24,537 ) (12,726 )
Results from operating activities 135,091 63,451
Net finance result 8 (2,005 ) (1,974 )
Net loss on balance sheet hedging 18 (10,572 ) (782 )
Profit before tax 122,514 60,695
Tax expense – net 11 (3,472 ) (2,698 )
Profit for the year 119,042 57,997
Earnings per share
Basic earnings per share (pence) 14 16.70 8.47
Diluted earnings per share (pence) 14 16.68 8.46
The accompanying notes form an integral part of the consolidated financial statements.
98 BBGI Global Infrastructure S.A.
Consolidated Statement of Other Comprehensive Income
For the year ended 31 December 2022
In thousands of Sterling Notes 2022 2021
Profit for the year 119,042 57,997
Other comprehensive loss for the year that may be reclassified to profit or loss in subsequent periods
(net of tax)
Exchange difference on translation of foreign operations 13 (450 ) (595 )
Total comprehensive income for the year 118,592 57,402
The accompanying notes form an integral part of the consolidated financial statements.
Annual Report 2022 99
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Financial statements
Consolidated Statement of Financial Position
As at 31 December 2022
In thousands of Sterling Notes 2022 2021
Assets
Property and equipment 123 68
Investments at fair value through profit or loss 9,18 1,102,844 975,225
Deferred tax assets 11 153 -
Other non-current assets 15 275 1,417
Non-current assets 1,103,395 976,710
Trade and other receivables 20 909 1,024
Other current assets 12 994 761
Derivative financial assets 18 2,885 907
Cash and cash equivalents 10 31,157 26,862
Current assets 35,945 29,554
Total assets 1,139,340 1,006,264
Equity
Share capital 13 850,007 847,858
Additional paid-in capital 21 2,502 1,833
Translation and other capital reserves 13 14,371 (8,809 )
Retained earnings 202,298 159,661
Equity attributable to the owners of the Company 1,069,178 1,000,543
Liabilities
Loans and borrowings 15 56,390 -
Derivative financial liabilities 18 5,687 429
Non-current liabilities 62,077 429
Loans and borrowings 15 230 246
Trade and other payables 16 3,242 2,956
Derivative financial liabilities 18 3,006 717
Tax liabilities 11 1,607 1,373
Current liabilities 8,085 5,292
Total liabilities 70,162 5,721
Total equity and liabilities 1,139,340 1,006,264
Net asset value attributable to the owners of the Company 13 1,069,178 1,000,543
Net asset value per ordinary share (pence) 13 149.89 140.50
The accompanying notes form an integral part of the consolidated financial statements.
100 BBGI Global Infrastructure S.A.
1,417
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
In thousands of Sterling Notes
Share
capital
Additional
paid-in
capital
Translation
and other
capital
reserve
Retained
earnings
Total
equity
Balance as at 1 January 2021 770,942 1,517 (378 ) 143,759 915,840
Total comprehensive income for the year ended
31 December 2021
Profit for the year - - - 57,997 57,997
Exchange difference on translation of foreign operation - - (8,431 ) 7,836 (595 )
Total comprehensive income for year - - (8,431 ) 65,833 57,402
Transactions with the owners of the Company,
recognised directly in equity
Issuance of shares from placing of ordinary shares –
net of issue cost 13 73,893 - - -
Scrip dividends 13 1,978 - - (1,978 ) -
Cash dividends 13 - - - (47,953 ) (47,953 )
Equity settlement of share-based compensation 13,21 1,045 (1,045 ) - - -
Share-based payment 21 - 1,361 - - 1,361
Balance as at 31 December 2021 847,858 1,833 (8,809 ) 159,661 1,000,543
In thousands of Sterling Notes
Share
capital
Additional
paid-in
capital
Translation
and other
capital
reserve
Retained
earnings
Total
equity
Balance as at 1 January 2022 847,858 1,833 (8,809 ) 159,661 1,000,543
Total comprehensive income for the year ended
31 December 2022
Profit for the year - - - 119,042 119,042
Exchange difference on translation of foreign operation - - 23,180 (23,630 ) (450 )
Total comprehensive income for year - - 23,180 95,412 118,592
Transactions with the owners of the Company,
recognised directly in equity
Scrip dividends 13 1,092 - - (1,092 ) -
Cash dividends 13 - - - (51,683 ) (51,683 )
Equity settlement of share-based compensation 13,21 1,084 (1,068 ) - - 16
Share-based payment 21 - 1,737 - - 1,737
Share issuance costs 13 (27 ) - - - (27 )
Balance as at 31 December 2022 850,007 2,502 14,371 202,298 1,069,178
The accompanying notes form an integral part of the consolidated financial statements.
Annual Report 2022 101
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Financial statements
In thousands of Sterling Notes 2022 2021
Operating activities
Profit for the year 119,042 57,997
Adjustments for:
Depreciation expense 6 34 23
Net finance results 8 2,005 1,974
Income from investments at fair value through profit or loss 9 (159,545 ) (75,443 )
Loss on derivative financial instruments – net 18 21,899 1,797
Foreign currency exchange loss (gain) – net 7 840 (448 )
Share-based compensation 21 1,737 1,361
Tax expense – net 11 3,472 2,698
Working capital adjustments:
Trade and other receivables (506 ) 691
Other assets (508 ) 1,045
Trade and other payables 92 214
Cash used in operating activities (11,438 ) (8,091 )
Interest paid and other borrowing costs (1,870 ) (1,356 )
Interest received 172 -
Realised gain(loss) on derivative financial instruments – net 18 (3,779 ) 3
Taxes paid (3,391 ) (2,667 )
Net cash flows used in operating activities (20,306 ) (12,111 )
Investing activities
Acquisition of/additional investments at fair value through profit or loss 9 (64,407 ) (79,163 )
Distributions received from investments at fair value through profit or loss
9 96,333 75,055
Realised loss on derivative financial instruments – net 18 (12,550 ) (1,543 )
Acquisition of property and equipment (89 ) (33 )
Net cash flows from/(used in) investing activities 19,287 (5,684 )
Financing activities
Issuance of share capital through placing (net of issuance cost) 13 - 73,893
Dividends paid 13 (51,683 ) (47,953 )
Repayment of loans and borrowings 15 (17,000 ) (67,000 )
Proceeds from the issuance of loans and borrowings 15 72,512 67,000
Debt and equity instrument issue cost (26 ) (1,608 )
Net cash flows from financing activities 3,803 24,332
Net increase in cash and cash equivalents 2,784 6,537
Impact of foreign exchange on cash and cash equivalents 1,511 (207 )
Cash and cash equivalents at 1 January 26,862 20,532
Cash and cash equivalents at 31 December 10 31,157 26,862
The accompanying notes form an integral part of the consolidated financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
102 BBGI Global Infrastructure S.A.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. Corporate information
incorporated in Luxembourg in the form of a public limited liability 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 amended 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 amended 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 company) and to trading on the main market of the London Stock Exchange on 21 December 2011.
As of 1 January 2021, the main market of the London Stock Exchange is not considered as an EU regulated market (as defined by the MiFID II). As a
result, Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004, on the harmonisation of transparency requirements
in relation to information about issuers whose securities are admitted to trading on a regulated market, and amending Directive 2001/34/EC (the
Transparency Directive) as implemented in the Luxembourg law by the act dated 11 January 2008 on transparency requirements for issuers (the
Transparency Act 2008), among other texts, do not apply to the Company.
The Company’s registered office is EBBC, 6E, route de Trèves, L-2633 Senningerberg, Luxembourg and is registered with the Registre du Commerce et
des Sociétes of Luxembourg under the number B 163879.
investment that is under construction (31 December 2021: one).
As at 31 December 2022, the Group employed 25 staff (31 December 2021: 25 staff).
Reporting period
The Company’s reporting period runs from 1 January to 31 December each year. The Company’s consolidated income statement, consolidated
statement of other comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity and consolidated
statement of cash flows include comparative figures as at 31 December 2021.
The amounts presented as ‘non-current’ in the consolidated statement of financial position are those expected to be recovered or settled after more
than one year. The amounts presented as ‘current’ are those expected to be recovered or settled within one year.
These consolidated financial statements were approved by the Management Board on 29 March 2023.
2. Basis of preparation
Statement of compliance
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as
adopted by the European Union (‘EU’).
The Group follows, to the fullest extent possible, the provisions of the Standard of Recommended Practices issued by the Association of Investment
Companies (‘AIC SORP’). If a provision of the AIC SORP is in direct conflict with IFRS as adopted by the EU, the standards of the latter shall prevail.
The consolidated financial statements have been prepared using the going concern principle, under the historical cost basis, except for investments at
fair value through profit or loss (‘Investments at FVPL’) and derivative financial instruments that have been measured at fair value.
Changes in accounting policy
New and amended standards applicable to the Group are as follows:
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a
contract to provide goods or services including both incremental costs and an allocation of costs directly related to contract activities. General and
administrative costs that do not relate directly to a contract are excluded unless they are explicitly chargeable to the counterparty under the contract.
The Group had not identified any existing contract as onerous or loss-making so these amendments had no significant impact on the consolidated
financial statements of the Group.
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially
different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including
fees paid or received by either the borrower or lender on the other’s behalf. There is no similar amendment proposed for IAS 39 Financial Instruments:
Recognition and Measurement.
These amendments had no significant impact on the consolidated financial statements of the Group as there were no modifications of the Group’s
financial instruments during the period.
Annual Report 2022 103
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Financial statements
2. Basis of preparation (continued)
Functional and presentation currency
These consolidated financial statements are presented in Sterling, the Company’s functional currency. All amounts presented in tables throughout the
report have been rounded to the nearest thousand, unless otherwise stated.
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 return over the long-term.
– Target an annual dividend payment with the aim to increase this distribution progressively over the longer-term.
– Target an IRR which is to be achieved over the longer-term via active management and 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 assets that have been developed predominantly under the
PPP/PFI portfolio procurement models. Each of these assets 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 31 December 2022, the Company has 56 investments;
b) it has more than one investor – the Company is listed on the London Stock Exchange with its shares 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 per cent) are held by non-related parties of the Company; and
d) it has ownership interests in the form of equity or similar interests – ownership in the Company is through equity interest.
3. Summary of significant accounting policies
a) Basis of consolidation
Subsidiaries
Subsidiaries are investees controlled by the Company (directly or indirectly). The Company controls an investee if it is exposed to, or has rights to,
variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The Company is an Investment Entity and measures investments in certain subsidiaries at fair value through profit or loss. In determining whether the
Company meets the definition of an Investment Entity, the management considered the Group structure as a whole (see also Note 2).
The Company, which qualifies as an Investment Entity and is required to value certain subsidiaries at fair value, has holds, directly or indirectly,
subsidiaries which provide services that support the Company’s investment activities. These subsidiaries are consolidated on a line-by-line basis
(see Note 19).
The shares in some of these consolidated subsidiaries have been pledged as a security under the Company’s multi-currency Revolving Credit Facility
(‘RCF’) (see note 15 for the RCF terms). As such, the financial covenants of the RCF includes the financial position and net results of the consolidated
subsidiaries. Furthermore, the assets and liabilities of the consolidated subsidiaries used in the preparation of these consolidated financial statements,
closely approximates its fair value due either to: (i) the short-term nature of their assets and liabilities or; (ii) their underlying investments of these
consolidated subsidiaries are already measured at fair value through profit and loss.
Transactions eliminated on consolidation (consolidated subsidiaries)
Intra-group receivables, liabilities, revenue and expenses are eliminated in their entirety when preparing the consolidated financial statements. Gains
that arise from intra-group transactions and that are unrealised from the standpoint of the Group, at the date of the consolidated statement of
financial position, are eliminated in their entirety. Unrealised losses on intra-group transactions are also eliminated in the same way as unrealised gains,
to the extent that the loss does not correspond to an impairment loss.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
104 BBGI Global Infrastructure S.A.
3. Summary of significant accounting policies (continued)
b) Foreign currency transactions
Transactions in foreign currencies are translated into Sterling at the exchange rate at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated into Sterling at the exchange rate on that date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into Sterling at the exchange rate
on the date that the fair value was determined. Foreign currency differences arising on translation are recognised in the consolidated income statement
as a gain or loss on currency translation.
c) Foreign currency translations
The assets and liabilities of foreign operations are translated to Sterling at the exchange rates on the reporting date. The income and expenses of
foreign operations are translated to Sterling at the average exchange rates during the year, if such does not significantly deviate from the exchange
rates at the date on which the transaction is entered into. If significant deviations arise, then the exchange rate at the date of the transaction is used.
Foreign currency differences are recognised in the consolidated statement of other comprehensive income, and presented in ‘translation and other
capital reserve’ in equity, except for exchange differences from intra-Group monetary items which are reflected in the consolidated income statement.
However, as the Company qualifies as an investment entity under IFRS 10 and records its investments in subsidiaries as investment at FVPL, ‘translation
reserve’ movements during the reporting period relating to investments are classified as ‘Income from investments at fair value through profit or loss’
(income from Investments at FVPL). If the foreign operation is a non-wholly owned consolidated subsidiary, then the relevant portion of the
translations difference is allocated to the non-controlling interest.
When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve
related to that foreign operation is reclassified to consolidated income statement as part of the gain or loss on disposal. When the Group disposes of
only part of its interest in a consolidated subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative
amount is reattributed to non-controlling interests.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future,
foreign currency gains and losses arising from such an item are considered to form part of a net investment in the foreign operation and are
recognised in other comprehensive income, and presented in the translation and other capital reserve in equity.
d) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified at initial recognition at either: (i) amortised cost; (ii) fair value through other comprehensive income – debt instruments;
(iii) fair value through other comprehensive income – equity instruments; or (iv) fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business
model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. The Group’s financial assets
classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual
cash flows which represents solely payments of principal and interests.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a
legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
At the date of the consolidated statement of financial position, except for Investments at FVPL and derivative financial assets, all non-derivative
financial assets of the Group have been classified as financial assets at amortised cost.
Investments at FVPL
The Company is an Investment Entity and therefore values its investment in subsidiaries at fair value through profit or loss, except where the subsidiary
provides investment related services or activities. The fair value of an investment in subsidiary includes the fair value of the equity, loans and interest
receivable and any other amounts which are included in the discounted estimated cash flow (which is used to compute the fair value) from such
subsidiary. The Company subsequently measures its investment in certain subsidiaries at fair value in accordance with IFRS 13, with changes in fair value
recognised in consolidated income statement in the period of change. The fair value estimation of investments in subsidiaries is described in Note 18.
Financial assets at amortised cost (debt instruments)
The Group classifies its financial assets at amortised cost only if both of the following criteria are met:
– the asset is held within a business model whose objective is to collect the contractual cash flows, and
– the contractual terms give rise to cash flows that are solely payments of principal and interest.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 105
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Financial statements
3. Summary of significant accounting policies (continued)
d) Financial instruments (continued)
Financial assets at amortised cost are subsequently measured using the effective interest rate (‘EIR’) method and are subject to impairment. Gains and
losses are recognised in the consolidated income statement when the asset is derecognised, modified or impaired.
The Group recognises an allowance for expected credit losses (‘ECLs’) for all debt instruments not held at fair value through profit or loss. ECLs are
based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original EIR.
The Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each reporting date.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
– The rights to receive cash flows from the asset have expired; or
– The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
Non-derivative financial liabilities
The Company classifies non-derivative financial liabilities as liabilities at amortised cost. Such financial liabilities are recognised initially at fair value less
any direct attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the EIR method.
The Company derecognises a financial liability (or part of a financial liability) from the consolidated statement of financial position when, and only
when, it is extinguished or when the obligation specified in the contract or agreement is discharged or cancelled or has expired. The difference
between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is considered in the consolidated income statement.
e) Fair value measurement
The Group accounts for its investments in Portfolio Companies as Investments at FVPL. The valuation is determined using the discounted cash flow
methodology. The cash flows forecasted 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 asset-specific discount rates. The valuation methodology
is unchanged from 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 18.
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.
f) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to a liability. The unwinding of
such discount is recognised as a finance cost.
g) Cash and cash equivalents
Cash and cash equivalents comprise of cash balances and term deposits with maturities of three months or less from the date when the deposits were made
and that are subject to an insignificant risk of change in their fair value, and are used by the Group in the management of its short-term commitments.
h) Share capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of ordinary shares, or which are associated with the establishment of the
Company, that would otherwise have been avoided are recognised as a deduction from equity, net of any tax effects.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
106 BBGI Global Infrastructure S.A.
3. Summary of significant accounting policies (continued)
i) Segment reporting
Segment results that are reported to the Management Board include items directly attributable to segments as well as those that can be allocated on
a reasonable basis.
j) Employee benefits and share-based payment arrangements
Short-term and other long-term employee benefits are expensed as the related services are provided. A liability is recognised for the amount expected
to be paid, and discounted at present value if necessary, if the Group has present legal or constructive obligation to pay this amount as a result of a
past service provided by the employee and the obligation can be estimated reliably.
For share-based payment arrangements, the grant-date fair value of the equity settled share-based payment arrangement is recognised as an expense,
with a corresponding increase in additional paid in capital over the vesting period of the awards. The amount recognised as an expense is adjusted to
reflect related service and non-market performance conditions. The market condition related to the award is measured at the date of grant and there
is no adjustment of expense/income to the consolidated income statement for differences between expected and actual outcomes.
k) Finance income and finance costs
Interest income and expenses are recognised in the consolidated income statement using the EIR method.
The EIR is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial instrument (or,
where appropriate, a shorter period) to the carrying amount of the financial instrument. When calculating the EIR rate, the Group estimates future cash
flows considering all contractual terms of the financial instrument, but not future credit losses.
Interest received or receivable and interest paid or payable are recognised in the consolidated income statement as finance income and finance costs,
respectively.
l) Leases
Under IFRS 16, upon lease commencement, a lessee recognises a right-of-use asset and a lease liability. The right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any
initial direct costs incurred and an estimate of costs to dismantle and remove any improvements made to office premises.
m) Tax
i) Subscription tax
According to the Luxembourg regulations regarding SICAV companies, the Company itself, as an undertaking for collective investment, is exempt from
paying income and/or capital gains taxes in Luxembourg. It is, however, liable to annual subscription tax of 0.05 per cent on its consolidated net asset
value (‘NAV’), payable quarterly and assessed on the last day of each quarter.
ii) Income tax
Income tax on the consolidated subsidiaries’ profits for the year comprises current and deferred tax. Current and deferred tax is recognised in the
consolidated income statement except to the extent that it relates to a business combination, or items recognised directly in equity or in the
consolidated statement of other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous periods.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised for:
– Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss;
– Temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the
temporary difference and it is probable that they will not reverse in the foreseeable future; and
– Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied
by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future
taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised.
n) Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:
– Expected to be realised or intended to be sold or consumed in the normal operating cycle;
– Held primarily for the purpose of trading;
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 107
Corporate governanceStrategic report
Financial statements
3. Summary of significant accounting policies (continued)
n) Current versus non-current classification (continued)
– Expected to be realised within 12 months after the reporting period; or
– Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
– It is expected to be settled in the normal operating cycle;
– It is held primarily for the purpose of trading;
– It is due to be settled within 12 months after the reporting period; or
– There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect
its classification.
The Group classifies all other liabilities as non-current.
4. Significant accounting judgements, estimates and assumptions
The preparation of consolidated financial statements in conformity with IFRS requires the Management Board to make judgements, 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 judgements that would have the most
significant effect on the amounts recognised in the consolidated financial statements.
4.1 Assessment as an investment entity
Refer to Note 2 for the discussion on this topic.
4.2 Fair value determination
Refer to Note 3 e) for the discussion on this topic.
4.3 Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which depends on the
terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the
expected life of the share option or appreciation right, volatility and dividend yield and making assumptions about them.
For the measurement of the fair value of equity-settled transactions for the Long-Term Incentive Plan (‘LTIP’), the Group uses a Monte Carlo simulation
model for the market-based performance condition element of the awards. Non-market based performance conditions are not taken into account in
the valuation of the unit fair value per share of the LTIP. Instead, the number of shares is adjusted at each reporting date to take into account the actual
level of non market-based performance condition.
For the measurement of the fair value of equity-settled transactions for the Deferred Short-Term Incentive Plan (‘Deferred STIP’), the Group recognises
a portion of the annual estimated bonus of the Management Board. The assumptions and models used for estimating fair value for share-based
payment transactions are disclosed in Note 21.
4.4 Going concern basis of accounting
The Group’s portfolio is more than 99 per cent operational and relies on availability-style revenues. At the time of producing these consolidated
financial statements, there was no evidence to suggest of material disruption to the operations of the Group and financial performance is not expected
to be materially affected.
The Management Board has satisfied itself that the Group has adequate resources to continue in operational existence for at least 12 months from the
date of approval of the consolidated financial statements. After due consideration, the Management Board believes it is appropriate to adopt the going
concern basis of accounting in preparing the consolidated financial statements.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
108 BBGI Global Infrastructure S.A.
5. 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 (determined to be the chief operating decision makers or CODM), 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 asset. The Management Board has concluded that the Group’s reportable segments are:
(1) UK; (2) North America; (3) Australia; (4) Continental Europe; and (5) Holding Activities. These reportable segments are the basis on which the Group
reports information to the Management Board.
Segment information is presented below:
For the year ended 31 December 2022
In thousands of Sterling UK
North
America Australia
Continental
Europe
Holding
Activities
Total
Group
Income from investments at FVPL (note 9) 66,910 72,902 10,707 9,026 – 159,545
Administrative expenses – – – – (11,756) (11,756)
Other operating expenses – net – – – – (12,698) (12,698)
Results from operating activities 66,910 72,902 10,707 9,026 (24,454) 135,091
Net finance result – – – – (2,005) (2,005)
Net loss on balance sheet hedging – – – – (10,572) (10,572)
Tax expense – net – – – – (3,472) (3,472)
Profit or loss for the year 66,910 72,902 10,707 9,026 (40,503) 119,042
For the year ended 31 December 2021
In thousands of Sterling UK
North
America Australia
Continental
Europe
Holding
Activities
Total
Group
Income from investments at FVPL (note 9) 4,718 65,061 1,509 4,155 – 75,443
Administration expenses – – – – (10,234) (10,234)
Other operating expenses – net – – – – (1,758) (1,758)
Results from operating activities 4,718 65,061 1,509 4,155 (11,992) 63,451
Net finance result – – – – (1,974) (1,974)
Net loss on balance sheet hedging – – – – (782) (782)
Tax expense – net – – – – (2,698) (2,698)
Profit or loss for the year 4,718 65,061 1,509 4,155 (17,446) 57,997
Statement of financial position per segment information as at 31 December 2022 and 2021 are presented below:
As at 31 December 2022
In thousands of Sterling UK
North
America Australia
Continental
Europe
Holding
Activities
Total
Group
Assets
Property and equipment – – – – 123 123
Investments at FVPL 354,002 504,408 112,414 132,020 – 1,102,844
Other non-current assets – – – – 428 428
Current assets – – – – 35,945 35,945
Total assets 354,002 504,408 112,414 132,020 36,496 1,139,340
Liabilities
Non-current – – – – 62,077 62,077
Current – – – – 8,085 8,085
Total liabilities – – – – 70,162 70,162
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 109
Corporate governanceStrategic report
Financial statements
5. Segment reporting (continued)
As at 31 December 2021
In thousands of Sterling UK
North
America Australia
Continental
Europe
Holding
Activities
Total
Group
Assets
Property and equipment – – – – 68 68
Investments at FVPL 319,324 456,690 110,242 88,969 – 975,225
Other non-current assets – – – – 1,417 1,417
Current assets – – – – 29,554 29,554
Total assets 319,324 456,690 110,242 88,969 31,039 1,006,264
Liabilities
Non-current – – – – 429 429
Current – – – – 5,292 5,292
Total liabilities – – – – 5,721 5,721
The Holding Activities of the Group include the activities which are not specifically related to a particular asset 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.
The Group maintains a well-diversified portfolio with no major single asset exposure.
6. Administrative expenses
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Personnel expenses
Short-term benefits 5,919 5,334
Share-based compensation expenses 1,737 1,361
Supervisory Board fees 260 220
7,916 6,915
Legal and professional fees 2,630 2,496
Office and other expenses 1,176 800
Depreciation expense 34 23
11,756 10,234
Short-term benefits relate to the Management Board and staff, and include basic salaries, Short-Term Incentive Plan (‘STIP’), staff bonus, social security
contributions and other related expenses.
The Group has engaged certain third parties to provide legal, depositary, custodian, audit, tax and other services. The expenses incurred in relation to such
services are treated as legal and professional fees. Depositary and custodian related charges during the year amounted to £383,000 (2021: £459,000).
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
110 BBGI Global Infrastructure S.A.
6. Administrative expenses (continued)
During the year, the Company and its consolidated subsidiaries obtained the following services from the external auditors.
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Group auditor remuneration:
Statutory audit fees 238 177
Audit-related fees 56 65
Non-audit-related fees 5 –
299 242
Audit and audit-related fees from non-Group auditor 65 33
364 275
Audit-related fees includes the fees in respect to the interim review of the Group’s consolidated interim financial statements and other permitted
audit-related services.
7. Other operating expenses
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Loss on derivative financial instruments at FVPL – net (Note 18) 11,326 1,015
Foreign currency exchange loss – net 840 –
Acquisition-related (including unsuccessful bid costs) 615 1,477
12,781 2,492
8. Net finance results
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Finance costs on loans and borrowings (Note 15) (2,177) (1,905)
Other finance costs – (69)
Interest income on bank deposits 172 –
(2,005) (1,974)
9. Investments at FVPL
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Balance at 1 January 975,225 895,674
Acquisitions of/additions in Investments at FVPL 64,407 79,163
Income from investments at FVPL
(i)
159,545 75,443
Distributions received from Investments at FVPL (96,333) (75,055)
Balance at 31 December 1,102,844 975,225
(i) This account reflects the unrealised gain on valuation of investments.
Income from investments at FVPL include the impact of foreign exchange gains or losses for the year ended 31 December 2022 amounted to a net
gain of £34.2 million (year ended 31 December 2021: net loss of £3.2 million). Refer to Note 18 of the consolidated financial statements for further
information on Investments at FVPL.
Distributions from Investments at FVPL are received after either: (a) financial models have been tested for compliance with certain ratios; or (b) financial
models have been submitted to the external lenders of the Portfolio Companies; or (c) approvals of the external lenders on the financial models have
been obtained.
As at 31 December 2022 and 2021, loan and interest receivable amounts from unconsolidated subsidiaries is embedded within Investments at FVPL.
The valuation of Investments at FVPL considers all future cash flows related to each individual underlying asset.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 111
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
9. Investments at FVPL (continued)
Interest income, dividend income, asset-related management fee income and other income, recorded under the accrual’s basis or when the right to
receive the payment is established at the level of the consolidated subsidiaries for the year ended 31 December 2022, amounted to £80,434,000
(31 December 2021: £67,046,000). The associated future cash flows deriving from these items are considered when fair valuing the investments.
During the year, the Group made the following acquisitions:
John Hart Generating Station Replacement Project (Canada): In February 2022, BBGI completed the acquisition of an investment in InPower BC
General Partnership, the entity responsible for delivering the John Hart Generating Station Replacement Project (‘John Hart Generating Station’),
an investment delivered through the existing strategic partnership between the Company and SNC-Lavalin Group Inc. The PPP consists of the design,
construction, financing, maintenance and rehabilitation of a new three-turbine, 132-MW hydroelectric power generation station on the Campbell River,
British Columbia, including a three generating unit underground powerhouse, 2.1 kilometres of water passage tunnels and a water bypass system to
protect downstream fish habitat. The acquisition price was approximately £24 million.
Service commencement was achieved in 2019 and the concession runs until 2033. The asset is classified as availability-style under the investment policy
of the Company. The investment is not subject to demand or power price risk. Availability payments are received from the British Columbia Hydro &
Power Authority (rated AA/Aaa by DBRS Morningstar and Moody’s respectively) a Crown corporation wholly owned by the Government of British
Columbia. The station generates clean and reliable energy for over 80,000 homes.
A7 German Motorway (Germany): In September 2022, BBGI completed the acquisition of a 49 per cent interest in Via Solutions Nord GmbH & Co.
KG, the project company for the A7 Motorway PPP near Hamburg in Germany. The asset is classified as availability-based under the investment policy
of the Company and aligns with BBGI’s ESG principles.
The project consists of the design, construction, financing, operation, maintenance and rehabilitation, of 65 km widening of a section of the A7
Motorway between Neumünster and Hamburg. The project includes 11 interchanges, six parking facilities and four rest areas, various civil engineering
structures and a 550-metre noise enclosure tunnel. Availability payments are received from Federal Republic of Germany, represented by the Free City
of Hamburg and the Federal State of Schleswig-Holstein, rated AAA/Aaa by S&P and Moody’s respectively. Construction completion was achieved in
December 2019 and the concession runs until 2044.
The increased efficiency of the A7 Motorway seeks to minimise any increase in exhaust emissions from the higher traffic load by reducing congestion
and traffic jams and is expected to achieve a consistent traffic flow and uniform driving speeds. Environmental impact assessments (EIA) have been
performed. During the EIA procedure, all potentially affected Natura 2000 sites, habitats and species have been analysed, including habitats and species
placed beyond Natura 2000 sites.
Details of various asset investments in the Group’s portfolio and their respective acquisition dates are as follows:
Country of
Ownership
Year
Company Asset
Incorporation
Interest
Acquired
RW Health Partnership Holdings Pty Limited* Royal Women’s Hospital Australia 100% 2012
Victorian Correctional Infrastructure Partnership Pty Limited Victoria Correctional
Australia 100% 2012
Facilities
BBPI Sentinel Holdings Pty Limited*, BBGI Sentinel Holdings 2 Pty Limited*,
Northern Territory Secure
Australia 100% 2014
Sentinel Financing Holdings Pty Limited*
Facilities
and 2015
Golden Crossing Holdings Inc.* Golden Ears Bridge Canada 100% 2012
and 2013
Trans-Park Highway Holding Inc.* Kicking Horse Canyon Canada 50% 2012
NorthwestConnect Holdings Inc.* Northwest Anthony Henday
Canada 50% 2012
Drive
BBGI KVH Holdings Inc.*, BBGI KVH Holdings 2 Inc.* Kelowna and Vernon
Canada 100% 2013
Hospital
and 2020
WCP Holdings Inc.* Women’s College Hospital Canada 100% 2013
Stoney Trail Group Holdings Inc.* Northeast Stoney Trail Canada 100% 2013
BBGI NCP Holdings Inc.* North Commuter Parkway Canada 50% 2015
SNC-Lavalin Infrastructure Partners LP* William R. Bennet Bridge Canada 80% 2017
Southeast Stoney Trail Canada 40% 2017
Canada Line Canada 26.7% 2017
Restigouche Hospital Centre Canada 80% 2017
McGill University Health
Canada 40% 2018
Centre
John Hart Generating Station Canada 80% 2022
BBGI Stanton Holdings Inc.* Stanton Territorial Hospital Canada 100% 2018
and 2020
112 BBGI Global Infrastructure S.A.
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
9. Investments at FVPL (continued)
Country of
Ownership
Year
Company Asset
Incorporation
Interest
Acquired
BBGI 104 GP Inc. Highway 104 Canada 50% 2020
BBGI Champlain Holding Inc.* Champlain Bridge Canada 25% 2020
Kreishaus Unna Holding GmbH* Unna Administrative Centre Germany 90% 2012
and 2020
PJB Beteiligungs–GmbH* Burg Correctional Facility Germany 90% 2012
Hochtief PPP 1 Holding GmbH & Co.KG* Cologne Schools Germany 50% 2014
Rodenkirchen Schools Germany
Frankfurt Schools Germany
Fürst Wrede Military Base Germany
BBGI PPP Investment S. à r.l. A7 Motorway Luxembourg 49% 2022
Noaber18 Holding B.V.* N18 Motorway Netherlands 52% 2018,
2019 and
2020
De Groene SchakelHolding B.V. * Westland Town Hall Netherlands 100% 2018
and 2019
SAAone Holding B.V* A1/A6 Motor way Netherlands 37.1% 2018
and 2019
Agder OPS Vegselskap AS E18 Motorway Norway 100% 2013
and 2014
Folera TH Holdings Limited Poplar Affordable Housing &
Jersey 100% 2021
Recreational Centres
Kent Education Partnership (Holdings) Limited* Kent Schools UK 50% 2012
Healthcare Providers (Gloucester) Limited* Gloucester Royal Hospital UK 50% 2012
Highway Management M80 Topco Limited* M80 Motorway UK 50% 2012
Bedford Education Partnership Holdings Limited* Bedford Schools UK 100% 2012
Lisburn Education Partnership Holdings (Limited)* Lisburn College UK 100% 2012
Clackmannanshire Schools Education Partnership (Holdings) Limited* Clackmannanshire Schools UK 100% 2012
Primaria (Barking Dagenham & Havering) Limited* Barking Dagenham &
UK 60% 2012
Havering Clinics (LIFT)
East Down Education Partnership (Holdings) Limited* East Down Colleges UK 100% 2012
and 2018
Scottish Borders Education Partnership (Holdings) Limited* Scottish Borders Schools UK 100% 2012
Coventry Education Partnership Holdings Limited* Coventry Schools UK 100% 2012
Fire Support (SSFR) Holdings Limited* Stoke & Staffs Rescue
UK 85% 2012
Service
GB Consortium 1 Limited* North London Estates
UK
60% (both) 2012, 2014
Partnership (LIFT)
and 2018
Liverpool & Sefton Clinics
UK
(LIFT)
Mersey Care Development Company 1 Limited* Mersey Care Hospital UK 79.6% 2013
and 2014
MG Bridge Investments Limited* Mersey Gateway Bridge UK 37.5% 2014
Tor Bank School Education Partnership (Holdings) Limited* Tor Bank School UK 100% 2013
Lagan College Education Partnership (Holdings) Limited* Lagan College UK 100% 2014
Highway Management (City) Holding Limited* M1 Westlink UK 100% 2014
Blue Light Partnership (ASP) Holdings Limited* Avon and Somerset Police
UK 100% 2014,
HQ
2015 and
2016
Northwin Limited North West Regional College UK 100% 2015
Northwin (Intermediate) (Belfast) Limited* Belfast Metropolitan College UK 100% 2016
Fire and Rescue NW Holdings Limited North West Fire and Rescue UK 100% 2021
Annual Report 2022 113
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
9. Investments at FVPL (continued)
Country of
Ownership
Year
Company Asset
Incorporation
Interest
Acquired
Woodland View Holdings Co Limited Ayrshire and Arran Hospital UK 100% 2021
Aberdeen Roads Holdings Limited Aberdeen Western
UK 33.3% 2021
Peripheral Route
BBGI East End Holdings Inc.* Ohio River Bridges US 66.7% 2014
and 2019
* and its subsidiary companies.
10. Cash and cash equivalents
Cash and cash equivalents relate to bank deposits amounting to £31,157,000 (31 December 2021: £26,862,000).
11. Taxes
Year ended
Year ended
31 December
31 December
In thousands of Sterling
2022
2021
Current tax:
Income tax and other taxes 3,705 2,470
Subscription tax 515 459
4,220 2,929
Deferred tax:
Relating to origination and reversal of temporary differences (748) (231)
3,472 2,698
The Company, as an undertaking for collective investment, is exempt from corporate income tax in Luxembourg and instead pays an annual
subscription tax of 0.05 per cent on the value of its total net assets. Moreover, the Company as a SICAV is not subject to taxes on capital gains or
income. All other consolidated subsidiaries are subject to taxation at the applicable rate in their respective jurisdictions.
Reconciliation of tax expense and the accounting profit multiplied by the Company’s effective corporate tax rate for the year is as follows:
Year ended
Year ended
31 December
31 December
In thousands of Sterling
2022
2021
Profit before tax 122,514 60,695
Income tax using the Luxembourg domestic tax rate of 24.94% 30,555 15,137
Subscription tax during the year 515 459
Reconciling difference mainly due to fair valuation of assets, net of gain/loss on derivatives (unrealised) (27,598) (12,898)
Tax charge for the year 3,472 2,698
A significant portion of the profit before tax results from fair valuation of Investments at FVPL. 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 consolidated financial statements. Therefore, the consolidated tax expense and tax assets/
liabilities, if any, do not include those of the Portfolio Companies. The tax liabilities of the Portfolio Companies are embedded in the fair value
calculation of Investments at FVPL.
The Group recognise a deferred tax asset during the year amounting to £153,000 (31 December 2021: £nil). Furthermore, the Group has additional tax
losses carried forward amounting to £18,032,000 (2021: £7,229,000) for which no deferred tax asset was recognised.
Tax liability as at 31 December 2022 amounted to £1,607,000 (31 December 2021: £1,373,000).
114 BBGI Global Infrastructure S.A.
12. Other current assets
In thousands of Sterling
31 December
2022
31 December
2021
Prepaid taxes 537 587
Prepaid expenses 227 11
Others 230 163
994 761
13. Capital and reserves
Share capital
Changes in the Company´s share capital are as follows:
In thousands of Sterling
31 December
2022
31 December
2021
Share capital as at 1 January 847,858 770,942
Issuance of ordinary shares through placing – 75,000
Share capital issued through scrip dividends 1,092 1,978
Equity settlement of share-based compensation (Note 21) 1,084 1,045
Shares issuance costs (27) (1,107)
850,007 847,858
The changes in the number of ordinary shares of no-par value issued by the Company are as follows:
In thousands of shares
31 December
2022
31 December
2021
In issue at beginning of the year 712,126 664,691
Shares issued through placing of ordinary shares – 45,181
Shares issued through scrip dividends 649 1,155
Shares issued as share based compensation – net
(i)
556 1,099
713,331 712,126
(i) Being the net share entitlement after adjustments to settle taxes.
Gross number of ordinary shares entitlement, before the settlement of taxes, as share-based compensation amounted to the following:
In thousands of shares
31 December
2022
31 December
2021
LTIP 636 353
STIP 367 746
1,003 1,099
All of the ordinary shares issued rank pari passu. 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.
The Company meets the minimum share capital requirement as imposed under the applicable Luxembourg regulation.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 115
Corporate governanceStrategic report
Financial statements
13. Capital and reserves (continued)
Translation and other capital 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 consolidated income statement. The translation reserve amounting
to a credit balance of £14,153,000 (31 December 2021: debit balance of £9,028,000) comprises foreign currency differences arising from the translation
of the financial statements of foreign operations. The remaining balance of Other capital reserve relates to statutory amounts required to be allocated
to this reserve account and which may not be distributed.
Dividends
The dividends declared and paid by the Company during the year ended 31 December 2022 are as follows:
In thousands of Sterling except as otherwise stated
31 December
2022
2021 2
nd
interim dividend of 3.665 pence per qualifying ordinary share – for the period
1 July 2021 to 31 December 2021 26,099
2022 1
st
interim dividend of 3.740 pence per qualifying ordinary share – for the period
1 January 2022 to 30 June 2022 26,676
Total dividends declared and paid during the year 52,775
The 31 December 2021 2
nd
interim dividend was paid in April 2022. The value of the scrip election was £964,000, with the remaining amount of
£25,135,000 paid in cash to those investors that did not elect for the scrip.
The 30 June 2022 1
st
interim dividend was paid in October 2022. The value of the scrip election was £127,000 with the remaining amount of
£26,548,000 paid in cash to those investors that elected for a cash dividend.
The dividends declared and paid by the Company during the year ended 31 December 2021 are as follows:
In thousands of Sterling except as otherwise stated
31 December
2021
2020 2
nd
interim dividend of 3.590 pence per qualifying ordinary share – for the period
1 July 2020 to 31 December 2020 23,863
2021 1
st
interim dividend of 3.665 pence per qualifying ordinary share – for the period
1 January 2021 to 30 June 2021 26,068
Total dividends declared and paid during the year 49,931
The 31 December 2020 2
nd
interim dividend was paid in April 2021. The value of the scrip election was £514,000, with the remaining amount of
£23,349,000 paid in cash to those investors that did not elect for the scrip.
The 30 June 2021 1
st
interim dividend was paid in October 2021. The value of the scrip election was £1,464,000 with the remaining amount of
£24,604,000 paid in cash to those investors that elected for a cash dividend.
Net Asset Value (‘NAV’)
The consolidated NAV and NAV per share as at 31 December 2022, 31 December 2021 and 31 December 2020 were as follows:
In thousands of Sterling/pence 2022 2021 2020
NAV attributable to the owners of the Company 1,069,178 1,000,543 915,840
NAV per ordinary share (pence) 149.89 140.50 137.78
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
116 BBGI Global Infrastructure S.A.
14. Earnings per share
a) Basic earnings per share
The basic earnings per share is calculated by dividing the profit for the year by the weighted average number of ordinary shares outstanding.
In thousands of Sterling/in thousands of shares
Year ended
31 December
2022
Year ended
31 December
2021
Profit for the year 119,042 57,997
Weighted average number of ordinary shares in issue 712,917 684,569
Basic earnings per share (in pence) 16.70 8.47
The weighted average number of ordinary shares outstanding for the purpose of calculating the basic earnings per share is computed as follows:
In thousands of shares
Year ended
31 December
2022
Year ended
31 December
2021
Shares outstanding as at 1 January 712,126 664,691
Effect of shares issued on placing of ordinary shares – 18,825
Effect of scrip dividends issued 443 366
Shares issued as share-based compensation 348 687
Weighted average – outstanding shares 712,917 684,569
b) Diluted earnings per share
The diluted earnings per share is calculated by dividing the profit for the year by the weighted average number of ordinary shares outstanding, after
adjusting for the effects of all potential dilutive ordinary shares. There were no items of the consolidated income statement accounts which have a
dilutive effect on the profit for the year.
The weighted average number of potential diluted ordinary shares for the purpose of calculating the diluted earnings per share is computed as follows:
In thousands of shares
Year ended
31 December
2022
Year ended
31 December
2021
Weighted average number of ordinary shares for basic earnings per share 712,917 684,569
Effect of potential dilution from share-based payment 852 985
Weighted average – outstanding shares 713,769 685,554
The price of the Company’s shares for the purpose of calculating the potential dilutive effect of award letters (see Note 21) was based on the average
market price for the year ended 2022 and 2021, during which period the awards were outstanding.
15. Loans and borrowings
In 2021, the Group secured an amendment and restatement to the RCF with ING Bank, KFW IPEX Bank, DZ Bank, Frankfurt Am Main and SMBC Bank EU
AG for a total commitment of £230 million. The tenor of the RCF is five years (maturing in May 2026). The borrowing margin is 165 bps over the
reference bank rate. Under the RCF, the Group retains the possibility to consider larger transactions by virtue of having structured a further £70 million
incremental accordion tranche, for which no commitment fees will be paid.
Outstanding borrowings under the RCF as at 31 December 2022 amounted to £57.5 million (31 December 2021: nil). As at 31 December 2022, the
Group has utilised £1.3 million (31 December 2021: £1.2 million) of the £230 million RCF, which was being used to cover letters of credit.
The interest and other related fees payables under the RCF as at 31 December 2022 amounted to £230,000 (31 December 2021: £246,000).
The RCF unamortised debt issuance cost amounted to £1,094,000 as at 31 December 2022 (2021: £1,417,000). The unamortised debt issuance cost is
presented as part of ‘Loans and borrowings’ in the Consolidated Statement of Financial Position (2021: as part of ‘Other non-current assets’).
The total finance cost incurred under the RCF for the year ended 31 December 2022 amounted to £2,171,000 (31 December 2021: £1,927,000) which
includes amortisation of debt issuance costs of £549,000 (31 December 2021: £549,000).
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 117
Corporate governanceStrategic report
Financial statements
15. Loans and borrowings (continued)
Changes in liabilities arising from financing activities
In thousands of Sterling
1 January
2022 Proceeds Repayment
Foreign
exchange Others
31 December
2022
Loans and borrowings_non-current – 72,512 (17,000) 1,972 (1,094) 56,390
In thousands of Sterling
1 January
2021 Proceeds Repayment
Foreign
exchange Others
31 December
2021
Loans and borrowings_non-current – 67,000 (67,000) – – –
Pledges and collaterals
As of 31 December 2022, and 31 December 2021, the Group has provided a pledge over shares issued by consolidated subsidiaries, pledge over
receivables between consolidated subsidiaries and a pledge over the bank accounts of the consolidated subsidiaries.
Based on the provisions of the RCF, where there is a continuing event of default, the lender, among other things, will have the right to cancel all
commitments and declare all or part of utilisations to be due and payable, including all related outstanding amounts, and exercise or direct the security
agent to exercise any or all of its rights, remedies, powers or discretions under the RCF.
The Group operated comfortably within covenant limits of the RCF during the year.
16. Trade and other payables
Trade and other payables are non-interest bearing and are usually settled within six months.
17. Financial risk review and management
The Group has exposure to the following risks from financial instruments:
– Credit risk
– Liquidity risk
– Market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and
managing risk and the Group’s management of capital. This note also presents the result of the review performed by management on the above-
mentioned risk areas.
Risk management framework
The Management Board has overall responsibility for the establishment and control of the Group’s risk management framework.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the
Group, resulting in:
1) impairment or reduction in the amounts recoverable from receivables and other current and non-current assets; and
2) non-recoverability, in part or in whole, of cash and cash equivalents deposited with banks.
Exposures to credit risks
The Group is exposed to credit risks on the following items in the consolidated statement of financial position:
In thousands of Sterling
31 December
2022
31 December
2021
Derivative financial assets 2,885 907
Trade and other receivables 909 1,024
Cash and cash equivalents 31,157 26,862
34,951 28,793
The maximum exposure to credit risk on receivables that are neither overdue nor impaired as of 31 December 2022, amounts to £909,000 (2021:
£1,024,000).
As of 31 December 2022, the Group is also exposed to credit risk on the loan receivable, interest and other receivable components of Investments at
FVPL (loans provided to Portfolio Companies) totalling to £282,378,000 (2021: £262,822,000).
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
118 BBGI Global Infrastructure S.A.
17. Financial risk review and management (continued)
Cash and cash equivalents and foreign currency forwards
The cash and cash equivalents and foreign currency forward contracts (recorded either as ‘derivative financial assets’ or ‘derivative financial liabilities’)
are maintained with reputable banks with ratings that are acceptable based on the established internal policy of the Group. Based on the assessment of
the Management Board, there are no significant credit risks related to the cash and cash equivalents and foreign currency forward contracts
maintained. The main counterparty banks of the Group have S&P/Moody’s credit rating of A+/A1 and AA-/AA1.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset.
The Group’s policy over liquidity risk is that it will seek to have sufficient liquidity to meet its liabilities and obligations when they fall due.
The Group manages liquidity risk by maintaining adequate cash and cash equivalents and access to borrowing facilities to finance day-to-day
operations and medium to long-term capital needs. The Group also regularly monitors the forecast and actual cash requirements and matches the
maturity profiles of the Group’s financial assets and financial liabilities.
The following are the undiscounted contractual maturities of the financial liabilities of the Group, including estimated interest payments:
Contractual cash flows
31 December 2022
In thousands of Sterling
Carrying
amount Total
Within
1 year
1-5
years
Loans and borrowings (Note 15) 56,620 65,112 19,907 45,205
Trade and other payables 3,242 3,242 3,242 –
Net derivative liability 5,808 5,808 121 5,687
65,670 74,162 23,270 50,892
Contractual cash flows
31 December 2021
In thousands of Sterling
Carrying
amount Total
Within
1 year
1-5
years
Loans and borrowings (Note 15) 246 5,801 1,326 4,475
Trade and other payables 2,956 2,956 2,956 –
3,202 8,757 4,282 4,475
The Group needs to maintain certain financial covenants under the RCF. Non-compliance with such covenants may trigger an event of default (see
Note 15). At 31 December 2022 and 2021, the Group was not in breach of any of the covenants under the RCF.
The Company has the possibility of raising capital through the issuance of shares in order to finance further acquisitions or to repay debt.
All external financial liabilities of the Group have maturities of less than one year except for loans and borrowings, which have a maturity of more than
one year. The Group has sufficient cash and cash equivalents and sufficient funding sources to pay and/or refinance currently maturing obligations.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s income or
the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the returns.
Currency risk
The Group buys derivative financial instruments, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried
out within certain internal guidelines. The Group, via its hedge counterparty, reports all trades under these hedging instruments, for European Market
Infrastructure Regulations purposes, to an EU branch of the derivative repository.
The Group is exposed to currency risk as a result of its underlying Investments at FVPL and cash and cash equivalents being denominated in currencies
other than Sterling. The currencies in which these items are primarily denominated are Australian dollars (A$), Canadian dollars (C$), Euros (€),
Norwegian kroner (NOK) and US dollars (US$).
The Group actively seeks to manage geographical concentration and mitigate foreign exchange risk by balance sheet hedging through foreign
exchange forward contracts, hedging of forecast portfolio distributions and borrowing in non-Sterling currencies. Furthermore, Euro-denominated
running costs provide a natural hedge against the Euro-denominated portfolio distributions.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 119
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
17. Financial risk review and management (continued)
Currency risk (continued)
In respect of other monetary assets and liabilities denominated in currencies other than Sterling, the Group’s policy is to ensure that its net exposure is
kept at an acceptable level. The Company accepts that risk from foreign exchange exposure is an inherent aspect of holding an international portfolio
of investments. However, the Management Board believes that, in addition to the hedging program in place, this risk is further mitigated by having
exposure to a number of different currencies including the Australian dollar, Canadian dollar, US dollar, Euro and Norwegian krone, all of which can
provide diversification benefits. The Management Board spends considerable time reviewing its hedging strategy and believes it remains both
appropriate and cost effective to continue with its four-year rolling hedge policy.
The summary of the quantitative data about the Group’s exposure to foreign currency risk are as follows:
31 December 2022
In thousands of Sterling A$ C$ € NOK US$
Financial assets measured at fair value
Investments at FVPL 112,414 386,678 106,655 25,365 117,730
Financial assets measured at amortised cost
Cash and cash equivalents 18 10,117 579 3 101
Trade and other receivables 148 467 76 – 201
166 10,584 655 3 302
Financial liabilities measured at amortised cost
Trade and other payables 17 688 877 – 80
31 December 2021
In thousands of Sterling A$ C$ € NOK US$
Financial assets measured at fair value
Investments at FVPL 110,242 347,921 64,199 24,770 108,769
Financial assets measured at amortised cost
Cash and cash equivalents 15 13,615 736 2 160
Trade and other receivables 484 241 1 – 103
499 13,856 737 2 263
Financial liabilities measured at amortised cost
Trade and other payables (10) (1,224) (1,367) – (29)
The significant exchange rates applied during the year ended 31 December 2022 and 31 December 2021 are as follows:
31 December 2022
Average £ Spot rate £
A$ 1 0.562 0.564
C$1 0.623 0.610
€1 0.853 0.885
NOK 1 0.084 0.084
US$ 1 0.811 0.827
31 December 2021
Average £ Spot rate £
A$ 1 0.546 0.537
C$1 0.580 0.583
€1 0.860 0.840
NOK 1 0.085 0.084
US$ 1 0.727 0.740
The sensitivity of the NAV to a 10 per cent positive and adverse movement in foreign exchange rates is disclosed in Note 18 to the consolidated
financial statements. This scenario assumes that all other macroeconomic assumptions remain constant.
120 BBGI Global Infrastructure S.A.
17. Financial risk review and management (continued)
Interest rate risk
Except for the loans and other receivables from Portfolio Companies which are included as part of Investments at FVPL, the Group does not account for
other fixed-rate financial assets and liabilities at fair value through profit or loss. For the years ended 31 December 2022 and 2021, the main variable
interest rate exposure of the Group is on the interest rates applied to the Group’s cash and cash equivalents, including deposit rates used in valuing the
Investments at FVPL and the loans and borrowings of the Group (see Note 15). A change in the deposit rates used in valuing Investments at FVPL
would have an impact on the value of such and a corresponding impact on the Group’s NAV. Refer to Note 18 for a sensitivity analysis of the impact of
a change on deposit rates on the Group’s NAV.
Investment risk
The valuation of Investments at FVPL depends on the ability of the Group to realise cash distributions from Portfolio Companies. The distributions to be
received from the Portfolio Companies are dependent on cash received by a particular Portfolio Company under the service concession agreements.
The service concession agreements are predominantly granted to the Portfolio Companies by a variety of public sector clients including, but not limited
to, central government departments and local, provincial and state government and corporations set up by the public sector.
The Group predominantly makes investments in countries where the Management Board consider that asset structures are reliable, where (to the
extent applicable) public sector counterparties carry what the Management Board consider to be an appropriate credit risk, or alternatively where
insurance or guarantees are available for the sovereign credit risk, where financial markets are relatively mature and where a reliable judicial system
exists to facilitate the enforcement of rights and obligations under the contracts.
The Management Board continuously monitors the ability of a particular Portfolio Company to make distributions to the Group. During the year, there
have been no material concerns raised in relation to current and future distributions to be received from any of the Portfolio Companies.
Capital risk management
The Company’s objective when managing capital is to ensure the Group’s ability to continue as a going concern in order to provide returns to
shareholders and benefits for further stakeholders and to maintain an optimal capital structure. The Company, at a Group level, views the share capital
(see Note 13) and the RCF (see Note 15) as capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to shareholders, return capital to
shareholders, avail itself of additional debt financing, pay down debt or issue new shares.
The Group regularly reviews compliance with Luxembourg regulations regarding restrictions on minimum capital. During the year, the Group complied
with all externally imposed capital requirements and made no changes in its approach to capital management.
Derivative financial assets and liabilities for which hedge accounting is not applied
The Group has entered into foreign currency forwards to fix the foreign exchange rates on certain investment distributions that are expected to be
received (‘cash flow hedges’) and on a portion of the non-Sterling and non-Euro denominated portfolio value (‘balance sheet hedges’). The derivative
financial instruments (asset/liability) in the consolidated statement of financial position represent the fair value of foreign currency forwards which were
not designated as hedges. The movements in their fair value are directly charged/credited in the consolidated income statement within other operating
expenses and net gain(loss) on balance sheet hedging.
Derivative financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial position as the Group has a
legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis. Cash flows from the settlement of cash
flow hedges and balance sheet hedges are presented as part of the net cash flows in operating and investing activities, respectively.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 121
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
18. Fair value measurements and sensitivity analysis
The fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated statement of financial position are
presented below. This does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying
amount is a reasonable approximation of fair value (i.e. cash and cash equivalents; trade and other receivables; trade payables, accruals and other
payables, loans and borrowings).
The table below analyses financial instruments carried at fair value, by valuation method.
31 December 2022
In thousands of Sterling
Fair value
Level 1 Level 2 Level 3 Total
Financial assets measured at fair value
Investments at FVPL – – 1,102,844 1,102,844
Derivative financial assets – 2,885 – 2,885
Financial liabilities measured at fair value
Derivative financial liabilities – (8,693) – (8,693)
31 December 2021
In thousands of Sterling
Fair value
Level 1 Level 2 Level 3 Total
Financial assets measured at fair value
Investments at FVPL – – 975,225 975,225
Derivative financial assets – 907 – 907
Financial liabilities measured at fair value
Derivative financial liabilities – (1,146) – (1,146)
Refer to table presented in Note 9 for the reconciliation of the movements in the fair value measurements in level 3 of the fair value hierarchy for
Investments at FVPL. There were no transfers between any levels during the year.
Investments at FVPL
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 portfolio valuation is carried out on a six-monthly basis as at 30 June and 31 December each year. The portfolio valuation is
reviewed by an independent third-party professional.
The valuation is determined using the discounted cash flow methodology. The cash flow forecasts, generated by each of the underlying assets, are
received by the Company or its subsidiaries, adjusted as appropriate to reflect risks and opportunities, and discounted using asset-specific discount
rates. The portfolio valuation methodology remains unchanged from previous reporting periods.
Key Portfolio Company and portfolio cash flow assumptions underlying NAV calculation include:
– Discount rates and the Assumptions, as set out below, continue to be applicable.
– The updated financial models used for the valuation accurately reflect the terms of all agreements relating to the Portfolio Companies and
represent a fair and reasonable estimation of future cash flows accruing to the Portfolio Companies.
– Cash flows from and to the Portfolio Companies are received and made at the times anticipated.
– Non-UK investments are valued in local currency and converted to Sterling at either the period-end spot foreign exchange rates or the
contracted foreign exchange rate.
– Where the operating costs of the Portfolio Companies are contractually fixed, such contracts are performed, and where such costs are not fixed,
they remain within the current forecasts in the valuation models.
– Where lifecycle costs/risks are borne by the Portfolio Companies, they remain in line with the current forecasts in the valuation models.
– Contractual payments to the Portfolio Companies remain on track and contracts with public sector or public sector backed counterparties are
not terminated before their contractual expiry date.
– Any deductions or abatements during the operations period of Portfolio Companies are passed down to subcontractors under contractual
arrangements or are part of the planned (lifecycle) forecasts.
122 BBGI Global Infrastructure S.A.
18. Fair value measurements and sensitivity analysis (continued)
Key Portfolio Company and portfolio cash flow assumptions underlying NAV calculation include: (continued)
– Changes to the concession period for certain investments are realised.
– In cases where the Portfolio Companies have contracts which are in the construction phase, they are either completed on time or any delay costs
are borne by the construction contractors.
– Enacted tax or regulatory changes, or forecast changes with a high probability, on or prior to this reporting period-end with a future effect
materially impacting cash flow forecasts, are reflected in the financial models.
In forming the above assessments, BBGI uses its judgement and works with our Portfolio Company management teams, as well as using due diligence
information from, or working with, suitably qualified third parties such as technical, legal, tax and insurance advisers.
Macroeconomic assumptions
31 December 2022 31 December 2021
Inflation
UK
(i)
RPI/CPIH 13.4% (actual) for 2022; 5.8% for 2023 then 2.75% (RPI)/2.0% (CPIH) 2.75%/2.00%
Canada 6.3% (actual) for 2022; 4.0% for 2023; 2.3% for 2024 then 2.0% 2.00%/2.35%
Australia 8.0% for 2022; 4.75% for 2023 3.25% for 2024 then 2.5% 2.50%
Germany/ Netherlands
(ii)
8.4% for 2022; 6.3% for 2023; 3.4% for 2024 then 2.0% 2.00%
Norway
(ii)
5.9% (actual) for 2022; 4.9% for 2023 then 2.25% 2.25%
US 6.5% (actual) for 2022; 3.4% for 2023 then 2.5% 2.50%
Deposit rates
(p.a.)
UK 2.00% to 2024, then 1.50% 0.00% to 2023, then 1.00%
Canada 3.50% to 2024, then 1.75% 0.50% to 2023, then 1.50%
Australia 3.25% to 2024, then 3.00% 0.25% to 2023, then 2.00%
Germany/ Netherlands 0.50% to 2024, then 1.0% 0.00% to 2023, then 0.50%
Norway 2.00% to 2024, then 2.00% 0.00% to 2023, then 2.00%
US 3.75% to 2024, then 1.50% 0.00% to 2023, then 1.50%
Corporate tax
rates (p.a.)
UK 19.0% until March 2023 then 25% 19.0% to Q1 2023, then 25.0%
Canada
(iii)
23.0%/26.5%/27.0%/29.0% 23.0%/26.5%/27.0%/29.0%
Australia 30.0% 30.0%
Germany
(iv)
15.83% (incl. solidarity charge) 15.8% (incl. solidarity charge)
Netherlands 25.8% 25.8%
Norway 22.0% 22.0%
US 21.0% 21.0%
(i) On 25 November 2020, the UK Government announced the phasing out of RPI after 2030 to be replaced with CPIH; the Company’s UK portfolio indexation factor changes from RPI to CPIH
beginning on 1 January 2031.
(ii) CPI indexation only. Where investments are subject to a basket of indices, a projection for non-CPI indices is used.
(iii) Individual tax rates vary among Canadian Provinces: Alberta; Ontario, Quebec, Northwest Territory; Saskatchewan, British Columbia; New Brunswick.
(iv) Individual local trade tax rates are considered in addition to the tax rate above.
Based on data from transactional activity, benchmark analysis with comparable companies and sectors, discussions with advisers in the relevant
markets, publicly available information gathered over the year and equity risk premium over government bond yields, we have increased the weighted
average discount rate to 6.9 per cent (31 December 2021: 6.6 per cent). This methodology calculates the weighted average based on the value of each
investment in proportion to the total portfolio value i.e. based on the net present value of their respective future cash flows. Furthermore, the Group,
with the advice of external experts, has considered the impact of climate change on the value of the investments at FVPL and has concluded that no
valuation adjustment was required.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 123
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Financial statements
18. Fair value measurements and sensitivity analysis (continued)
Discount rate sensitivity
The weighted average discount rate applied to the Company’s portfolio of investments is the single most important judgement and variable.
The following table shows the sensitivity of the NAV to a change in the discount rate:
+1% to 7.9% in 2022
(i)
-1% to 5.9% in 2022
(i)
Effects in thousands of Sterling Equity Profit or loss Equity Profit or loss
31 December 2022 (87,101) (87,101) 100,702 100,702
31 December 2021 (78,057) (78,057) 89,908 89,908
(i) Based on the weighted average discount rate of 6.9 per cent (31 December 2021: 6.6 per cent).
Inflation has increased in all jurisdictions across BBGI’s geographies and interest rates have risen from historical lows. In the event long-term interest
rates rise substantially further, this is likely to effect on discount rates, and as a result negatively impact portfolio valuation.
Combined sensitivity: inflation, deposit rates and discount rates
It is reasonable to assume that if discount rates increase, then deposit rates and inflation would also be affected. To illustrate the effect of this
combined movement on the Company’s NAV, a scenario was created assuming a one percentage point increase in the weighted average discount
rate to 7.9 per cent, and a one percentage point increase in both deposit and inflation above the macroeconomic assumptions.
+1%
In thousands of Sterling Equity Profit or loss
31 December 2022 (22,796) (22,796)
31 December 2021 (23,127) (23,127)
Inflation sensitivity
The Company’s investments are contractually entitled to receive availability-style revenue streams from public sector clients, which are typically
adjusted every year for inflation. Facilities management subcontractors for accommodation investments and operating and maintenance
subcontractors for transport investments have similar indexation arrangements. The portfolio cash flows are positively linked with inflation (e.g. RPI,
CPI, or a basket of indices).
This inflation-linkage is achieved through contractual indexation mechanics in the various project agreements with the public sector clients at the
portfolio companies and the inflation adjustment updated at least annually.
The table below shows the sensitivity of the NAV to a change in inflation rates compared to the long-term assumptions in the table above:
+1% -1%
Effects in thousands of Sterling Equity Profit or loss Equity Profit or loss
31 December 2022 51,508 51,508 (45,524) (45,524)
31 December 2021 39,499 39,499 (32,622) (32,622)
Short-term inflation sensitivity
It is reasonable to assume that inflation could be elevated for the short-term before diminishing. To illustrate the effect of persistent higher short-term
inflation on the Company’s NAV, three scenarios were created assuming inflation is two percentage points above our assumptions for the next one,
three and five years.
+2%
In thousands of Sterling Equity Profit or loss
Inflation +2% for one year 12,008 12,008
Inflation +2% for three years 52,619 52,619
Inflation +2% for five years 65,624 65,624
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
124 BBGI Global Infrastructure S.A.
18. Fair value measurements and sensitivity analysis (continued)
Foreign exchange sensitivity
As described above, a significant proportion of the Group’s underlying investments are denominated in currencies other than Sterling.
The following table shows the sensitivity of the NAV, by applying a change to foreign exchange rates:
Increase by 10%
(i)
Decrease by 10%
(i)
Effects in thousands of Sterling Equity Profit or loss Equity Profit or loss
31 December 2022 (23,665) (23,665) 31,488 31,488
31 December 2021 (28,372) (28,372) 31,140 31,140
(i) Sensitivity in comparison to the spot foreign exchange rates at 31 December 2022 and considering the contractual and natural hedges in place, derived by applying a 10 per cent increase or
decrease to the Sterling/foreign currency rate.
Deposit rate sensitivity
Portfolio Companies typically have cash deposits that are required to be maintained as part of the senior debt funding requirements (e.g. six-month
debt service reserve accounts and maintenance reserve accounts). The total deposits held by the Portfolio Companies exceed £400 million. The asset
cash flows are positively correlated with the deposit rates.
The table below shows the sensitivity of the NAV to a percentage-point change in long-term deposit rates compared to the long-term assumptions in
the table above:
+1 % -1%
Effects in thousands of Sterling Equity Profit or loss Equity Profit or loss
31 December 2022 20,659 20,659 (20,635) (20,635)
31 December 2021 17,260 17,260 (17,151) (17,151)
Lifecycle costs sensitivity
Lifecycle costs are the cost of planned interventions or replacing material parts of an asset to maintain it over the concession term. They involve larger
items that are not covered by routine maintenance and, for roads, it will include items such as replacement of asphalt, rehabilitation of surfaces, or
replacement of electromechanical equipment. Lifecycle obligations are generally passed down to the facility maintenance provider, with the exception
of transportation investments, where these obligations are typically retained by the Portfolio Company.
Of the Group’s 56 Investments at FVPL, 20 Investments at FVPL retain the lifecycle obligations. The remaining 36 investments have this obligation
passed down to the subcontractor.
The table below shows the sensitivity of the NAV to a change in lifecycle costs:
Increase by 10%
(i)
Decrease by 10%
(i)
Effects in thousands of Sterling Equity Profit or loss Equity Profit or loss
31 December 2022 (25,956) (25,956) 23,459 23,459
31 December 2021 (19,003) (19,003) 19,580 19,580
(i) Sensitivity applied to the 20 investments in the portfolio that retain the lifecycle obligation i.e. the obligation is not passed down to the subcontractor.
Corporate tax rate sensitivity
The profits of each Portfolio Company are subject to corporation tax in the country where the Portfolio Company is located.
The table below shows the sensitivity of the NAV to a change in corporate tax rates compared to the assumptions in the table above:
+1% in 2022 -1% in 2021
In thousands of Sterling Equity Profit or loss Equity Profit or loss
31 December 2022 (11,150) (11,150) 11,011 11,011
31 December 2021 (8,760) (8,760) 8,739 8,739
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 125
Corporate governanceStrategic report
Financial statements
18. Fair value measurements and sensitivity analysis (continued)
Refinancing: senior debt rate sensitivity
Assumptions are used where a refinancing of senior debt financing is required for an investment during the remaining investment concession term.
There is a risk that such assumptions may not be achieved.
The table below shows the sensitivity of the NAV to a +100bps adjustment to the forecasted debt rate.
Margin +1%
In thousands of Sterling Equity Profit or loss
2022 (9,051) (9,051)
2021 (6,321) (6,321)
Derivative financial instruments
The fair value of derivative financial instruments (‘foreign exchange forwards’) is calculated by 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 by the
counterparty bank. The fair value of derivative financial instruments as of 31 December 2022 amounted to a net liability of £5,808,000 (31 December
2021: £239,000 – net liability). The counterparty bank has an S&P/Moody’s long-term credit rating of A+/A1.
During the year, the Group recognised the following net losses on derivatives financial instruments at FVPL:
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Realised 16,330 1,541
Unrealised 5,569 256
21,899 1,797
19. Subsidiaries
During the year ended 31 December 2022, the Company had the following consolidated subsidiaries (‘Holding Companies’ if referred to individually)
which are included in the consolidated financial statements:
Company Country of Incorporation
Effective
Ownership Interest
Year
Acquired/
Established
BBGI Management HoldCo S.à r. l. (‘MHC’) Luxembourg 100% 2011
BBGI Inv, S.à r. l. Luxembourg 100% 2012
BBGI Investments S.C.A. Luxembourg 100% 2012
BBGI Holding Limited UK 100% 2012
BBGI (NI) Limited UK 100% 2013
BBGI (NI) 2 Limited UK 100% 2015
BBGI CanHoldco Inc. Canada 100% 2013
BBGI Guernsey Holding Limited Guernsey 100% 2013
BBGI Ireland Limited Ireland 100% 2017
BBGI US Holding, Inc.
(i)
US 100% 2021
(i) Dissolved during the year
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
126 BBGI Global Infrastructure S.A.
19. Subsidiaries (continued)
The Company’s subsidiaries which are not consolidated, by virtue of the Company being an Investment Entity, and are accounted for as Investments at
FVPL, are as follows:
Company Asset name
Country of
Incorporation
Effective
Ownership
Date
Acquired
Controlled
RW Health Partnership Holdings Pty Limited Royal Women’s Hospital Australia 100% 2012
RWH Health Partnership Pty Limited Royal Women’s Hospital Australia 100% 2012
RWH Finance Pty Limited Royal Women’s Hospital Australia 100% 2012
Victorian Correctional Infrastructure Partnership Pty Limited Victoria Correctional Facilities Australia 100% 2012
BBPI Sentinel Holdings Pty Limited Northern Territory Secure Facilities Australia 100% 2014
BBPI Sentinel Holding Trust Northern Territory Secure Facilities Australia 100% 2014
BBPI Sentinel Pty Limited Northern Territory Secure Facilities Australia 100% 2014
BBPI Member Trust Northern Territory Secure Facilities Australia 100% 2014
Sentinel Partnership Pty Limited Northern Territory Secure Facilities Australia 100% 2014
and 2015
Sentinel UJV Northern Territory Secure Facilities Australia 100% 2014
and 2015
Sentinel Financing Holdings Pty Limited Northern Territory Secure Facilities Australia 100% 2014
and 2015
Sentinel Financing Pty Limited Northern Territory Secure Facilities Australia 100% 2014
and 2015
Sentinel Finance Holding Trust Northern Territory Secure Facilities Australia 100% 2014
and 2015
Sentinel Finance Trust Northern Territory Secure Facilities Australia 100% 2014
and 2015
BBGI Sentinel Holdings 2 Pty Limited Northern Territory Secure Facilities Australia 100% 2015
BBGI Sentinel Holding Trust 2 Northern Territory Secure Facilities Australia 100% 2015
BBGI Sentinel 2 Pty Limited Northern Territory Secure Facilities Australia 100% 2015
BBGI Sentinel Trust 2 Northern Territory Secure Facilities Australia 100% 2015
BBGI Champlain Holding Inc. Champlain Bridge Canada 100% 2020
BBGI SSLG Partner Inc. Champlain Bridge Canada 100% 2020
Golden Crossing Holdings Inc. Golden Ears Bridge Canada 100% 2012
and 2013
Golden Crossing Finance Inc. Golden Ears Bridge Canada 100% 2012
and 2013
Golden Crossing Inc. Golden Ears Bridge Canada 100% 2012
and 2013
Global Infrastructure Limited Partnership Golden Ears Bridge Canada 100% 2012
and 2013
Golden Crossing General Partnership Golden Ears Bridge Canada 100% 2012
and 2013
BBGI KVH Holdings Inc. Kelowna and Vernon Hospitals Canada 100% 2013
BBGI KVH Inc. Kelowna and Vernon Hospitals Canada 100% 2013
BBGI KVH Holdings 2 Inc. Kelowna and Vernon Hospitals Canada 100% 2020
BBGI KVH 2 Inc. Kelowna and Vernon Hospitals Canada 100% 2020
Infusion Health KVH General Partnership Kelowna and Vernon Hospitals Canada 100% 2013
and 2020
BBGI 104 GP Inc. Highway 104 Canada 100% 2020
WCP Holdings Inc. Women’s College Hospital Canada 100% 2013
WCP Inc. Women’s College Hospital Canada 100% 2013
WCP Investments Inc. Women’s College Hospital Canada 100% 2013
Women’s College Partnership Women’s College Hospital Canada 100% 2013
Stoney Trail Group Holdings Inc. Northeast Stoney Trail Canada 100% 2013
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 127
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
19. Subsidiaries (continued)
Date
Country of
Effective
Acquired
Company Asset name
Incorporation
Ownership
Controlled
Stoney Trail LP Inc. Northeast Stoney Trail Canada 100% 2013
Stoney Trail Investments Inc. Northeast Stoney Trail Canada 100% 2013
Stoney Trail Inc. Northeast Stoney Trail Canada 100% 2013
Stoney Trail Global Limited Partnership Northeast Stoney Trail Canada 100% 2013
Stoney Trail General Partnership Northeast Stoney Trail Canada 100% 2013
BBGI NCP Holdings Inc. North Commuter Parkway Canada 100% 2015
BBGI Stanton Holdings Inc. Stanton Territorial Hospital Canada 100% 2018
and 2020
BBGI Stanton Partner 1 Inc. Stanton Territorial Hospital Canada 100% 2018
and 2020
BBGI Stanton Partner 2 Inc. Stanton Territorial Hospital Canada 100% 2020
Boreal Health Partnership Stanton Territorial Hospital Canada 100% 2018
and 2020
PJB Beteiligungs-GmbH Burg Correctional Facility Germany 100% 2012
Projektgesellschaft Justizvollzug Burg GmbH & Co. KG Burg Correctional Facility Germany 90% 2012
PJB Management-GmbH Burg Correctional Facility Germany 100% 2012
Kreishaus Unna Holding GmbH Unna Administrative Center Germany 100% 2012
and 2020
Projekt- und Betriebsgesellschaft Kreishaus Unna mbH Unna Administrative Center Germany 90% 2012
and 2020
BBGI PPP Investment S.à r.l. A7 Motorway Luxembourg 100% 2018
De Groene Schakel Holding B.V. Westland Town Hall Netherlands 100% 2018
and 2019
De Groene Schakel B.V. Westland Town Hall Netherlands 100% 2018
and 2019
Noaber18 Holding B.V. N18 Motorway Netherlands 52% 2018, 2019
and 2020
Noaber18 B.V. N18 Motorway Netherlands 52% 2018, 2019
and 2020
Agder OPS Vegselskap AS E18 Motorway Norway 100% 2013
and 2014
Bedford Education Partnership Holdings Limited Bedford Schools UK 100% 2012
Bedford Education Partnership Limited Bedford Schools UK 100% 2012
Lisburn Education Partnership (Holdings) Limited Lisburn College UK 100% 2012
Lisburn Education Partnership Limited Lisburn College UK 100% 2012
Clackmannanshire Schools Education Partnership (Holdings)
Clackmannanshire Schools UK 100% 2012
Limited
Clackmannanshire Schools Education Partnership Limited Clackmannanshire Schools UK 100% 2012
Primaria (Barking & Havering) Limited Barking, Dagenham & Havering Clinics
UK 100% 2012
(LIFT)
Barking Dagenham Havering Community Ventures Limited Barking, Dagenham & Havering Clinics
UK 60% 2012
(LIFT)
Barking & Havering LIFT (Midco) Limited Barking, Dagenham & Havering Clinics
UK 60% 2012
(LIFT)
Barking & Havering LIFT Company (No.1) Limited Barking, Dagenham & Havering Clinics
UK 60% 2012
(LIFT)
Scottish Borders Education Partnership (Holdings) Limited Scottish Borders Schools UK 100% 2012
Scottish Borders Education Partnership Limited Scottish Borders Schools UK 100% 2012
Coventry Education Partnership Holdings Limited Coventry Schools UK 100% 2012
Coventry Education Partnership Limited Coventry Schools UK 100% 2012
128 BBGI Global Infrastructure S.A.
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
19. Subsidiaries (continued)
Date
Country of
Effective
Acquired
Company Asset name
Incorporation
Ownership
Controlled
Fire Support (SSFR) Holdings Limited Stoke & Staffs Rescue Service UK 85% 2012
Fire Support (SSFR) Limited Stoke & Staffs Rescue Service UK 85% 2012
Highway Management M80 Topco Limited M80 Motorway UK 100% 2012
Tor Bank School Education Partnership (Holdings) Limited Tor Bank School UK 100% 2013
Tor Bank School Education Partnership Limited Tor Bank School UK 100% 2013
Mersey Care Development Company 1 Limited Mersey Care Hospital (LIFT) UK 100% 2013
and 2014
MG Bridge Investments Limited Mersey Gateway Bridge UK 100% 2014
Lagan College Education Partnership (Holdings) Limited Lagan College UK 100% 2014
Lagan College Education Partnership Limited Lagan College UK 100% 2014
Highway Management (City) Holding Limited M1 Westlink UK 100% 2014
GB Consortium 1 Limited North London Estates Partnership
UK 100% 2012, 2014
(LIFT) and Liverpool and Sefton
and 2018
Clinics (LIFT)
East Down Education Partnership (Holdings) Limited East Down Colleges UK 100% 2012
and 2018
East Down Education Partnership Limited East Down Colleges UK 100% 2012
and 2018
Highway Management (City) Finance Plc M1 Westlink UK 100% 2014
Highway Management (City) Limited M1 Westlink UK 100% 2014
Blue Light Partnership (ASP) NewCo Limited
(i)
Avon and Somerset Police HQ UK 100% 2014
and 2016
Blue Light Partnership (ASP) Holdings Limited Avon and Somerset Police HQ UK 100% 2014, 2015
and 2016
Blue Light Partnership (ASP) NewCo 2
(i)
Limited Avon and Somerset Police HQ UK 100% 2015
GT ASP Limited
(i)
Avon and Somerset Police HQ UK 100% 2015
Blue Light Partnership (ASP) Limited Avon and Somerset Police HQ UK 100% 2014, 2015
and 2016
Northwin Limited North West Regional College UK 100% 2015
Northwin (Intermediate) (Belfast) Limited Belfast Metropolitan College UK 100% 2016
Northwin (Belfast) Limited Belfast Metropolitan College UK 100% 2016
Folera TH Holdings Limited Poplar Affordable Housing &
Jersey 100% 2021
Recreational Centres
Folera Limited Poplar Affordable Housing &
Jersey 100% 2021
Recreational Centres
Woodland View Holdings Co Limited Ayrshire and Arran Hospital UK 100% 2021
Woodland View Intermediate Co Limited Ayrshire and Arran Hospital UK 100% 2021
Woodland View Project Co Limited Ayrshire and Arran Hospital UK 99% 2021
Fire and Rescue NW Holdings Limited North West Fire and Rescue UK 100% 2021
Fire and Rescue NW Intermediate Limited North West Fire and Rescue UK 100% 2021
Fire and Rescue NW Limited North West Fire and Rescue UK 100% 2021
BBGI East End Holdings Inc. Ohio River Bridges US 100% 2014
(i) In the process of liquidation.
Annual Report 2022 129
20. 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 total fees of £260,000 for the year ended 31 December 2022 (2021: £220,000).
Directors’ shareholding in the Company
In thousands of shares
31 December
2022
31 December
2021
Management Board
Duncan Ball 871 636
Frank Schramm 829 600
Michael Denny 504 412
Supervisory Board
Andrew Sykes 40 –
Sarah Whitney 39 39
June Aitken 31 –
Christopher Waples 17 17
2,331 1,704
Remuneration of 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 Remuneration Committee.
The total short-term and other long-term benefits recorded in the consolidated income statement for the Management Board, as the key management
personnel, are as follows:
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Short-term benefits 2,944 2,769
Share-based payments 1,536 1,224
4,480 3,993
Trade and other receivables
As at 31 December 2022, trade and other receivables include short-term receivables from non-consolidated subsidiaries amounting to £909,000
(2021: £1,024,000).
21. Share-based compensation
Each of the members of the Management Board received award letters (‘2021 Award’, ‘2020 Award’, and ‘2019 Award’, respectively and referred
collectively as ‘Awards’) under the Group’s long-term incentive plan. These Awards are to be settled by MHC in the Company’s own shares. The Awards
vest by reference to a combination of performance measures linked to the Company’s Total Shareholder Return (‘TSR condition’), increase in the
Company’s Investment Basis NAV per share (‘NAV condition’) and decrease in Corporate Greenhouse Gas Emissions (‘GHG’) over the Return Periods.
2019 Award
For 2019 awards, 50 per cent of the performance target will be subject to stretching NAV Total Return and 50 per cent to the Total Shareholder Return
(‘TSR’) targets, over a three-year period.
2020 Award
For 2020 awards, 100 per cent of the performance target will be subject to stretching NAV Total Return targets over a three-year period.
Performance metric Threshold performance Target performance Maximum performance
NAV Total return
(100% weighting)
Dividend of 7.18p per annum to
2023, and NAV per share maintained
from 31 December 2020 to
31 December 2023.
Dividend growth of 2% per annum
to 2023; and 1% per annum NAV per
share growth to 31 December 2023.
Dividend growth of 2% per annum
to 2023; and 2% per annum NAV per
share growth to 31 December 2023.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
130 BBGI Global Infrastructure S.A.
21. Share-based compensation (continued)
2021 Award
For 2021 awards, 90 per cent of the performance target will be subject to stretching NAV Total Return targets over a three-year period.
10 per cent. of the award will be linked to a reduction in corporate GHG emissions (Scope 1, 2 & 3) (against a 2019 baseline), a key climate-related
ESG metric linked to BBGI’s Net Zero Plan.
Performance metric Threshold performance Target performance Maximum performance
NAV Total return
(90% weighting)
Dividend of 7.33p per annum to
2024, and NAV per share maintained
from 31 December 2021 to
31 December 2024.
Dividend growth of 2% per
annum to 2024; and 1% per
annum NAV per share growth
to 31 December 2024.
Dividend growth of 2% per annum
to 2024; and 2% per annum NAV per
share growth to 31 December 2024.
ESG – % Corporate GHG emissions
(Scope 1, 2 & 3)
(10% weighting)
GHG emissions as % of 2019 baseline (at 31 December 2024)
77% 75% 72%
The fair value of the equity instruments awarded to the Management Board was determined using the following key parameters:
2021 Award 2020 Award 2019 Award
Share price at grant date £1.760 £1.700 £1.675
Maturity 3 years 3 years 3 years
Annual target dividend (2024) £0.0771 – –
Annual target dividend (2023) £0.0755 £0.0733 –
Annual target dividend (2022) £0.0741 – –
Annual target dividend (2020) – – £0.0718
Annual target dividends (2021
to 2022) £0.0733 £0.0733 £0.0733
Volatility n/a n/a 11%
Risk free rate Between 0.38% and 0.68% Between -0.11% and -0.05% Between 0.53% and 0.60%
The expected volatility under the 2019 awards 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 Group has issued restricted share awards to selected employees. The restricted share award entitles the employee to a right to receive shares in the
Company upon meeting a service condition.
The fair value of the awards and amounts recognised as additional paid in capital in the Group’s consolidated statement of financial position are as
follows:
In thousands of Sterling
31 December
2022
31 December
2021
2021 Award 354 –
2020 Award 691 345
2019 Award 445 297
2018 Award – 472
Deferred STIP 708 616
Staff Award Plan 304 103
Amount recognised in additional paid-in capital 2,502 1,833
During the year ended 31 December 2022, the 2018 Award vested, resulting in a gross entitlement before tax, of 636,281. A portion of the 2018 Award
was settled in cash in order to realise sufficient funds to settle resulting tax liabilities arising from the vesting, with only the net number of shares being
issued to each individual. The total accrued amount under the 2018 Award as at 31 December 2021 was £472,000. This amount was transferred from
Additional paid in capital to Share capital at the settlement date plus an adjustment of £28,000 for the non-market based performance condition.
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 131
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
21. Share-based compensation (continued)
The share-based compensation expenses amount recognised as part of ‘administrative expenses’ in the Group’s consolidated income statement are
as follows:
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
2021 Award 354 –
2020 Award 345 345
2019 Award 148 148
2018 Award (28) 157
2018 Award – 25
Deferred STIP 718 607
Staff Award Plan 200 79
Amount recognised in administrative expenses 1,737 1,361
Deferred STIP
One-third of any bonus earned under the STIP is being deferred into shares for three year holding period. The deferral component of the STIP differs
from the Company’s share-based compensation in that there are no further vesting conditions on this earned bonus.
The Deferred STIP is valued at one-third of the anticipated outcome of the annual bonus for the Management Board. The total value of the Deferred
STIP as at 31 December 2022 was £708,000 (31 December 2021: £616,000).
22. Commitments and contingencies
The Group has engaged, in the ordinary course of business, the services of certain entities to provide legal, custodian, audit, tax and other services to
the Company. The expenses incurred in relation to such are treated as legal and professional fees under the administrative expenses grouping in the
consolidated income statement.
As at 31 December 2022, the Group had utilised £1.3 million (31 December 2021: £1.2 million) of the £230 million RCF to cover letters of credit.
Refer to Note 15 for further details on the RCF.
The BBGI Luxembourg office is leased under a cancellable operating lease agreement. The expenses incurred in relation to such lease are recognised
as office and other expenses under administrative expenses (see Note 6).
23. Service Concession Agreements
As at 31 December 2022, the Group has a portfolio of 56 assets (see Note 9), with a weighted average portfolio life of 20.2 years. The Group has a
diverse asset mix from which the service concession receivables are derived. All assets are availability-style. The rights of both the concession provider
and concession operator are stated within the specific asset agreement.
The following table summarises the main information about the Group’s outstanding service concession agreements, which are all classified as
availability-style social infrastructure:
% Equity
Owned
Period of Concession
(Operational Phase)
Asset Name Short Description of Concession Arrangement Phase Start Date End Date
Kicking Horse Canyon 50% Design, build, finance and operate a 26 km stretch of the Trans-
Canada Highway, a vital gateway to British Columbia.
Operational September
2007
October
2030
Golden Ears Bridge 100% Design, build, finance and operate the Golden Ears Bridge
that spans the Fraser River and connects Maple Ridge and
Pitt Meadows to Langley and Surrey, near Vancouver, British
Columbia.
Operational June 2009 June 2041
Northwest Anthony
Henday Drive
50% Partly design, build, finance and operate a major transport
infrastructure asset in Canada, a ring road through Edmonton, capital
of the province of Alberta.
Operational November
2011
October
2041
M80 Motorway 50% Design, build, finance and operate 18 km of dual two/three lane
motorway with associated slip roads and infrastructure from Stepps
in North Lanarkshire to Haggs in Falkirk (Scotland).
Operational Jul y 2011 September
2041
E18 Motorway 100% Design, build, finance, operate and maintain a 38 km dual
carriageway in Norway, including 75 bridges and structures and
75 km of secondary roads, carving through a rugged and beautiful
landscape between Grimstad and Kristiansand.
Operational August 2009 August 2034
132 BBGI Global Infrastructure S.A.
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
23. Service Concession Agreements (continued)
Period of Concession
(Operational Phase)
% Equity
Asset Name Short Description of Concession Arrangement Phase Start Date End Date
Owned
Northeast Stoney Trail 100% Design, build, finance, operate and maintain a 21 km section of
Operational November
October
highway, forming part of a larger ring road developed in Calgary,
2009
2039
Alberta, Canada.
Ohio River Bridges 67% Design, build, finance, operate and maintain East End Bridge asset
Operational December
December
which includes a cable-stay bridge, a tunnel and the connecting
2016
2051
highway with a total length of 8 miles crossing the Ohio river in the
greater Louisville-Southern Indiana region.
Mersey Gateway Bridge 38% Design, build, finance, operate and maintain a new circa 1 km long
Operational October 2017 March 2044
six-lane toll cable-stay bridge (three towers) over the Mersey river to
relieve the congested and ageing Silver Jubilee Bridge and upgrading
works for 9.5 km of existing roads and associated structures.
M1 Westlink 100% Design, build, finance, operate and maintain with significant amount
Operational February
October 2036
of construction work completed in 2009 to upgrade key sections of
2006
approx. 60 km of motorway through Belfast and its vicinity, including
O&M of the complete motorway.
North Commuter
50% Design, build, finance, operate and maintain two new arterial
Operational October 2018 September
Parkway
roadways and a new river crossing located in the north area of
2048
Saskatoon, Saskatchewan, Canada, and design, construct, finance,
operate and maintain a replacement river crossing located in
Saskatoon’s downtown core.
Canada Line 27% Design, build, finance, operate and maintain a 19 km rapid transit line
Operational August 2009 July 2040
connecting the cities of Vancouver and Richmond with Vancouver
International Airport in British Columbia, Canada.
Southeast Stoney Trail 40% Design, build, finance, operate and maintain a 25 km section of
Operational November
September
highway, forming part of a larger ring road developed in Calgary,
2013
2043
Alberta, Canada.
William R. Bennett
80% Design, build, finance, operate and maintain a 1.1 km long floating
Operational May 2008 June 2035
Bridge
bridge in Kelowna, British Columbia, Canada.
A1/A6 Motor way 37% Design, build finance operate and maintain the enlargement of the
Operational July 2017 June 2042
A1/A6 in the Netherlands, which involves the reconstruction and
widening of this 2x5 lanes motorway plus 2 reversible direction lanes.
The asset involves some 90 engineering structures.
N18 Motorway 52% Design, build, finance operate and maintain the extension of the N18
Operational April 2018 April 2043
motorway between Varsseveld and Enschede in the eastern part of
the Netherlands. It comprises of 15 km of existing and 27 km of a new
2x2-lane motorway with more than 30 ecological passages, aiming at
a reduction in traffic in certain villages and safety improvement.
Highway 104 50% Design, build, finance, operate and maintain PPP following
Construction May 2020 August 2043
completion of construction. The project consists of the construction
of a four-lane divided highway corridor beginning at the end of the
existing divided highway east of New Glasgow near Exit 27 at
Sutherlands River and running for a distance of approximately 38 km
to the existing divided highway just west of the Addington Fork
Interchange (Exit 31) at Antigonish.
Champlain Bridge 25% Design, construction, financing, operation, maintenance and
Operational December
October 2049
rehabilitation of a new bridge spanning the St. Lawrence River
2020
between Montreal and Brossard, Quebec.
Victoria Correctional
100% Design, build, finance, operate, and maintain for a period of 25 years,
Operational March 2006
May 2031
Facilities
two new correctional facilities for the State of Victoria, Australia (MCC
(MRC)/
and MRC).
February
2006 (MCC)
Burg Correctional
90% Design, build, finance, operate, and maintain for a concession period
Operational May 2009 April 2034
Facility
of 25 years, a new correctional facility for the state of Saxony-Anhalt,
Germany.
Avon and Somerset
100% Design, build, finance, operate and maintain four new build police and
Operational July 2014/
March 2039
Police HQ
custody facilities in the Avon and Somerset region (UK).
July 2015
Annual Report 2022 133
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
23. Service Concession Agreements (continued)
Period of Concession
(Operational Phase)
% Equity
Asset Name Short Description of Concession Arrangement Phase Start Date End Date
Owned
Northern Territory
100% Design, build, finance, operate and maintain a new correctional
Operational November
June 2044
Secure Facilities
facility, located near Darwin, including three separate centres of the
2014
1,048 bed multi-classification men’s and women’s correctional centre
and 24-bed Complex Behaviour Unit.
Bedford Schools 100% Design, build, finance, operate and maintain the redevelopment of
Operational June 2006 December
two secondary schools in the County of Bedfordshire.
2035
Coventry Schools 100% Design, build, finance, operate and maintain one new school and
Operational In stages
December
community facilities for the Coventry City Council.
from March
2034
2006 to June
2009
Kent Schools 50% Design, build, finance, operate and maintain the redevelopment,
Operational June 2007 September
which included the construction of new build elements for each
2035
academy as well as extensive reconfiguration and refurbishment of
six academies.
Scottish Borders
100% Design, build, finance, operate and maintain three new secondary
Operational July 2009 November
Schools
schools for Scottish Borders Council.
2038
Clackmannanshire
100% Design, build, finance, operate and maintain the redevelopment of
Operational In stages
March 2039
Schools
three secondary schools in Clackmannanshire, Scotland.
from January
to May 2009
East Down Colleges 100% Design, build, finance, operate and maintain the three East Down
Operational June 2009 May 2036
Colleges campuses in Northern Ireland.
Lisburn College 100% Design, build, finance, operate and maintain Lisburn College in
Operational April 2010 May 2036
Northern Ireland.
Tor Bank School 100% Design, build, finance, operate and maintain a new school for pupils
Operational October 2012 October 2037
with special education needs in Northern Ireland.
Lagan College 100% Design, build, finance operate and maintain the redevelopment of
Operational October 2013 June 2038
Lagan College in Northern Ireland.
Cologne Schools 50% Design, build, finance operate and maintain the redevelopment of
Operational April 2005 December
five schools in Cologne.
2029
Rodenkirchen Schools 50% Design, build, finance operate and maintain a school for approx. 1200
Operational November
November
pupils in Cologne.
2007
2034
Frankfurt Schools 50% Design, build, finance operate and maintain the redevelopment of
Operational August 2007 July 2029
four schools in Frankfurt.
North West Regional
100% Design, build, finance, operate and maintain the North West Regional
Operational February
January 2026
College
College educational campus in Northern Ireland.
2001
Belfast Metropolitan
100% Design, build, finance, operate and maintain the Belfast Metropolitan
Operational September
August 2027
College
educational campus in Northern Ireland.
2002
Westland Town Hall 100% Design, build, finance, operate and maintain Westland Town Hall, a
Operational August 2017 August 2042
PPP accommodation asset consisting of a new approximately
11,000m
2
town hall for the Dutch Municipality of Westland.
Gloucester Royal
50% Design, build, finance, operate and maintain a hospital scheme in
Operational April 2005 February
Hospital
Gloucester, UK.
2034
Liverpool and Sefton
60% Design, build, finance, operate and maintain the primary healthcare
Operational In 7 tranches
In 7 tranches
Clinics (LIFT)
facilities in Liverpool and Sefton, UK.
starting April
starting April
2005 and
2033 and
ending
ending
February
February
2013
2043
134 BBGI Global Infrastructure S.A.
Corporate governanceStrategic report
Financial statements
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
23. Service Concession Agreements (continued)
Period of Concession
(Operational Phase)
% Equity
Asset Name Short Description of Concession Arrangement Phase Start Date End Date
Owned
North London Estates
60% Design, build, finance, operate and maintain the primary healthcare
Operational In 4 tranches
In 4 tranches
Partnership (LIFT)
facilities of the Barnet, Enfield and Haringey LIFT programme, UK.
starting
starting
February
October 2030
2006 and
and ending
ending June
June 2043
2013
Barking Dagenham &
60% Design, build, finance, operate and maintain 10 facilities/clinics in East
Operational In 3 tranches
In 3 tranches
Havering (LIFT)
London, UK with asset construction completions between 2005 and
starting
starting
2009.
October
September
2005 and
2030 and
ending
ending
October
September
2008
2033
Royal Women’s
100% Design, build, finance, operate and maintain a new nine-storey Royal
Operational June 2008 June 2033
Hospital
Women’s Hospital in Melbourne.
Mersey Care Hospital
80% Design, build, finance, operate and maintain a new mental health
Operational December
December
(part of Liverpool Sefton
in-patient facility on the former Walton hospital site in Liverpool, UK.
2014
2044
Clinics (LIFT) above)
Kelowna and Vernon
100% Design, build, finance, operate and maintain a new Patient Care
Operational January 2012 August 2042
Hospital
Tower, a new University of British Columbia Okanagan Clinical
Academic Campus and car park at Kelowna General Hospital, and a
new Patient Care Tower at Vernon Jubilee Hospital.
Women’s College
100% Design, build, finance, operate and maintain the new Women’s
Operational May 2013
May 2043
Hospital
College Hospital in Toronto, Ontario, Canada.
(Phase 1),
September
2015
(Phase 2),
March 2016
(final
completion).
Restigouche Hospital
80% Design, build, finance, operate and maintain the new Psychiatric Care
Operational June 2015 October
Centre
Centre in Restigouche, New Brunswick, Canada.
2044
McGill University Health
40% Design, build, finance, operate and maintain the new McGill
Operational October 2014 September
Centre
University Health Centre, Montreal, Canada.
2044
Stanton Territorial
100% Design, build, finance, operate and maintain the new Stanton
Operational December
October
Hospital
Territorial Hospital, Yellowknife, Northwest Territories, Canada.
2018
2048
Stoke & Staffs Rescue
85% Design, build, finance, operate and maintain 10 new community fire
Operational November
October 2036
Service
stations in Stoke-on-Trent and Staffordshire, UK.
2011
Unna Administrative
90% Design, build, finance, operate and maintain the administration
Operational July 2006 July 2031
Centre
building of the Unna District in Rhine-Westphalia, Germany.
Fürst Wrede Military
50% Design, build, finance, operate and maintain the refurbishment and
Operational March 2008 March 2028
Base
new construction of a 32 hectare army barracks in Munich, Germany.
Poplar Affordable
100% Design, construction, financing, operation, maintenance and
Operational October 2015 July 2051
Housing & Recreational
rehabilitation of separate buildings.
Centres
Aberdeen Western
33% Design, construction, financing, operations and maintenance of
Operational May 2018 November
Peripheral Route
12 km of the existing roadway (upgraded) and 47 km of new dual
2047
carriageway including two significant river crossings.
Ayrshire and Arran
100% Design, construction, financing and maintenance of a 206-bed acute
Operational March 2016 March 2041
Hospital
mental health facility and community hospital in Irvine, North
Ayrshire, Scotland.
North West Fire and
100% Design, construction, financing, maintenance and rehabilitation of 16
Operational June 2013 July 2038
Rescue
new community fire stations in the North West of England.
Annual Report 2022 135
Notes to the Consolidated Financial Statements continued
For the year ended 31 December 2022
23. Service Concession Agreements (continued)
Period of Concession
(Operational Phase)
% Equity
Asset Name Short Description of Concession Arrangement Phase Start Date End Date
Owned
John Hart Generating
80% Design, construction, financing, maintenance and rehabilitation of a
Operational June 2019 October 2033
Station
new three-turbine, 132-MW hydroelectric power generation station
on the Campbell River, British Columbia, including a 3 generating unit
underground powerhouse, 2.1 kilometres of water passage tunnels
and a water bypass system to protect downstream fish habitat.
A7 Motorway 49% Expansions and upgrades to certain critical sections of the A7
Operational December
August 2044
Motorway and consists of the design, construction, financing,
2019
operation, maintenance and rehabilitation of 65 km widening from
four to six lanes of a section of the A7 Motorway between
Bordesholm and Hamburg. The project includes 11 interchanges, six
parking facilities, four rest areas, 79 civil engineering structures,
c.100,000 m
2
noise barriers and a c.550-metre noise enclosure tunnel.
24. Standards issued but not yet effective
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2023 and earlier application
is permitted; however, the Group has not early adopted any of the forthcoming new or amended standards in preparing these financial statements.
The Group intends to adopt these new and amended standards, if applicable, when they become effective. The adoption of the below news standards
are not expected to have a significant impact on the Group’s financial statements.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose
their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the
concept of materiality in making decisions about accounting policy disclosures.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
The amendments specify the requirements for classifying liabilities as current or non-current and clarify:
– What is meant by a right to defer settlement
– That a right to defer must exist at the end of the reporting period
– That classification is unaffected by the likelihood that an entity will exercise its deferral right
– That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively.
Definition of Accounting Estimates – Amendments to IAS 8
The amendments introduce a definition of ‘accounting estimates’ and clarify the distinction between changes in accounting estimates and changes in
accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.
25. Events after the end of the reporting period
Dividend declaration
In February 2023, the Company declared a 2
nd
interim dividend of 3.74 pence per share with scrip alternative for qualifying shareholders for the period
1 July – 31 December 2022. The dividend is expected to be paid in April 2023.
Grant of Share Awards under LTIP
In February 2023, each of the members of the Management Board received an award letter (‘2022 Award’). The maximum number of shares that could
be issued under this award was determined by using the average closing price of the Company’s share price during December 2022, as ascertained
from the Official List, which was 156.46 pence per share. Subject to the achievement of the performance conditions, the awards will vest after
31 December 2025.
136 BBGI Global Infrastructure S.A.
Audit Report
To the Shareholders of BBGI Global Infrastructure S.A.
Our opinion
In our opinion, the accompanying financial statements give a true and fair view of the financial position of BBGI Global Infrastructure S.A.
(the “Company”) as at 31 December 2022, and of its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
What we have audited
The Company’s financial statements comprise:
• the statement of financial position as at 31 December 2022;
• the statement of comprehensive income for the year then ended;
• the statement of changes in equity for the year then ended;
• the statement of cash flows for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards on
Auditing (ISAs) as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier” (CSSF). Our responsibilities under the Law of
23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the “Responsibilities of the “Réviseur d’entreprises agréé”
for the audit of the financial statements” section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants, including International
Independence Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF
together with the ethical requirements that are relevant to our audit of the financial statements. We have fulfilled our other ethical responsibilities
under those ethical requirements.
Annual Report 2022 137
Corporate governanceStrategic report
Financial statements
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current
period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Impairment of Investment in subsidiary
and loans receivable from subsidiary:
Refer to the financial statements (Note 3.e),
impairment testing for investments and loans and
receivables from subsidiary; Note 13 and
Note 14).
Investment in subsidiary and loan receivables
from subsidiary are measured at cost less
accumulated impairment losses. Their carrying
amounts are GBP 243 million and GBP 354 million,
respectively, and they are the most significant
balances on the statement of financial position.
The impairment assessment of the investment
in the subsidiary and the determination of
expected credit loss (ECL) for loans receivable
from subsidiary is linked to the fair value of the
underlying investments which are mainly made
of social infrastructure investments through
public private partnership and/or public finance
initiatives or similar procurement models
(“investments”) generating long-term predictable
cash flows.
The valuation of the investments is determined
using the discounted cash flow methodology.
It relies on significant unobservable inputs and
requires significant judgments from the
Management Board. A small change in these
assumptions could result in a significant impact
on the fair value of the investments. As a
consequence, there is an inherent risk that the fair
value of these investments may not be
appropriate.
Taking this into account, coupled with the
magnitude of the amounts involved, we consider
this area as a key audit matter.
In assessing the impairment of investment in subsidiary and loans receivable from subsidiary,
we performed the procedures outlined below.
We assessed that the accounting policy in relation with the impairment of the investment in
subsidiary and loans receivable from subsidiary was in compliance with the applicable accounting
framework.
We understood and evaluated the design and implementation of key controls in place around the
impairment of the investment in subsidiary and loans receivable from subsidiary.
We obtained the management’s impairment assessment of the investment in subsidiary and loans
receivable from subsidiary and performed an overall assessment to challenge the criteria and
inputs used in the impairment analysis, as well as the assumptions and models used to calculate
the ECL;
In addition, considering that the impairment of the investment in subsidiary and loans receivable
from subsidiary is linked to the fair value of the underlying investments, we obtained substantive
audit evidence over the valuation of the underlying investments as follows:
- We tested key controls performed in the valuation process of investments in relation to the
financial data included in the valuation models, the “look back” comparison of the forecast vs
actual cash flows for the previous financial year, as well as other investment model review
controls.
- We inquired into the qualification of Management Board and its internal valuation team and
concluded that they have sufficient experience and expertise.
- We obtained the overall fair value reconciliation of opening to closing fair value of the
underlying investments and corroborated significant fair value movements during the year,
thereby assessing the reasonableness and completeness of the movement for the year.
- With the support of our own valuation experts, we assessed that the Group’s valuation
methodology was in compliance with the International Private Equity and Venture Capital
Valuation Guidelines and market practice based on our knowledge of the investments held
by the Group and experience of the industry in which the Group operates.
- For a sample of assets selected via risk and value-based targeted sampling of the
investments
by value, we assessed that the key macroeconomic assumptions such as inflation, deposit
rates, corporate tax rates, base discount rate setting were appropriate and/or within
acceptable ranges based on market search. We also checked that the selected asset specific
discount rates were within acceptable ranges.
- We obtained and read the valuation report prepared by Management’s external valuation
experts which confirmed that the portfolio value prepared by the Management Board was
appropriate.
- Finally, for the entire portfolio, we obtained external confirmation over the existence and
percentage of ownership of the investments held by the Group.
Audit Report continued
To the Shareholders of BBGI Global Infrastructure S.A.
138 BBGI Global Infrastructure S.A.
Other information
The Management Board is responsible for the other information. The other information comprises the information stated in the annual report but
does not include the financial statements and our audit report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Management Board and those charged with governance for the financial statements
The Management Board is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs as adopted by the
European Union, and for such internal control as the Management Board determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Management Board is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management Board either
intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Responsibilities of the “Réviseur d’entreprises agréé” for the audit of the financial statements
The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
Management Board;
• conclude on the appropriateness of the Management Board’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our audit report. However, future events or conditions may cause the Company to cease to continue as a going concern;
• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
Audit Report continued
To the Shareholders of BBGI Global Infrastructure S.A.
Annual Report 2022 139
Corporate governanceStrategic report
Financial statements
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence,
and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit matters. We describe these matters in our audit report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
The annual report is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders on 28 March 2022 and the duration of our
uninterrupted engagement, including previous renewals and reappointments, is one year.
PricewaterhouseCoopers, Société coopérative
Represented by
Emanuela Sardi
Luxembourg, 29 March 2023
Audit Report continued
To the Shareholders of BBGI Global Infrastructure S.A.
140 BBGI Global Infrastructure S.A.
Company Statement of Comprehensive Income
For the year ended 31 December 2022
In thousands of Sterling Notes 2022 2021
Administrative expenses 5 (11,617) (9,498)
Other operating expenses 6 (22,748) (12,611)
Other operating income 7 4,883 –
Results from operating activities (29,482) (22,109)
Net finance result 8 21,496 20,118
Loss before tax (7,986) (1,991)
Tax expense 9 (515) (459)
Loss for the year (8,501) (2,450)
Other comprehensive income for the year – –
Total comprehensive loss for the year (8,501) (2,450)
The accompanying notes form an integral part of the Company’s financial statements.
Annual Report 2022 141
Corporate governanceStrategic report
Financial statements
Company Statement of Financial Position
As at 31 December 2022
In thousands of Sterling Notes 2022 2021
Assets
Property and equipment 73 7
Loans receivable from subsidiary 13 243,212 243,638
Investment in subsidiary 14 354,233 350,453
Non-current assets 597,518 594,098
Loans receivable from subsidiary 13 37,663 91,968
Interest and other receivables from subsidiary 13 11,164 8,760
Other current assets 733 325
Cash and cash equivalents 10 18,738 11,311
Current assets 68,298 112,364
Total assets 665,816 706,462
Equity
Share capital 11 852,391 850,355
Retained earnings (222,400) (161,124)
Equity attributable to the owners of the Company 629,991 689,231
Liabilities
Trade and other payables 1,200 1,125
Advances from subsidiary 13 34,496 15,990
Tax liabilities 9 129 116
Current liabilities 35,825 17,231
Total liabilities 35,825 17,231
Total equity and liabilities 665,816 706,462
Net asset value attributable to the owners of the Company 11 629,991 689,231
Net asset value per ordinary share (pence) 11 88.32 96.78
The accompanying notes form an integral part of the Company’s financial statements.
142 BBGI Global Infrastructure S.A.
Company Statement of Changes in Equity
For the year ended 31 December 2022
In thousands of Sterling Notes
Share
Capital
Retained
Earnings
Total
Equity
Balance at 1 January 2021 772,640 (108,743) 663,897
Total comprehensive loss for the year – (2,450) (2,450)
Transactions with the owners of the Company recognised directly in equity
Issuance of shares from placing of ordinary shares net of issue cost 11 73,893 – 73,893
Cash dividends 11 – (47,953) (47,953)
Scrip dividends 11 1,978 (1,978) –
Shares issued on behalf of a subsidiary 11 1,844 – 1,844
Balance at 31 December 2021 850,355 (161,124) 689,231
Total comprehensive loss for the year – (8,501) (8,501)
Transactions with the owners of the Company recognised directly in equity
Cash dividends 11 – (51,683) (51,683)
Scrip dividends 11 1,092 (1,092) –
Shares issued on behalf of a subsidiary 11 971 – 971
Share issuance costs 11 (27) – (27)
Balance at 31 December 2022 852,391 (222,400) 629,991
The accompanying notes form an integral part of the Company’s financial statements.
Annual Report 2022 143
Corporate governanceStrategic report
Financial statements
Company Statement of Cash Flows
For the year ended 31 December 2022
In thousands of Sterling Notes 2022 2021
Operating activities
Loss for the year (8,501) (2,450)
Adjustments for:
Net finance result 8 (21,496) (20,118)
Foreign currency exchange loss (gain) – net 6,7 (4,883) 5,063
Tax expense 9 515 459
Depreciation 3 –
Working capital adjustments:
Advances/other receivables from subsidiary 19,475 30,279
Other current assets (407) (69)
Trade and other payables 53 (119)
Cash from/(used in) operating activities (15,241) 13,045
Interest received 24 –
Taxes paid (502) (445)
Net cash flows from/(used in) operating activities (15,719) 12,600
Investing activities
Loan repayment from subsidiary 59,557 29,449
Loans provided to subsidiary – (57,971)
Investment in subsidiary 14 (3,780) (17,405)
Interest received 19,134 12,925
Acquisition of property and equipment (69) –
Net cash flows from/(used in) investing activities 74,842 (33,002)
Financing activities
Proceeds from the issuance of ordinary shares 11 – 75,000
Equity instruments issue costs 11 (27) (1,107)
Dividends paid 11 (51,683) (47,953)
Net cash flows from/(used in) financing activities (51,710) 25,940
Net increase in cash and cash equivalents 7,413 5,538
Impact of foreign exchange on cash and cash equivalents 14 137
Cash and cash equivalents at 1 January 10 11,311 5,636
Cash and cash equivalents at 31 December 10 18,738 11,311
The accompanying notes form an integral part of the Company’s financial statements.
144 BBGI Global Infrastructure S.A.
Notes to the Company Financial Statements
For the year ended 31 December 2022
1. Corporate information
BBGI Global Infrastructure S.A., (‘BBGI’, or the ‘Company’) is an investment company incorporated in Luxembourg in the form of a public limited liability
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 amended 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 amended 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.
As of 1 January 2021, the main market of the London Stock Exchange is not considered as an EU regulated market (as defined by the MiFID II). As a
result, Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements
in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (the
Transparency Directive) as implemented in the Luxembourg law by the act dated 11 January 2008 on transparency requirements for issuers (the
Transparency Act 2008), among other texts, does not apply to the Company.
The Company’s registered office is EBBC, 6E, route de Treves, L-2633 Senningerberg, Luxembourg and is registered with the Registre du Commerce of
Luxembourg under the number B 163 879.
The Company is a closed-ended investment company that invests, through its subsidiaries, principally in a diversified portfolio of operational Public-
Private Partnership (‘PPP’)/Private Finance Initiative (‘PFI’) infrastructure or similar style assets (‘PPP/PFI portfolio’). At 31 December 2022, the Company
has one indirectly held investment that is under construction (31 December 2021: one).
The Company had no employees as of 31 December 2022 and 2021, respectively.
Reporting period
The Company´s reporting period runs from 1 January to 31 December each year. The Company´s statement of comprehensive income, statement of
financial position, statement of changes in equity and statement of cash flows include comparative figures as at 31 December 2021.
The amounts presented as ‘non-current’ in the Company´s statement of financial position are those expected to be recovered or settled after more
than one year. The amounts presented as ‘current’ are expected to be recovered or settled within one year. These financial statements were approved
by the Management Board on 29 March 2023.
2. Basis of preparation
Statement of compliance
The separate financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as
adopted by the European Union (‘EU’). Please refer to Note 3 d) for the accounting policy with respect to the investment in subsidiary.
The Company also prepares consolidated financial statements in accordance with IFRS as adopted by the EU.
The Company follows, to the fullest extent possible, the provisions of the Standard of Recommended Practices issued by the Association of Investment
Companies (‘AIC SORP’). If the provisions of the AIC SORP are in direct conflict with IFRS as adopted by the EU, the standards of the latter shall prevail.
The separate financial statements have been prepared using the going concern principle under the historical cost basis.
Functional and presentation currency
These financial statements are presented in Sterling, the Company’s functional currency. All amounts presented in tables throughout the report have
been rounded to the nearest thousand, unless otherwise stated.
Changes in accounting policy
New and amended standards applicable to the Company is as follows:
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a
contract to provide goods or services including both incremental costs and an allocation of costs directly related to contract activities. General and
administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
These amendments have no significant impact on the Company financial statements.
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially
different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including
fees paid or received by either the borrower or lender on the other’s behalf. There is no similar amendment proposed for IAS 39 Financial Instruments:
Recognition and Measurement.
These amendments had no significant impact on the Company financial statements as there were no modifications of the Company’s financial
instruments during the period.
Annual Report 2022 145
Corporate governanceStrategic report
Financial statements
3. Summary of significant accounting policies
a) Foreign currency transactions
Transactions in foreign currencies are translated into Sterling at the exchange rate on the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated into Sterling at the exchange rate on that date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into Sterling at the exchange rate
on the date that the fair value was determined. Foreign currency differences arising on translation are recognised in the statement of comprehensive
income as a gain or loss on currency translation.
b) Foreign currency translations
The assets and liabilities of foreign operations are translated to Sterling at the exchange rates on the reporting date. The income and expenses of
foreign operations are translated to Sterling at the average exchange rates during the year, if such does not significantly deviate from the exchange
rates at the date on which the transaction is entered into. If significant deviations arise, then the exchange rate at the date of the transaction is used.
c) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified at initial recognition at either: (i) amortised cost; (ii) fair value through other comprehensive income – debt instruments;
(iii) fair value through other comprehensive income – equity instruments; or (iv) fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s
business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the
Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. The Company’s financial
assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect
contractual cash flows which represents solely payments of principal and interests.
In general, the Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any
interest in such transferred financial assets that is created or retained by the Company is recognised as a separate financial asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a
legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
At the date of the statement of financial position, all financial assets of the Company have been classified as financial assets at amortised cost. Financial
assets of the Company consist of investment in subsidiary, loan receivables from subsidiary, interest and other receivables from subsidiary and cash
and cash equivalents.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
– The rights to receive cash flows from the asset have expired; or
– The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks
and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses
are recognised in the statement of comprehensive income when the asset is derecognised, modified or impaired.
Financial liabilities
The Company classifies financial liabilities at amortised cost. Such financial liabilities are recognised initially at fair value less any direct attributable
transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the EIR method.
The Company derecognises a financial liability (or part of a financial liability) from the statement of financial position when, and only when, it is
extinguished or when the obligation specified in the contract or agreement is discharged or cancelled or has expired. The difference between the
carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is considered in the statement of comprehensive income.
d) Investments in subsidiary
The investment in subsidiary is held at cost less any impairment.
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
146 BBGI Global Infrastructure S.A.
3. Summary of significant accounting policies (continued)
e) Impairment testing for investments and loans and receivables from subsidiary
The investment in subsidiary and loan receivables from subsidiary are measured at cost less accumulated impairment losses. The impairment losses are
based on expected credit loss (‘ECL’) on such receivables. The loans and receivables of the Company from its subsidiary are directly linked to the PPP/
PFI portfolio financed by this subsidiary either through loans and/or equity investments. The ECL, if any, of the Company from its loans and receivables
from subsidiary has a direct link with the fair value of the Company´s PPP/PFI portfolio. The Company performs a fair valuation of the underlying PPP/
PFI portfolio every six months and considers any ECL on the loans and receivables, among others based on the results of the valuation. The fair
valuation of the underlying PPP/PFI portfolio is done by calculating the net present value of the cash flows from these assets, based on internally
generated models. The net present value of each asset is determined using future cash flows, applying certain macroeconomic assumptions for the
cash flows which include indexation rates, deposit interest rates, corporate tax rates and foreign currency exchange rates. The cash flows are discounted
at the applicable discount rate for companies involved in service concession assets. A material change in the macroeconomic assumptions and discount
rates used for such valuation could have a significant impact on the net present value of the future cash flows. The determined fair value will be
considered as the recoverable amount to be compared to the carrying amount of investment in subsidiary to determine possible impairment. Excess of
the carrying amount of the investment in subsidiary over the recoverable amount is recognised as an impairment loss. As of 31 December 2022, the
Company identified no ECL to be recorded on its loans and receivables from subsidiary (2021: nil) nor any impairment on its investment in subsidiary.
f) Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to a liability. The unwinding of
such discount is recognised as a finance cost.
g) Cash and cash equivalents
Cash and cash equivalents comprise of cash balances and term deposits with maturities of three months or less from the date when the deposits were
made and that are subject to an insignificant risk of change in their fair value, and are used by the Company in the management of its short-term
commitments.
h) Share capital
Ordinary shares are classified as equity. Costs directly attributable to the issue of ordinary shares, or which are associated with the establishment of the
Company, that would otherwise have been avoided are recognised as a deduction from equity, net of any tax effects.
i) Finance income and finance costs
Interest income and expenses are recognised in the statement of comprehensive income using the EIR method.
The EIR is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial instrument (or, where
appropriate, a shorter period) to the carrying amount of the financial instrument. When calculating the EIR, the Company estimates future cash flows
considering all contractual terms of the financial instrument, but not future credit losses.
Interest received or receivable and interest paid or payable are recognised in the statement of comprehensive income as finance income and finance
costs, respectively.
j) Tax
According to the Luxembourg regulations regarding SICAV companies, the Company itself, as an undertaking for collective investment, is exempt from
paying income and/or capital gains taxes in Luxembourg. It is, however, liable to annual subscription tax of 0.05 per cent on its consolidated net asset
value (‘NAV’) payable quarterly and assessed on the last day of each quarter.
k) Current versus non-current classification
The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when
it is:
– Expected to be realised or intended to be sold or consumed in the normal operating cycle
– Held primarily for the purpose of trading
– Expected to be realised within 12 months after the reporting period or
– Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period
All other assets are classified as non-current.
A liability is current when:
– It is expected to be settled in the normal operating cycle
– It is held primarily for the purpose of trading
– It is due to be settled within 12 months after the reporting period or
– There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 147
Corporate governanceStrategic report
Financial statements
3. Summary of significant accounting policies (continued)
k) Current versus non-current classification (continued)
The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect
its classification.
The Company classifies all other liabilities as non-current.
4. Significant accounting judgements, estimates and assumptions
The preparation of financial statements in conformity with IFRS requires the Management Board to make judgements, 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 Company´s accounting policies, the Management Board has made the following judgements that would have the most
significant effect on the amounts recognised in the Company’s financial statements.
4.1 Impairment testing for investments
Refer to Note 3e) for the discussion of this topic.
4.2 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 12 months from the end of
this reporting period. 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 financial statements.
5. Administrative expenses
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Support agreement fees (Note 13) 8,914 6,982
Legal and professional fees 2,207 2,090
Supervisory Board fees and expenses 275 225
Others 221 201
11,617 9,498
Included in the legal and professional fees expensed during the year are those amounts charged by the Company’s external auditor which include audit
fees of £201,000 (2021: £157,000) and audit related fees of £73,000 (2021: £64,000). Non-audit related fees charged by the Company’s external auditors
during the year amounted to £5,000 (2021: nil). Also included in the legal and professional fees are depositary and custodian related charges which
amounted to £383,000 (2021: £460,000).
6. Other operating expenses
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Foreign exchange indemnity agreement expense (Note 13) 22,326 6,965
Foreign currency exchange loss – net – 5,063
Acquisition-related (including unsuccessful bid costs) 422 583
22,748 12,611
7. Other operating income
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Foreign currency exchange gain – net 4,883 –
The net foreign currency exchange gains are mainly attributable to the unrealised gains on the translation of foreign currency denominated loans
receivable from the Company’s subsidiary.
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
148 BBGI Global Infrastructure S.A.
8. Net finance result
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Finance income from multi-currency facility (Note 13) 21,474 20,149
Interest income from deposits 24 –
Other finance costs (2) (31)
21,496 20,118
9. Taxes
As at 31 December 2022, tax payable with respect to subscription tax amounted to £129,000 (2021: £116,000).
A reconciliation of the tax expense and the tax at applicable tax rate is as follows:
In thousands of Sterling
Year ended
31 December
2022
Year ended
31 December
2021
Loss before tax (7,986) (1,991)
Income tax using the Luxembourg domestic tax rate of 24.94% (1,991) (497)
Effect of tax-exempt deductions/(income) 1,991 497
Subscription tax expense 515 459
Tax charge for the year 515 459
The Company, as an undertaking for collective investment, pays an annual subscription tax of 0.05 per cent on its consolidated NAV. For the year ended
31 December 2022, the Company incurred a subscription tax charge of £515,000 (2021: £459,000).
10. Cash and cash equivalents
Cash and cash equivalents relate to bank deposits amounting to £18,738,000 (2021: £11,311,000).
11. Share capital
Changes in the Company´s share capital are as follows:
In thousands of Sterling
31 December
2022
31 December
2021
Share capital as at 1 January 850,355 772,640
Issuance of ordinary shares through placing – 75,000
Share capital issued through scrip dividends 1,092 1,978
Shares issued as share based compensation 971 1,844
Shares issuance cost (27) (1,107)
852,391 850,355
BBGI Management HoldCo S.à r.l. (‘MHC’), a wholly owned direct subsidiary of the Company, provides share-based compensation to senior executives
whereby issues a certain number of shares of the Company to entitled executives calculated based on the conditions of the Long-Term Incentive Plan
(‘LTIP’) rules and the respective LTIP Award letters. During the year, the Company issued 346,203 shares, in connection with the 2018 LTIP award at
174.3 pence per share for a total amount of £604,000 (2021: £1,844,000). The amount of £604,000 was recorded as an advance made by the Company
to MHC during the year (2021: £618,000).
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 149
Corporate governanceStrategic report
Financial statements
11. Share capital (continued)
Deferred STIP
MHC introduced a bonus deferral with one-third of any bonus earned under the STIP is being deferred into shares of the Company for three year
holding period. The deferral component of the STIP differs from the Company’s share-based compensation as there are no further vesting conditions
on this earned bonus. The amount of £366,000 was recorded as an advance made by the Company to MHC during the year (2021: £618,000).
The changes in the number of ordinary shares of no-par value issued by the Company are as follows:
In thousands of shares
31 December
2022
31 December
2021
In issue at beginning of the year 712,126 664,691
Shares issued through placing of ordinary shares – 45,181
Shares issued through scrip dividends 649 1,155
Shares issued as share based compensation 556 1,099
713,331 712,126
All of the ordinary shares issued rank pari passu. 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.
The Company meets the minimum share capital requirement as imposed under the applicable Luxembourg regulation.
Dividends
The dividends declared and paid by the Company during the year ended 31 December 2022 are as follows:
In thousands of Sterling except as otherwise stated
31 December
2022
2021 2
nd
interim dividend of 3.665 pence per qualifying ordinary share – for the period 1 July 2021 to 31 December 2021 26,099
2022 1
st
interim dividend of 3.740 pence per qualifying ordinary share – for the period 1 January 2022 to 30 June 2022 26,676
Total dividends declared and paid during the year 52,775
The 31 December 2021 2
nd
interim dividend was paid in April 2022. The value of the scrip election was £964,000, with the remaining amount of
£25,135,000 paid in cash to those investors that did not elect for the scrip.
The 30 June 2022 1
st
interim dividend was paid in October 2022. The value of the scrip election was £127,000 with the remaining amount of
£26,548,000 paid in cash to those investors that elected for a cash dividend.
The dividends declared and paid by the Company during the year ended 31 December 2021 are as follows:
In thousands of Sterling except as otherwise stated
31 December
2021
2020 2
nd
interim dividend of 3.590 pence per qualifying ordinary share – for the period 1 July 2020 to 31 December 2020 23,863
2021 1
st
interim dividend of 3.665 pence per qualifying ordinary share – for the period 1 January 2021 to 30 June 2021 26,068
Total dividends declared and paid during the year 49,931
The 31 December 2020 2
nd
interim dividend was paid in April 2021. The value of the scrip election was £514,000, with the remaining amount of
£23,349,000 paid in cash to those investors that did not elect for the scrip.
The 30 June 2021 1
st
interim dividend was paid in October 2021. The value of the scrip election was £1,464,000 with the remaining amount of
£24,604,000 paid in cash to those investors that elected for a cash dividend.
Net asset value (‘NAV’)
The Company NAV and NAV per share as of 31 December 2022, 31 December 2021 and 31 December 2020 were as follows:
In thousands of Sterling/pence 2022 2021 2020
NAV attributable to the owners of the Company 629,991 689,231 663,897
NAV per ordinary share (pence) 88.32 96.78 99.88
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
150 BBGI Global Infrastructure S.A.
12. Financial risk and capital risk management
The Company has exposure to the following risks from financial instruments:
– Credit risk
– Liquidity risk
– Market risk
This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for
measuring and managing risk and the Company’s management of capital. This note also presents the result of the review performed by management
on the above-mentioned risk areas.
Risk management framework
The Management Board has overall responsibility for the establishment and control of the Company’s risk management framework.
Credit risk
Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the
Company, resulting in:
1) impairment or reduction in the amounts recoverable from receivables and other current and non-current assets; and
2) non-recoverability, in part or in whole, of cash and cash equivalents deposited with banks.
A significant part of receivables of the Company are receivables from a subsidiary. This subsidiary has the ability to pay based on the projected cash
flows to be received by such subsidiary from their respective investments.
Exposures to credit risks
The Company is exposed to credit risks on the following items in the Company’s statement of financial position:
In thousands of Sterling
31 December
2022
31 December
2021
Loans and other receivable to subsidiary (including accrued interest) 292,039 344,366
Cash and cash equivalents 18,738 11,311
310,777 355,677
The maximum exposure to credit risk on receivables that are neither overdue nor impaired as of 31 December 2022, amounts to £292,039,000 (2021:
£344,366,000).
Recoverable amounts of receivables and other current and non-current assets
The Company establishes when necessary an allowance for impairment, based on ECL specific to the asset. Currently there are no recorded allowances
for impairment. All the Company’s receivables are recoverable and no significant amounts are considered as overdue, impaired or subject to ECL.
Cash and cash equivalents
The cash and cash equivalents are maintained with reputable banks with ratings that are acceptable based on the established internal policy of the
Company. Based on the assessment of the Management Board, there are no significant credit risks related to the cash and cash equivalents. The main
counterparty banks of the Company have S&P/Moody’s credit rating between A+/Aa3 and AA-/Aa2.
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 151
Corporate governanceStrategic report
Financial statements
12. Financial risk and capital risk management (continued)
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset.
The Company’s policy over liquidity risk is that it will seek to have sufficient liquidity to meet its liabilities and obligations when they fall due.
The Company manages liquidity risk by maintaining adequate cash and cash equivalents and access to borrowing facilities to finance day-to-day
operations and medium to long-term capital needs. The Company also regularly monitors the forecast and actual cash requirements and matches the
maturity profiles of the Company’s financial assets and financial liabilities.
The Company has the possibility to raise capital through the issuance of shares in order to finance further acquisitions.
The following are the undiscounted contractual maturities of the financial liabilities of the Company:
Contractual cash flows
31 December 2022
In thousands of Sterling
Carrying
amount Total
Within
1 year
1-5
years
Trade and other payables 1,200 1,200 1,200 –
Advances from subsidiary 34,496 34,496 34,496 –
35,696 35,696 35,696 –
Contractual cash flows
31 December 2021
In thousands of Sterling
Carrying
amount Total
Within
1 year
1-5
years
Trade and other payables 1,125 1,125 1,125 –
Advances from subsidiary 15,990 15,990 15,990 –
17,115 17,115 17,115 –
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Company’s income
or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the returns.
Currency risk
The Company is exposed to currency risk as a result of its cash and cash equivalents being denominated in currencies other than Sterling.
The currencies in which these items are primarily denominated are Australian Dollar (A$), Canadian Dollar (C$), Euro (€), Norwegian Krone (NOK)
and US Dollar (US$).
In respect of other monetary assets and liabilities denominated in currencies other than Sterling, the Company’s policy is to ensure that its net exposure
is kept at an acceptable level. The management believes that there is no significant concentration of currency risk in the Company.
The summary of the quantitative data about the Company’s exposure to foreign currency risk provided to the management is as follows:
31 December 2022
In thousands of Sterling A$ C$ € NOK US$
Cash and cash equivalents 13 7 277 2 1
Trade and other payables – – (745) – –
13 7 (468) 2 1
31 December 2021
In thousands of Sterling A$ C$ € NOK US$
Cash and cash equivalents 12 8 331 2 1
Trade and other payables – – (641) – –
12 8 (310) 2 1
The Company has loans and receivables from MHC denominated in foreign currency but the Company is not exposed to fluctuations in foreign
exchange rates in relation to these receivables due to the foreign exchange indemnity agreement entered into between the Company and MHC
(see Note 13).
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
152 BBGI Global Infrastructure S.A.
12. Financial risk and capital risk management (continued)
Currency risk (continued)
The significant exchange rates applied during the year ended 31 December 2022 and 31 December 2021 are as follows:
31 December 2022
Average £ Spot rate £
A$ 1 0.562 0.564
C$1 0.623 0.610
€1 0.853 0.885
NOK 1 0.084 0.084
US$ 1 0.811 0.827
31 December 2021
Average £ Spot rate £
A$ 1 0.546 0.537
C$1 0.580 0.583
€1 0.860 0.840
NOK 1 0.085 0.084
US$ 1 0.727 0.740
The impact of a strengthening or weakening of Sterling against the A$, C$, NOK and US$, as applicable, by 10 per cent at 31 December 2022 and
31 December 2021 would not have a significant impact on the Company’s statement of comprehensive income and net equity. This assumes that all
other variables, in particular, interest rates, remain constant and ignores any impact of forecast revenues, hedging instruments and other related costs.
Fair values versus carrying amounts
The 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 carrying amounts of cash and cash equivalents, receivables and payables approximates their fair value due to their short-term nature with maturity
of one year or less, or on demand.
The fair value of loans and other receivables from subsidiary and investment in subsidiary, with a total carrying value of £635,108,000 (2021: £681,167,000),
amounts to £1,104,000 (2021: £976,249,000). The fair value of these loans receivable and investment in subsidiary is determined by discounting the
future cash flows to be received from such assets using applicable market rates (Level 3).
Capital risk management
The Company’s objective when managing capital is to ensure the Company’s ability to continue as a going concern in order to provide returns to
shareholders and benefits for further stakeholders and to maintain an optimal capital structure. The Company views the share capital (see Note 11)
as capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to shareholders, return capital to
shareholders, avail of additional debt financing, pay down debt, or issue new shares.
The Company regularly reviews compliance with Luxembourg regulations regarding restrictions on minimum capital. During the year, the Company
complied with all externally imposed capital requirements and made no changes in its approach to capital management.
The portfolio continued its strong performance over the reporting period with no material adverse effect on valuation. This strong performance is
primarily as a result of the Company holding a low-risk, 100 per cent availability-style underlying portfolio, coupled with strong stakeholder
collaboration during the reporting period.
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
Annual Report 2022 153
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Financial statements
13. Related parties and key contracts
Supervisory Board fees
During the year 31 December 2022, the aggregate remuneration paid to the Supervisory Board was £260,000 (2021: £220,000).
Loans and receivables from subsidiary – multicurrency facility agreement
On 1 January 2017, the Company as a lender and MHC as a borrower, entered into a multicurrency credit facility agreement (‘MCF’). Pursuant to
this agreement the Company has and will continue to make available an interest-bearing loan to MHC for the purposes of funding its initial and
subsequent acquisitions of interests in PPP/PFI portfolio. The maximum amount that can be withdrawn from the MCF is £680,000,000. The Company
engages a third-party transfer pricing specialist to determine the reasonable ranges of interest rates to be applied on borrowings under the MCF.
Movements in the MCF during the year are as follows:
In thousands of Sterling
31 December
2022
31 December
2021
1 January 243,638 217,182
Additions – 36,398
Capitalisation of interest under MCF 94 83
Principal payments received (5,253) (5,060)
Foreign exchange movements 4,733 (4,965)
243,212 243,638
During the year, the finance income from the MCF amounted to £21,474,000 (2021: £20,149,000).
Loans receivable from subsidiary – interest free loan agreements
The Company has entered into various interest free loan agreements (‘IFL’) with MHC, a direct 100 per cent owned subsidiary. These IFLs have a term of one
year with the possibility to extend and to introduce an arm’s length interest rate. The details of the interest free loans receivable from MHC is as follows:
In thousands of Sterling
31 December
2022
31 December
2021
IFL receivable from MHC 37,663 91,968
Interest and other receivables from subsidiary
The details of the interest and other receivables from subsidiary are as follows:
In thousands of Sterling
31 December
2022
31 December
2021
Interest receivable from MCF 11,164 8,760
Foreign exchange indemnity agreement
The Company and MHC have entered into a foreign exchange indemnity agreement (‘Indemnity Agreement’) whereby the Company will indemnify
MHC for any net losses incurred by MHC in relation to foreign exchange movements, including losses incurred on foreign exchange forward contracts.
The agreement also stipulates that where MHC makes a net gain on foreign transactions, then it shall pay an equivalent amount to the Company. As at
31 December 2022, the Company recorded an Indemnity Agreement expense amounting to £22,326,000 (2021: £6,965,000).
Support agreement with MHC
The Company and MHC have entered into a support agreement (‘Support Agreement’) whereby MHC provides support and assistance to the Company
with respect to the day-to-day operations. As at 31 December 2022, the Company recorded Support Agreement expenses amounting to £8,914,000
(2021: £6,982,000).
Advances from subsidiary
This account is non-interest bearing and relates to remaining liabilities arising from the foreign exchange indemnity agreement, support agreement
and other unsettled advances received from MHC that is usually settled in the next 12 months. Advances from subsidiary as at 31 December 2022
amounted to £34,496,000 (2021: £15,990,000).
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
154 BBGI Global Infrastructure S.A.
Notes to the Company Financial Statements continued
For the year ended 31 December 2022
14. Investment in subsidiary
The Company’s total equity investment in MHC amounted to £354,233,000 as of 31 December 2022 (2021: £350,453,000). The movements in the
Company’s investment in MHC are as follows:
In thousands of Sterling
31 December
2022
31 December
2021
1 January 350,453 333,048
Additional investment through capital contribution 3,780 17,405
354,233 350,453
The Company’s investments in PPP/PFI portfolio, were made and will continue to be made through MHC.
15. Commitments and contingencies
The Company is an obligor under the Group’s Revolving Credit Facility (‘RCF’), and as a result has pledged all its current and future financial assets and
shares in its investments in subsidiary.
Based on the provisions of the RCF, where there is a continuing event of default by MHC as borrower, the lenders will, among other things, have the
right to cancel all commitments and declare all or part of utilisations to be due and payable, including all related outstanding amounts, and exercise or
direct the security agent to exercise any or all of its rights, remedies, powers or discretions under the RCF. There was £57,484,000 outstanding principal
from the RCF as at the 31 December 2022.
16. Standards issued but not yet effective
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2023 and earlier application is
permitted; however, the Company has not early adopted any of the forthcoming new or amended standards in preparing these financial statements.
The Company intends to adopt these new and amended standards, if applicable, when they become effective. The adoption of the below new
standards is not expected to have a significant impact on the Company’s financial statements.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose
their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the
concept of materiality in making decisions about accounting policy disclosures.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
The amendments specify the requirements for classifying liabilities as current or non-current and clarify:
– What is meant by a right to defer settlement
– That a right to defer must exist at the end of the reporting period
– That classification is unaffected by the likelihood that an entity will exercise its deferral right
– That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification
Definition of Accounting Estimates – Amendments to IAS 8
The amendments introduce a definition of ‘accounting estimates’ and clarify the distinction between changes in accounting estimates and changes in
accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.
17. Events after the reporting period.
Dividend declaration
In February 2023, the Company declared a 2
nd
interim dividend of 3.74 pence per share with scrip alternative for qualifying shareholders for the period
1 July – 31 December 2022. The dividend is expected to be paid in April 2023.
Annual Report 2022 155
Corporate governanceStrategic report
Financial statements
Board Members,
Agents and Advisers
Supervisory Board
Sarah Whitney (Chair)
Howard Myles (retired on 29 April 2022)
Jutta af Rosenborg
Christopher Waples
Andrew Sykes (appointed as of 29 April 2022)
June Aitken (appointed as of 29 April 2022)
Management Board
Duncan Ball
Michael Denny
Frank Schramm
Registered Office
EBBC, 6E route de Trèves
L-2633 Senningerberg
Grand Duchy of Luxembourg
Central Administrative Agent,
Luxembourg Registrar and Transfer Agent,
Depositary and Principal Paying Agent
RBC Investor Services Bank S.A.
14 Porte de France
L-4360 Esch-sur-Alzette
Grand Duchy of Luxembourg
Depository
Link Market Services Trustees Limited
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
United Kingdom
Corporate Brokers
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
United Kingdom
EEA based Centralised Securities Depository
LuxCSD
42 Avenue John F. Kennedy
L-1855 Luxembourg
Grand Duchy of Luxembourg
Receiving Agent and UK Transfer Agent
Link Market Services Trustees Limited
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
United Kingdom
Communications Adviser
H/Advisors Maitland
3 Pancras Square
London N1C 4AG
United Kingdom
Auditors
PricewaterhouseCoopers, Société cooperative
2 rue Gerhard Mercator
B.P. 1443
L-1014 Luxembourg
Grand Duchy of Luxembourg
Corporate Brokers
Winterflood Securities Limited
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
Luxembourg CSD Principal Agent
Banque Internationale à Luxembourg
69 route d’Esch
Office PLM 018A
L-2953 Luxembourg
Grand Duchy of Luxembourg
Registre de Commerce et des Sociétés Luxembourg B163879
Listing Chapter 15 premium listing, closed-ended investment company
Trading Main Market
ISIN LU0686550053
SEDOL B6QWXM4
Ticker BBGI
Indices FTSE 250, FTSE 350, FTSE 350 High Yield and FTSE All-Share
156 BBGI Global Infrastructure S.A.
Glossary
AIC
The UK Association of Investment Companies,
the trade association for closed-ended
investment companies in the UK
AGM
Annual General Meeting of the Company’s
shareholders
AIC Code
The 2019 AIC Code of Corporate Governance
AIC SORP
Standard of Recommended Practices issued by
the AIC
AIF
Alternative Investment Fund
AIFM Law/2013 Law
The Luxembourg amended law of 12 July 2013
on Alternative Investment Fund Managers
AIFMD
EU Alternative Investment Fund Managers
Directive
APM
Alternative Performance Measures
Availability-style
Availability-style, unlike ‘demand-based’ means
that revenues are paid provided the asset is
available for use
BBGI/Company
BBGI Global Infrastructure S.A.
Carbon neutral
A state where the residual GHG emissions have
been balanced out by financing activities that
remove atmospheric CO₂ (‘offsets’)
Circular 18/698
CSSF circular 18/698, published 23 August 2018,
concerning Authorisation and organisation of
investment fund managers incorporated under
Luxembourg law; Specific provisions on the fight
against money laundering and terrorist financing
applicable to investment fund managers and
entities carrying out the activity of registrar agent
Corporate Emissions
GHG emissions that pertain to our business
activities
CSSF
Commission de Surveillance du Secteur Financier,
the public institution that supervises the
professionals and products of the Luxembourg
financial sector, including the Company
CPI
Consumer Price Index
DTR
The UK Disclosure Guidance and Transparency
Rules
ECL
Expected Credit Losses
EIR
Effective Interest Rate
ESG
Environmental, Social and Governance
ESMA
European Securities and Markets Authority
FCA
The UK Financial Conduct Authority
Financed Emissions
GHG emissions from our investments
FRC
Financial Reporting Council, the UK’s regulator
of auditors, accountants and actuaries, and
responsible for setting the UK’s Corporate
Governance and Stewardship Codes
FRC Code
The UK Corporate Governance Code 2018
GDP
Gross Domestic Product
GHG
Greenhouse Gas
Group
The Company and its subsidiaries
IFRS
International Financial Reporting Standards as
adopted by the European Union
Investments at FVPL
Investments at fair value through profit or loss
IPO
Initial Public Offering
KPI
Key Performance Indicator
LIBOR
London Interbank Offered Rate
LIFT
The UK’s Local Improvement Finance Trust
LTIP
Long-Term Incentive Plan
Management Board
The Executive Directors of the Company
NAV
Net Asset Value
NED
Independent Non-Executive Director, a member
of the Supervisory Board
NPPR
The UK’s National Private Placement Regime
NZAM
The Net Zero Asset Managers Initiative
O&M
Operation and Maintenance
Offsets
Removing CO₂ from the atmosphere, by
financing projects which are either creating
natural carbon dioxide sinks or technology
that captures carbon dioxide from the air.
The long-term removals must be measurable,
verifiable, permanent and additional. Offsets
cannot be done in isolation to combat climate
change, they must be supported by science-
based targets and GHG reduction pathways
OGC
Ongoing Charges
Pathways
Net zero pathways show how much and how
quickly companies need to reduce their GHG
emissions to reach their science-based GHG
reduction targets
PFI
Private Finance Initiative
PPP
Public Private Partnership
PwC
PricewaterhouseCoopers société cooperative,
the Company’s External Auditor
RCF
Revolving Credit Facility for up to £230 million,
with the possibility of increasing the quantum
to £300 million by means of an accordion
provision, and matures in May 2026
RPI
Retail Price Index
Science-based targets
Targets adopted by companies to reduce
GHG emissions are considered ‘science-based’
if they follow a pathway that is consistent with
the latest climate science and keeping warming
to below 1.5°C
SDG, SDGs
The UN Sustainable Development Goals
SFDR
Sustainable Finance Disclosure Regulation
SONIA
Sterling Overnight Index Average
STIP
Short-Term Incentive Plan
Supervisory Board
The independent Non-Executive Directors
of the Company
TCFD
Task Force on Climate-Related Financial
Disclosures
TSR
Total Shareholder Return
UNGC
UN Global Compact
Annual Report 2022 157
Cautionary Statement
Certain sections of this Annual Report, including,
but not limited to, the Chair’s Statement and
the Strategic Report of the Management Board,
have been prepared solely to provide additional
information to shareholders to assess the
Group’s strategies and the potential for those
strategies to succeed. This additional
information should not be relied on by any
other party or for any other purpose.
These sections may include statements that
are, or may be deemed to be, ‘forward-looking
statements’. These forward-looking statements
can be identified using 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
throughout this document and include
statements regarding the intentions, beliefs or
current expectations of the Management and
Supervisory Boards concerning, among other
things, the investment objectives and
investment policy, financing strategies,
investment performance, results of operations,
financial condition, liquidity, prospects and
distribution policy of the Group, 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 a guarantee
of future performance. The Group’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 Management and Supervisory Boards
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, these sections may include target
figures and guidance for future financial
periods. Any such figures are targets only
and are not forecasts.
This report has been prepared for the Group,
and therefore gives greater emphasis to those
matters that are significant to BBGI Global
viewed as a whole.
158 BBGI Global Infrastructure S.A.
Design and produced by Gather.London
Board photography by Danish Apple Photography
www.bb-gi.com
Registered Office:
EBBC, 6E route de Trèves
L-2633 Senningerberg
Grand Duchy of Luxembourg