BBGI Global Infrastructure’s NAV total return for 2023 was 3.9% [we had to work that out, for some reason, the company went out of its way to avoid saying it, resorting to publishing an annualised NAV return since IPO instead, but if you think that’s odd, the really damning thing is the absence of any mention of the company’s share price, share price return, and the level of the discount.]. We reckon that the share price return was -4.5% as the shares ended the year on a 4.2% discount. Since then, the discount has widened, and based on the year-end NAV of 147.8p, the discount is now over 13%. Th echair says “Any potential action to reduce our NAV discount will only be undertaken after thorough consideration, based on our disciplined approach to capital allocation and taking full account of any longer-term implications.” [which is pretty non-committal]

The dividend was 7.93p, up 6% on the prior year and the target is to increase that to 8.4p for 2024 and 8.57p for 2025. The dividend was covered by cash 1.4x.

The outstanding balance on the company’s revolving credit facility has been repaid.

BBGI was hit by the same problems that have affected other infrastructure funds. Chiefly an increase in the discount rate applied to forecast cash flows to calculate the NAV (this rose to 7.3% from 6.9%).

Extracts from the CEO’s statement

All 56 of our infrastructure assets are performing strongly and delivering in line with expectations and are now all in full operation. Our equity investment in Highway 104 in Nova Scotia, Canada achieved substantial completion in September 2023 and significantly improves efficiency and safety of travel, the flow of goods and services, and connects communities in the region.

Our active asset management activities 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 generated a consistently high asset availability rate of 99.9 per cent.

As of December 31, 2023, our NAV per share stood at 147.8 pence, a slight decrease of 1.4 per cent from the previous year and BBGI’s first year-over-year decrease since our 2011 listing. The shift in market discount rates had the most significant negative effect on our portfolio valuation, responsible for a 3.8 per cent reduction. Adverse currency exchange movements further decreased portfolio valuation by 2.2 per cent, which was partially offset by income arising from foreign exchange derivative contracts. We have also decreased our portfolio valuation by 1.5 per cent by fully provisioning for the anticipated negative effect of proposed changes to Canadian tax legislation, which are expected to be approved in parliament in 2024 with effect from 1 January 2024. However, these negative impacts on the portfolio valuation were partially offset by our proactive asset management, which increased our NAV by 1.7 per cent, along with changes in our macroeconomic assumptions, driven largely by the effect of revised deposit rate assumptions, contributing to an increase of 2.6 per cent.

BBGI can’t pretend that 2023’s results were good