Dear Shareholders,

On behalf of the Supervisory Board, I am pleased to report another period of robust operational and financial performance. This performance underpins the quality of our secure asset class, active asset management approach, and disciplined capital allocation, and is a testament of our proven track record in delivering long-term sustainable returns for our shareholders.

Our high-quality inflation-linked cash flows generated by our portfolio of availability-style core infrastructure assets has enabled us to meet consistently or exceed dividend targets since the IPO in 2011, providing our shareholders with predictable, progressive and fully cash covered dividends for over a decade.

All 56 of our infrastructure assets performed strongly, achieving a consistently high asset level availability rate and are fully operational. Our strong overall Net Promoter Score of 56 from our project clients, which is in the top quartile of the achievable range, a measure of client satisfaction, further underscores our commitment to delivering strong performance.

Continued resilient performance and prudent capital management

In the first half of 2024, our NAV total return per share was 2.4 per cent. This return consisted of a dividend of 3.965pps paid in April, partially offset by a modest decrease in NAV per share of 0.3 per cent to 147.4 pence, largely due to the impact of net negative foreign exchange movements. The weighted average discount rate remained unchanged at 7.3 per cent.

The defensive and global nature of our portfolio has again provided stable, predictable and inflation-linked cash flows. We increased our FY 2024 dividend target by 6.0 per cent to 8.40pps, after a similar increase in FY 2023, and the FY 2025 dividend target reflects a further increase of 2.0 per cent to 8.57pps. With strong cash dividend cover of 1.47x during H1 2024, we expect FY 2024 dividend cover to be in the range of 1.3x to 1.4x. Over the medium term, we expect cashflows to continue to support a healthy dividend cover and provide ample headroom to sustain a progressive dividend policy well into the future.

Share price fails to reflect portfolio strengths

Despite consistently delivering robust financial and operational performance and increasing dividends by 6.0 per cent in FY 2023 and targeting a further 6.0 per cent growth in FY 2024, BBGI’s share price traded at an average discount of 11.7 per cent during the first half of the year compared to the reported NAV for FY 2023. We believe this general weakness in the share price reflects sentiment across the UK-listed Investment Trust sector following a rapid rise in interest rates and other headwinds affecting the sector and BBGI has not been immune to some of these forces.

We continue to recognise a disconnect between private market valuations of similar high-quality core infrastructure assets, as evidenced by recent secondary market transactions, and the valuations currently ascribed by public markets. The transaction activity in the secondary market reinforces our confidence in the attractiveness of these asset classes.

The Supervisory Board and Management Board believe BBGI’s share price as of end-June 2024 does not adequately reflect the strength and performance of our underlying portfolio. We continue to closely monitor our share price and the discount compared to our published NAV.

The recent forecasts from central banks and economists globally indicate that base interest rates have stabilised and are expected to decline from the second half of 2024, which bodes well for the sector. Our current share price offers an attractive FY 2024 and FY 2025 dividend yield of 6.3 per cent and 6.4 per cent respectively.

Governance structure aligns shareholders and management interests

BBGI is internally managed, with appropriate governance and management incentivisation arrangements. This structure is unique among infrastructure investment companies listed on the London Stock Exchange and ensures full alignment of the Management Board's interest with those of our shareholders. Another important aspect of our internally managed structure is the rigorous approach towards valuation which is undertaken by the team. The valuation is reviewed by an independent third-party valuation expert and scrutinised by our auditors, with oversight by the Supervisory Board throughout the entire process.

The Management Board is incentivised for long-term value creation and preservation, focusing on enhancing the quality of the underlying portfolio and shareholder returns, rather than merely expanding assets under management, which could potentially dilute portfolio quality and shareholder returns.

BBGI continues to maintain one of the lowest ongoing charges in the sector, at 0.90 per cent, thanks to our efficient and cost-effective internal management.

Progressing on our Environmental, Social and Governance commitments

Central to our mission is our commitment to ensuring our assets deliver high-quality services to communities while maintaining long-term returns for our shareholders. We build long-term relationships with all stakeholders and promote positive ESG practices at both corporate and portfolio levels. Our investments in core infrastructure assets, such as schools, hospitals, civic infrastructure, affordable housing, clean energy generation and transportation networks, demonstrate our commitment to align with six SDGs and the social investment objective of our SFDR article 8 categorisation. By partnering with government and government-backed entities, we ensure the responsible delivery and long-term management of these essential facilities, supporting healthier, safer, and more connected communities.

Our long-standing commitment to responsible investment and the integration of ESG factors as a core pillar of our investment strategy have allowed us to progress against our ESG targets. In addition to engaging with regulatory bodies on the SFDR consultation and collaborating with industry bodies on net-zero practices for PPP, we have, for the first time, obtained external verification of our reported GHG portfolio emissions. This significant undertaking demonstrates our commitment to transparency and proactive action.

I encourage shareholders to review our stand-alone Sustainability Report, which details our strong ESG credentials, and the significant work being done on several fronts.

Read more: Sustainability Report

We are confident amidst uncertainty

The current macroeconomic and geopolitical landscape presents challenges, but we remain confident in our strategy. Notably we have seen a reduction in inflation in the first half of the year, with forecasts suggesting gradual declines in base interest rates in the second half of this year. While these macroeconomic factors are beyond our control, we are committed to maintaining a disciplined approach to capital allocation, financial management and portfolio enhancement to deliver low-risk, sustainable long-term returns for our shareholders.

While 2024 sees election cycles in some of the regions where we operate, we anticipate a broad political consensus on the urgent need for substantial infrastructure investments, which is crucial for economic growth and societal well-being. Our availability-style investments are protected against demand fluctuations and regulatory risks, ensuring stable returns and long-term value for our shareholders.

Our Management Board, with their proven disciplined and meticulous approach, continues to carefully manage the Company's risk profile and explore ways to further optimise assets and portfolio construction and generate additional value for our shareholders over the long term.

Sarah Whitney

Chair
28 August 2024