This illustrative chart, as at 30 June 2024, is a target only and is not a profit forecast. There can be no assurance this target will be met. The illustrative target cash flows do not consider any further acquisitions, 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 cash flows extending beyond 2051 but for illustrative purposes, these are excluded from the chart above.
The Company's underlying assets generate a consistent and long-term stream of cash flows for the portfolio. These cash flows have a high degree of visibility and certainty, owing to the involvement of government or government-backed counterparties and the contractual nature of the agreements.
Investing in concessions requires a careful balance between long-term benefits and inherent limitations. On one hand, the contractual cash flows are exceptionally resilient, indexed to inflation, and inherently defensive. However, these benefits are tempered by the fact that the cash flows are finite, concluding at the end of each concession term.
To enhance disclosure and provide investors with more detailed information, we are now reporting a sub-category within our portfolio, to distinguish our concession assets from non-concession assets. Non-concession assets are assets where the Portfolio Company either holds a freehold interest or a long-term leasehold interest in the underlying asset, compared to a concession arrangement where the asset returns to the public client at the end of the contract. This sub-category of non-concession assets includes a portion of our UK LIFT (Local Improvement Finance Trust) assets, which represents approximately 6 per cent of our total portfolio value. The LIFT assets, primarily healthcare facilities, are designed for long-term use, and with regular maintenance and upgrades, can have significantly longer income-generating lifespans for BBGI. As a result of this reclassification, the average remaining life of our portfolio has been extended from 18.8 years to 22.8 years. This reporting change does not impact the valuation methodology, nor has there been any change in the underlying assumptions relating to the assets.
By prioritising the acquisition of assets with long residual life and investing excess cash flows into new projects, while maintaining a progressive dividend, BBGI plans to maintain a portfolio with a long weighted average life.
Based on current estimates, and if there were to be no further acquisitions, the portfolio could continue to generate a progressive dividend for the next 15 years.