BBGI Global Infrastructure Regulatory News (BBGI)

26 March 2014

Bilfinger Berger Global Infrastructure SICAV S.A.

('BBGI' or the 'Company')

Annual Results for financial year ended 31 December 2013

Cautionary Statement

This report (including the Company Overview, the Chairman's Statement and the Report of the Management Board (the "Review Section")) have been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any other purpose.

The Review Section may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of 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 all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Management and Supervisory Board concerning, amongst other things, the investment objectives and investment policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, and distribution policy of the Company 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 guarantees of future performance. The Company'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 Board 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, the Review Section may include target figures for future financial periods. Any such figures are targets only and are not forecasts.

This report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Bilfinger Berger Global Infrastructure SICAV S.A. and its subsidiaries when viewed as a whole.

2013 Financial and Operational Highlights

§ A 103.89% increase in Net Asset Value on an investment basis ("Investment Basis NAV")* to £449.25 million as at 31 December 2013 (£220.34 million - 31 December 2012)

§ Investment Basis NAV per share of 105.6 pence as at 31 December 2013 (103.5 pence - 31 December 2012) which represents an increase of 2.04%

§ 2013 interim dividend of 2.75 pence per share paid on 4 October 2013 and a further dividend of 2.75 pence per share proposed for the year ended 31 December 2013, giving total distributions of 5.5 pence for the year

§ Market capitalisation increased to £502.2 million at 31 December 2013 up 118% from £230.8 million at 31 December 2012. Shares continue to trade at a premium to Investment Basis NAV, and stood at a premium of 11.8% as at 31 December 2013

§ Total Shareholder return since listing in December 2011 to 31 December 2013 of 29%**

§ Successfully completed a £85 million capital raise in July and a £145 million capital raise in December, both of which were significantly oversubscribed

§ Announced acquisition of 22 separate interests in new and existing projects from a variety of parties for total consideration of approximately £205 million. Seven of the announced acquisitions completed by 31 December 2013

§ Following the completion of all acquisitions announced pre year end, BBGI expects to own interests in 35 project entities

§ Portfolio performance and cash receipts were in-line with, or exceeded plan

§ Ongoing charges percentage decreased to 1.11% (1.44% - 31 December 2012) which is very competitive within the UK listed infrastructure sector. It is expected to decrease further by December 2014 as the full effects of a larger portfolio, increased average Net Asset Value and internal management structure take effect

§ Average discount rate of 8.39% at 31 December 2013 compared with 8.51% at 31 December 2012

§ International Financial Reporting Standards (IFRS) NAV of £450.7 million as at 31 December 2013 (£220.9 million - (as restated) - 31 December 2012)***

§ Net profit under IFRS basis of £18.8 million for the year ended 31 December 2013 (£19.1 million - year ended 31 December 2012 - as restated)

*Refer to Financial Results for further detail on Investment Basis NAV

**Based on share price at 31 December 2013 and after adding back dividends paid during the period

***During the year ended 31 December 2013, the Company opted for early adoption of Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), resulting in a restatement of 2012 results. A reconciliation of the balance sheet and income statement under the Investment Basis and under IFRS is shown in the Financial Results section within Report of the Management Board

COMPANY OVERVIEW

Bilfinger Berger Global Infrastructure SICAV S.A.

Results for the year ended 31 December 2013

Bilfinger Berger Global Infrastructure SICAV S.A. ("BBGI", or the "Company" or, together with its consolidated subsidiaries, the "Group")is an investment company incorporated in Luxembourg in the form of a public limited 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 Luxembourg Law of 17 December 2010 on undertakings for collective investments with an indefinite life. 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.

\* These are targets only and not profit forecasts, based on the issue price of its ordinary shares at the time of the IPO. There can be no assurance that these targets will be met.

Key characteristics of BBGI

Notes:

*Previously referred to as Net cash on an Investment Basis. Following the amendment to IFRS 10 both the net cash on an IFRS basis and on an Investment Basis are the same so a distinction no longer needs to be made.

** These are targets only and not profit forecasts; there can be no assurance that these targets will be met.

CHAIRMAN'S STATEMENT

Your Company has had a busy and successful year. Full details are set out in the Management Board Report, but I wish to highlight:

· Two successful capital raises in July and December 2013, totalling £230 million.

· Acquisition of new assets and an increase in the percentage shareholding of existing assets, totalling £98.6 million.

· Agreed acquisitions to be completed in calendar year 2014 totalling £106 million.

· An increase in the value of the invested portfolio of 48.0%.

· Payment of a dividend in line with our target of 5.5p per share per annum.

· The adoption of IFRS 10 which makes for better understanding of financial performance.

On behalf of shareholders I congratulate the Management team on their success and thank them for their hard work and long hours. In view of the significant increase in the scale of the Company and responsibilities of the management, combined with the need to comply with AIFMD rules, we have instigated a third party review of management remuneration. Pending this review we have also determined to delay making the proposed amendment of the LTIP to provide for the delivery of awards partly in cash and partly in shares which was approved by shareholders at the Annual General Meeting on 30 April 2013. A decision on the future structure of the LTIP will be made following the completion of the third party review and will be communicated to shareholders in due course.

As a Luxembourg registered company we have a two tier Board structure. Essentially the Supervisory Board is analogous to an investment company board and comprises the Non-Executive directors. The Management Board comprises the Executive Directors. The role of the Supervisory Board is legally defined but I seek to manage the Board so that there is suitable oversight and challenge of the Management Board in both the development of strategy and its execution. The mutual respect for the various skills sets has enabled this process to work smoothly but we continue to assess and challenge ourselves to avoid complacency.

I believe that the company has a clear business purpose, is led by Boards with sufficient independence and skills, provides fair, understandable and balanced reporting of its results and can maintain a sustainable balance of rewards to shareholders and other stakeholders.

The outlook for your company remains encouraging. 2014 is going to be a year when the acquisitions already made are consolidated and those outstanding should be completed satisfactorily. The current market conditions make further growth at a sensible cost of capital a challenge but the management team is disciplined in its approach and focussed on shareholder value.

In May 2013, Thomas Töpfer, the Bilfinger nominated director, resigned and I thank him for his wise counsel and support. Michael Denny, the Finance Director, was appointed to the Management Board in April 2013 at which time Arne Speer retired from the Management Board and was appointed to the Board of BBGI Management Holdco. Both have had very successful years. The combined Boards have reviewed their size and membership and have concluded that no immediate changes are desirable. We will continue to keep this under review.

David Richardson

Chairman

Bilfinger Berger Global Infrastructure SICAV S.A.

25 March 2014

REPORT OF THE MANAGEMENT BOARD

BUSINESS REVIEW

Business of the Company

We are very pleased to present the results for the year ended 31 December 2013.

The Management Board has presented the management report for the consolidated financial statements and the standalone financial statements as a single report.

BBGI is an investment company incorporated in Luxembourg in the form of a public limited company société anonyme with variable share capital (société d'investissement à capital variable or "SICAV") and regulated by the CSSF under Part II of the Luxembourg Law of 17 December 2010 on undertakings for collective investment.

The Company's ordinary shares were 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.

Highlights 

BBGI's goals for 2013 were to actively manage the portfolio to enhance returns and position the Company for continued selective growth. 2013 was an active year for BBGI and the Group made significant progress towards the realisation of its objectives, which can be summarised as follows:

§ A 103.89% increase in the Investment Basis NAV to £449.25 million as at 31 December 2013 (£220.34 million - 31 December 2012). Comparable International Financial Reporting Standards as adopted by the EU (IFRS) NAV of £450.7 million as at 31 December 2013 (£220.9 million as at 31 December 2012 - as restated)

§ Investment Basis NAV per share of 105.6 pence as at 31 December 2013 (103.5 pence - 31 December 2012) which represents an increase of 2.04%

§ 2013 interim dividend of 2.75 pence per share paid on 4 October 2013 and a further dividend of 2.75 pence per share proposed for the year ended 31 December 2013, giving total distributions of 5.5 pence for the year

§ Shares continue to trade at a premium to Investment Basis NAV, and stood at a premium of 11.8% as at 31 December 2013

§ Total Shareholder return since listing in December 2011 to 31 December 2013 of 29%

§ Successfully completed a £85 million capital raise in July and a £145 million capital raise in December, both of which were significantly oversubscribed

§ Completed or announced the acquisition of 22 separate interests in new and existing projects from a variety of parties for total consideration of approximately £205 million. These acquisitions were accretive and made on attractive terms. Seven of the announced acquisitions completed by 31 December 2013

§ Ongoing charge percentage decreased to 1.11% at 31 December 2013 (1.44% - 31 December 2012) and is expected to decrease further to below 1% by December 2014 as the full effects of the larger portfolio, increased average Net Asset Value and internal management structure take effect

§ Market capitalisation increased to £502.2 million at 31 December 2013 up 118% from £230.8 million at 31 December 2012

Growth in the Portfolio and benefits of the growth

2013 was a year of significant growth for BBGI as the Company announced the acquisition of 22 separate interests in new and existing projects from a variety of parties for total consideration of approximately £205 million. Despite an increasingly competitive landscape, the Management Board believes that these transactions were concluded on attractive terms and will provide the following benefits to shareholders:

§ Further diversify the Group's investment portfolio by geography and sector:

o International portfolio with majority of assets being outside the UK

o Sector focus on availability based transport projects which the Management Board believes are less complex and easier to operate than social infrastructure assets

§ Continue to diversify the counterparty exposure while maintaining an attractive mix of high investment grade, creditworthy counterparties

§ Ongoing charge percentage has dropped to 1.11%, which is very competitive within the UK listed infrastructure sector. The decrease was primarily due to the larger asset base for the Company over which its operating costs are spread. The ongoing charge percentage is expected to decrease further by December 2014 as the full effects of the larger portfolio and internal management structure take effect. There is potential for the ongoing charges percentage to decline further in the future should the Company continue to grow

§ Providing some exposure to projects in construction, thereby increasing the opportunity for greater NAV growth in the future, as these assets are expected to see a valuation uplift upon becoming operational

§ Increasing the issued share capital of the Company, thereby increasing the liquidity of the shares

Acquisition of 2 Canadian assets

In August 2013, the Company signed an acquisition agreement for a 50% equity and loan note interest in Kelowna & Vernon Hospitals and 100% equity and loan note interest in North East Stoney Trail.

The Kelowna & Vernon Hospitals project is a long term PPP concession contract to operate and maintain a new Patient Care 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. These facilities are in the cities of Kelowna and Vernon in the interior of British Columbia, Canada. The project is availability-based with no volume risk, and has 28.8 years remaining on the concession length.

North East Stoney Trail is a long term PPP concession contract to operate and maintain a 21km section of new highway, forming part of a larger ring road developed in Calgary, Alberta, Canada. The project is an availability-based road project with no traffic volume risk, and has 25.8 years remaining on the concession length.

The total consideration paid by BBGI for the interests in Kelowna & Vernon Hospitals and North East Stoney Trail was CAD $41.3m or approximately £25.6 million, and the assets transferred in November 2013 once certain third party consents were obtained.

Acquisition of 4 German social infrastructure assets

In August the Company also signed an agreement to acquire a 50% equity and loan note interest in four operational social infrastructure PPP Projects in Germany from Hochtief PPP Solutions GmbH, which currently holds 100% of the interest.

Frankfurt Schools project is a 22 year concession to design, build/refurbish and maintain four schools in the City of Frankfurt am Main with the concession expiring in July 2029. The Cologne Schools project is a 25 year concession to design, build and maintain seven schools at five locations in the City of Cologne with the concession expiring in December 2029. Cologne-Rodenkirchen Comprehensive School consists of a comprehensive school serving 1,200 students. The project is a 25 year concession which expires in November 2034. Fürst Wrede Military Base Munich consists of various accommodation, office and training buildings, vehicle depots and gymnasiums in the Munich region, and is a 20 year concession which expires in March 2028.

All of the assets acquired from Hochtief are availability-based with no volume risk. The total consideration to be paid by BBGI is EUR 13.2 million or approximately £11.0m. The acquisition is conditional on, inter alia, third party consents and is expected to be completed in H1 2014.

Acquisition of an international portfolio of 10 social and transport infrastructure assets

On November 15, 2013, the Company announced that it had signed an acquisition agreement with Bilfinger Group ("Bilfinger") in relation to the acquisition of interests in 11 pipeline assets for £204 million (purchase price using F/X rates at the time of acquisition). The signing of the acquisition agreement with Bilfinger followed the announcement on 28 May 2013, which indicated that Bilfinger was planning to divest of its concessions business unit comprising of PPP/PFI projects in Australia, North America and Europe.

In December, the Company was notified by Bilfinger that the third party shareholder pre-emption rights in relation to the investment capital of one of the pipeline assets, a road project in Australia, had been exercised and as a result the acquisition excluded that asset. Subsequently the price of the remaining pipeline assets was adjusted to approximately £154 million (purchase price using F/X rates at the time of acquisition) pursuant to the valuation. While the Management Board was disappointed to lose this investment opportunity, we take comfort in our disciplined approach to pricing and realise that our valuation was reasonable given that others are prepared to pay similar prices or more for this asset.

Summary of pipeline assets

a Completed and transferred pre year end

b Completed and transferred post year end

*24.5% equity interest and 40% subordinated debt interest

Five of the pipeline assets are operational and it is expected that two more will become operational during 2014. All pipeline assets are classified as availability-based under the investment policy of the Company.

In December 2013, the Company completed 5 of the 10 acquisitions from Bilfinger which includes the remaining 50% equity and loan note interest in Golden Ears Bridge, 100% equity and loan note interest in Women's College Hospital, 58.8% equity interest in E18, 24.5% equity and 40.0% loan note interest in Mersey Care Mental Health Hospital and 70% equity and loan note interest in Tor Bank School.

Golden Ears Bridge project, which was already 50% owned by BBGI, is a long term PPP concession contract to operate and maintain the Golden Ears Bridge near Vancouver, British Columbia, Canada, opening to the public in June 2009. The bridge itself is a 1 km, six-lane road that spans the Fraser River. The rest of the scheme consists of more than 3.5 km of structures including ramps, viaducts, minor bridges and underpasses and more than 13 km of mainline roadway. The concession expires in 2038 and is availability-based with no volume risk.

Women's College Hospital Project is a long term PPP concession contract to design, build, finance and operate the new Women's College Hospital in Toronto, Ontario, Canada. The project is being delivered in two phases. The first phase became operational in May 2013 and partial payments from the health authority started at that time. Full operations are expected in March 2016. The concession expires in 2043 and is availability-based with no volume risk.

E18 project is a long term PPP concession contract to operate and maintain a new section of highway between Grimstad and Kristiansand in Norway. The 38km dual carriageway carves through a rugged and extremely beautiful landscape, which opened in August 2009 and is part of the trunk road from Oslo to Kristiansand. It is a key element of the transport corridor between southern Norway and the Continent, as well as an important connection between the two cities. The concession expires in 2034 and is availability-based with no volume risk.

Mersey Care Mental Health Hospital project is the eighth financial close in an existing LIFT project in the Liverpool & Sefton region in which BBGI already holds investment capital. The project consists of a new mental health in-patient facility on the former Walton hospital site in Liverpool, UK. The former Walton Hospital site will be transformed into a new mental health in-patient facility providing 85 single occupancy bedrooms with en-suite bathrooms to facilitate best practices in modern mental health care. Construction completion is expected in December 2014. The concession expires in 2044 and is availability-based with no volume risk.

Tor Bank School is a concession to develop, fund, build, operate and manage a new school for pupils with special education needs in Northern Ireland. The school was completed in October 2012 and is accommodating 164 pupils with severe learning difficulties in the 3-19 age range. The concession expires in 2037 and is availability-based with no volume risk.

The acquisition agreement with Bilfinger is conditional on the receipt of third party consents and certain project specific conditions. The remaining acquisitions are expected to be completed in H1 2014 once all such consents and clearances have been obtained.

Acquisition of further interest in 3 UK social infrastructure assets

The Company signed an agreement with Graham Investment Projects Limited ("Graham") in relation to the acquisition of additional equity and subordinated debt interests in three assets, being Lagan College, Tor Bank School and DBFO-1 Road Service (M1 Westlink); all of which are in Northern Ireland. The total cash consideration to be paid for these interests was approximately £9 million. The acquisition of the remaining interest in Tor Bank School from Graham completed in December 2013. Completion of the acquisition from Graham of the equity and loan note interests in Lagan College and M1 Westlink is expected to occur in H1 2014.

Acquisition of further interest in UK LIFT assets

In November 2013 BBGI signed an agreement with Assura Group Limited ("Assura Acquisition Agreement") in relation to the acquisition of certain equity and subordinated debt interests in two existing projects, being Liverpool & Sefton Clinics and North London Estates Partnerships (formerly known as Barnet & Haringey Clinics), as well as certain equity and subordinated debt interests in one of the pipeline assets, being Mersey Care Mental Health Hospital. The total consideration payable under the Assura Acquisition Agreement is £9.1 million. The Assura Group assets transferred to BBGI in February 2014.

The Liverpool & Sefton Clinics LIFT project is a UK concession to develop, fund, build, operate and manage primary healthcare facilities in Liverpool and Sefton. Under the Assura Acquisition Agreement which completed in February 2014, BBGI acquired 20.0% of the equity interest in the project and 26.1% of the subordinated debt. Upon completion of the acquisition, BBGI controls 46.7% of the equity and 52.8% of the subordinated debt.

The North London Estates Partnership LIFT project is a UK concession to develop, fund, build, operate and manage primary healthcare facilities around Barnet, Enfield and Haringey. In February 2014, BBGI acquired 20.0% of the equity interest in the project and 26.7% of the subordinated debt. BBGI now controls 46.7% of the equity and 53.3% of the subordinated debt.

The Mersey Care Mental Health project involves transforming the former Walton Hospital site in Liverpool into a new, 85 bed, mental health in-patient facility. Under the existing Sale and Purchase Agreement with Bilfinger, as announced on 15 November 2013, it was proposed that BBGI would acquire 24.5% of the equity in this project (in addition to the 13.6% of equity it already indirectly owns through its holding in Liverpool and Sefton Clinics) and 40.0% of the subordinated debt. Under the Assura Acquisition Agreement, BBGI acquired in February 2014 a further 28.6% of the equity and 30.0% of the subordinated debt. Upon completion of both acquisitions, BBGI will control 66.7% of the equity and 70% of the subordinated debt. The asset is currently in construction, although it is expected to become operational during 2014.

As at 31 December 2013, the Company held approximately £126.3 million in cash or cash equivalent. It is important to note that of this £106.0 million is ear-marked for acquisitions already announced which are waiting to complete. In most cases the Company is entitled to project cash flows from 1 January 2013 until time of completion and has been able to earn additional interest income on funds held to complete announced acquisitions.

Once all of the above transactions are completed, BBGI will have a portfolio consisting of 35 assets. All of these projects are supported by contracted, public sector-backed revenue streams, with inflation-protection characteristics. 

Relationship with Bilfinger Group

Bilfinger is an international multi-service group which included the concession business of Bilfinger Project Investments, historically an investor, developer and operator of large public infrastructure projects. Bilfinger announced on 28 May 2013 its intention to divest its concession business unit which comprised PPP/PFI projects in Australia, Europe and North America.

Following the completion of the acquisition of the ten pipeline assets from Bilfinger, it is expected that there will be, at most, two further investment opportunities available for consideration under the pipeline agreement. There can be no assurance that Bilfinger will elect to dispose of these investments, or that it will agree terms for the sale with the Group.

Bilfinger SE has not participated in capital raises and, as a result, the current shareholding of Bilfinger SE in BBGI has been diluted from an original holding of 19.9% to 8.74% at the end of December 2013. In 2012 Bilfinger Project Investments GmbH transferred 5 million shares to a Bilfinger pension fund. The 8.74% does not include those shares held by the Bilfinger pension fund.

As there are limited opportunities to acquire future projects from Bilfinger, it is expected that the Company will re-brand itself with a new name, distinct from Bilfinger. A shareholder resolution will be tabled at the Annual General Meeting to change the name of the Company to BBGI SICAV S.A. The ticker will remain "BBGI".

Future Growth

The Management Board believes that the access to Bilfinger's pipeline has been a reliable and attractive initial growth driver for the Company. This is especially true in the current competitive environment where it is difficult to make accretive investments in auction processes.

However, the Management Board also believes that there are a number of opportunities in the wider market which will enable the Company to continue its growth. This is evidenced in part by the fact that several of the portfolio assets have been acquired from third parties including Assura, Barclays Infrastructure, Graham, Hochtief and Miller, as well as from Bilfinger.

Previously, there were certain third party developers of PPP/PFI assets who appeared reluctant to sell assets to the Company because of its affiliation with Bilfinger, which was perceived as a competitor to certain vendors/developers. Now that Bilfinger is no longer engaged in the development of PPP/PFI projects, and that its shareholding in the Company has been diluted, the Company anticipates an increase in opportunities to acquire projects from these third party vendors.

The management team has extensive experience in the PPP/PFI secondary market, having been involved in secondary market transactions with an aggregate investment volume in excess of EUR 7 billion. The Management Board believe that BBGI will be well positioned to originate further investments due to their extensive PPP industry contacts in Australia, Europe and North America. During 2013, of the 22 acquisitions of interests announced or completed by the Company, only 12 came from Bilfinger.

It is also anticipated that the personnel who provide the day-to-day management services for many of the assets in the Existing Portfolio and the pipeline assets will be motivated to help originate acquisition opportunities for the Company, as these may create future asset management opportunities for them. The Company hopes to leverage this network of over 45 global personnel in Australia, Europe and North America to source investment opportunities without having to increase the Company's level of direct employment. This approach will allow the Company to benefit from the extensive regional knowledge and relationships of these PPP/PFI specialists.

The Management Board have noticed the increased competitive tension in the PPP/PFI secondary market. There is currently more investment capital searching for assets than there is supply, putting pressure on prices. BBGI will continue to follow a path of disciplined growth, reinforced by an internally managed structure. This will mean that BBGI will be selective and surgical in its approach and buy assets on an opportunistic basis.

Construction Exposure

The Company's investment policy is to invest principally in projects that are operational and that have completed construction. Accordingly, investment in projects that are under construction will be limited to 25 per cent of the Portfolio Value (calculated as at the time of investment). The rationale for this approach is to be able to produce a stable dividend for our shareholders, while at the same time gaining some exposure to the potential NAV uplift that can occur when projects move from the construction stage to the operational stage.

After completing all of the previously announced acquisitions, five projects will be in construction representing 18% of portfolio value. Of these projects, two projects (7% of portfolio value) are in late stage construction and are expected to become operational in 2014. Three projects (11% of portfolio value) are in early stage construction and will become operational in 2015 or 2016.

The construction risk generally has been passed down to creditworthy construction sub-contractors. The typical construction contract is a fixed-price, date-certain contract where the construction contractor is responsible for any potential cost over-runs or delays. Construction support packages typically consist of letters of credit or bonds from third parties and to the extent necessary parent company guarantees from the parent of the construction companies.

The Management Board was excited at the opportunity to acquire assets in construction from Bilfinger as it is less common for projects to be sold midway through the construction cycle. Typically developers wait until a project becomes operational to realise the potential value uplift themselves. We believe that, because of Bilfinger's strategic decision to exit the PPP/PFI concession business entirely, we were presented with a unique opportunity to acquire projects in construction on attractive terms.

BBGI remains optimistic for further increases in NAV in future periods most particularly once those projects currently in construction within the Company's portfolio move closer and into the operational phase. The ability to provide such organic growth in NAV as particular potential risks in assets reduce over time is an important and differentiating characteristic of the Company. It also provides a potential future mitigant to any possible adverse movements in NAV that might arise from changes in macro-economic factors.

The Company has also expanded its asset management team with individuals with specific PFI construction experience to help manage and mitigate any potential risks. With effect from 1 April 2014 the Company will hire a second Director Asset Management.

Despite the increased construction exposure, the Management Board believes that the ability to meet dividend targets has not been compromised.

As mentioned previously, BBGI expects it may be presented with the opportunity to acquire up to two more assets in the construction phase from Bilfinger in 2014, following Bilfinger's strategic decision to exit the PPP/PFI development business. As a result, the Management Board are proposing to consult with shareholders in relation to the potential to increase the level of construction exposure within the BBGI's investment policy in order to allow the Company to realise these attractive opportunities. Changes to the Investment policy may only be made with the approval of the CSSF and of the shareholders by way of ordinary resolution.

The construction opportunities are considered attractive to the Management Board because they are typically well priced on a risk adjusted basis. Nevertheless each opportunity will be analysed with due diligence on a case by case basis. Further information on construction risk can be obtained from the Company's prospectus which is available on the Company's website.

Representation at project level

With regard to the project entities acquired, the Management Board has taken, in most cases, two board seats within each portfolio asset. More information on the performance of the project entities is provided in the Valuation section below.

Share capital

The issued share capital of the Company is 425,573,646 ordinary shares with a nominal value of £1 each. All of the ordinary shares issued rank pari passu. There are no special voting or other rights attaching to any of the ordinary shares.

Voting rights

There are no restrictions on the voting rights attaching to ordinary shares.

Details of substantial shareholders

As at 10 March 2014, being the latest available information, the management are aware of the following shareholders holding more than 5% of the Company's ordinary shares.

Discount management

Although the Company's shares have traded at a premium since flotation, the Management Board will actively monitor any discount to the net asset value per ordinary share at which the ordinary shares may trade in the future. The Management Board will report to the Supervisory Board on any such discount and propose actions to mitigate this.

Purchases of ordinary shares by the Company in the market

In order to assist in the narrowing of any discount to the net asset value 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% p.a. of its issued ordinary shares

· Make tender offers for the ordinary shares

Share repurchases

No shares have been bought back in the year. The most recent authority to purchase ordinary shares for cancellation was granted to the Company on 30 April 2013 and expires on the date of the next Annual General Meeting ("AGM"). The Company is proposing that its authority to buy back shares be renewed at the forthcoming AGM.

Share price performance

The Company's share price has performed well and has maintained a premium to net asset value. We continue to believe that a key benefit of the portfolio is the high quality cash flows that are derived from long-term government backed contracts. As a result, the portfolio performance is largely uncorrelated to the many wider economic factors that may cause market volatility in other sectors.

The share price closed the year at £1.18, an increase of 8.9% in 2013. Shares traded at a premium to net asset value throughout the year in a range from £1.0675 to £1.205. Total Shareholder return in 2013 was 15.7%.

Distribution policy

Distributions on the ordinary shares are planned to be paid twice a year, normally in respect of the six months to 30 June and the year ended 31 December. Subject to market conditions and to the level of the Company's income, it is intended that distributions will be paid as annual dividends subsequent to shareholder approval at the AGM at the end of April and as interim dividends in October of each year.

The Company's Articles currently restrict the offering of a scrip alternative should the calculated scrip price be greater than the sum of the net asset value per share plus a 5% premium. Subject to the prior approval of the CSSF, the Company is seeking to remove this restriction from its Articles at its EGM to be held on 30 April 2014.

Dividends

On 31 May 2013, the Company paid a final dividend of 2.75 pence per share for the year ended 31 December 2012. On 4 October 2013, an interim dividend of 2.75 pence per share was paid. In addition to the interim dividend the Company proposes a final dividend of 2.75 pence per share for the year ended 31 December 2013, giving total distributions of 5.5 pence for the year.

Overall, the performance of the portfolio is in line with, or has exceeded expectations. Since the project entities were acquired, distributions have been in line with, or have exceeded forecasts.

Hedging

The Management Board has implemented a policy of hedging forward a portion of its anticipated foreign currency cash flows. In August 2013, the Company rolled forward its four year hedging plan. The Company seeks to provide protection to the level of Pound sterling dividends that the Company aims to pay on the ordinary shares, in order to reduce the risk of currency fluctuations and the volatility of returns that may result from such currency exposure. The Company does not currently hedge the future Euro cash flows as it is envisaged that these cash flows will be used to cover the fund's running costs which are largely Euro denominated. Management are currently seeking to hedge future cash flows related to those assets acquired since 1 December 2013. Future cash flows related to those assets acquired pre 1 December 2013 have been hedged in accordance with the Company's hedging policy. The Company is exposed to foreign exchange movements on future portfolio distributions denominated in AUD, CAD, EUR, NOK and USD.

An in-depth review of hedging strategy is carried out on an annual basis. The Company currently uses forward contracts to hedge against exchange rate exposure.

Financing

In July 2012 the Company entered into a three year £35 million revolving credit facility and letter of credit option with three lenders (The Royal Bank of Scotland plc, National Australia Bank Limited and KfW IPEX-Bank GmbH) to finance acquisitions, to provide letters of credit for outstanding equity obligations or for working capital purposes. The arrangement fee was 1.5% and the margins are 2.25% over LIBOR when loan to value is less than 25% and 2.75% over LIBOR when loan to value is greater than or equal to 25%. The commitment fee is 1.00% of the available commitment per annum.

As of 31 December 2013 £33.6 million was available to be drawn down. The Company has utilised £1.4 million of the facility to provide two letters of credit.

As the size of the Company has increased, the Management Board is currently in discussions with its relationship banks regarding the increase and extension of the Company's £35 million revolving debt facility to approximately £75 million to £80 million with a corresponding extension of the final maturity beyond the current maturity of 2015. Negotiation of detailed terms is expected to be concluded by Q3 2014.

At 31 December 2013 the Company was not in breach of any of the covenants under the credit facility.

The Company has operated and continues to operate comfortably within the covenant limits.

In accordance with the AIC Code of Corporate Governance Principle 21, the consequences of a material breach of the borrowing covenants are stated below. On and at any time after the occurrence of an event of default which is continuing the agent may, and shall, if so directed by the majority lenders:

a) Cancel the total commitments

b) Declare that all or part of the amounts drawn, together with accrued interest, and all other amounts accrued or outstanding under the agreement be immediately due and payable

c) Declare that all or part of the drawn amounts be payable on demand, at which time they shall immediately become payable on demand by the agent on the instructions of the majority lenders

d) Declare that cash cover in respect of each letter of credit is immediately due and payable

e) Declare that cash cover in respect of each letter of credit is payable on demand at which time it shall immediately become due and payable on demand by the agent on the instructions of the majority lenders

f) Exercise or direct the security agent to exercise any or all of its rights, remedies, powers or discretions under the agreement

Additionally, the Company is able to issue up to 10% of its issued share capital via tap issues in order to finance further acquisitions. The Company does not use structural gearing.

Apart from the Royal Women's Hospital, the individual PPP/PFI projects in the portfolio all have long term amortising debt in place which does not need to be refinanced. The Royal Women's Hospital has one tranche of debt which needs to be refinanced between 2017 and 2021. The value of this project as a percentage of the fund Net Asset Value is less than 3%.

Women's College Hospital has long term amortizing debt in place, but it is expected that this will be refinanced sometime after construction completion in March 2016 and before July 2019 when there is an increase in the lending margin and a cash sweep in favour of the lenders, both of which act as an incentive to encourage refinancing. The valuation used for Women's College Hospital therefore assumes that the project will be refinanced during this period.

As at 31 December 2013, the weighted average PPP project concession length remaining was 24.6 years and the weighted average portfolio debt tenor was 23.2 years. BBGI is not aware of any recourse to the Company for debt financing at the project entity level.

Status for taxation

The Company is not liable for any Luxembourg tax on profits or income, nor are distributions paid by the Company subject to any Luxembourg withholding tax. The Company is, however, liable to a subscription tax of 0.05% per annum of its net asset value, such tax being paid quarterly on the basis of the value of the aggregate net assets of the Company at the end of the relevant calendar quarter. No stamp duty or other tax is payable in Luxembourg on the issues of Shares. No Luxembourg tax is payable on the realised capital appreciation of the assets of the Company.

Relationship with clients

The Management Board has worked hard to maintain a good dialogue with the group's public sector clients and partners. It is engaged in identifying efficiencies and facilitating variations which benefit both shareholders and public sector clients. Overall, the working relationship with partners is considered strong.

Across the entire portfolio, BBGI remains comfortable with the counter-party risk of the public sector clients and the Management Board is not aware of any instances of financial distress which might lead to default.

Facility management continues to be performed at a high level with no major incidents to report.

Going concern basis of accounting

The Management Board has examined significant areas of possible financial risk including cash and cash requirements. They have 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 not less than 12 months from the date of approval of the financial statements. 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 in preparing the financial statements. Please see note 2 to the financial statements.

Subsequent events

· Ohio River Bridge

On 30 January 2014 the Company announced that it had completed the acquisition of a 33.33% interest in the Ohio River Bridge PPP Project.

Ohio River Bridge / East End Crossing PPP is a long term public-private-partnership concession procured by the Indiana Finance Authority for the development, design, construction, financing, operation and maintenance of a cable stayed bridge and associated roadway and facilities across the Ohio River, connecting Clark County Indiana and Jefferson County, Kentucky. The bridge is in close proximity to Louisville, Kentucky.

The concession term is equal to the construction period of 3.6 years plus 35 years of operations. The project payment mechanisms are comprised of a series of milestone payments to be received both during the construction period and shortly after the achievement of substantial completion and monthly availability payments in the operation period.

The construction work relating to the project is being undertaken by a joint venture between Walsh Construction Company and VINCI Construction Grand Projects JV, both of which are experienced in delivering large transportation infrastructure projects. Construction obligations have been passed down to the design build joint venture through a fixed price, date-certain, design build contract.

The concession expires in 2051 and is availability-based with no volume risk.

The Ohio River Bridge PPP Project was a pipeline asset in the December £145 million capital raise.

· Assura Transaction

On 14 February 2014 the Company announced that it had completed the acquisition of additional interests in three PPP/PFI projects from Assura Group Limited ("Assura"), as previously indicated on 25 November 2013. The interests acquired include equity and subordinated debt interests in Liverpool & Sefton Clinics, North London Estates Partnerships (formerly known as Barnet & Haringey Clinics) and Mersey Care Mental Health Hospital (see previous section). The total consideration was approximately £9 million which was funded from existing cash reserves.

· Northern Territories Secure Facility ("NTSF")

On 10 March 2014 the Company announced that it has completed the acquisition of a 50% equity interest in the Northern Territories Secure Facility.

The Northern Territory Secure Facilities (NTSF) is a new 1,000 bed correctional facility, located on a greenfield site at Holtze, near Darwin, Australia. When complete, the facilities will allow Northern Territory Corrections to engage prisoners into structured daily programs in order to foster rehabilitation and stronger re-integration.

The concession term runs until June 2044. BBGI will receive availability payments during the concession period from the Northern Territory government which is rated Aa1 by Moody's Investor Services.

The construction work relating to the project is being undertaken by a joint venture between Baulderstone Pty (now Lend Lease) and Sitzler Pty Ltd. Construction obligations are designed to be passed down to the joint venture through a fixed price, date-certain, design and build contract. Honeywell Limited will be responsible for the facility management and the Northern Territory government will provide custodial services. The project is expected to become operational in H2 2014.

NTSF was a pipeline asset in the recent £145 million capital raise which completed on 11 December 2013 and the acquisition was funded from the Company's existing cash resources.

· Revolving credit facility

Subsequent to 31 December 2013 the Company used a £21m letter of credit under its credit facility to cover future potential PPP equity / sub debt obligations.

Incorporation and administration

The ordinary shares are created in accordance with Luxembourg law and conform to the Companies Law and the regulations made thereunder, have all necessary statutory and other consents and are duly authorised according to, and operate in conformity with, the Articles of Incorporation.

Articles of incorporation

The Articles of Incorporation were approved and formalised before the 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. A copy of the Articles is available for inspection at the offices of Hogan Lovells International LLP, Atlantic House, Holborn Viaduct, London EC1A 2FG and at the registered office of the Company during normal business hours.

Amendments to the Articles

The Articles may be amended in accordance with the rules set out in article 32 of the Articles.

Valuation

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 valuation is carried out on a six monthly basis as at 30 June and 31 December each year. An independent third party has reviewed this valuation.

The valuation is determined using the discounted cash flow methodology. The cash flows forecasted to be received by the Company or its subsidiaries, generated by each of the underlying assets, and adjusted as appropriate to reflect the risk and opportunities, have been discounted using project specific discount rates. The valuation methodology is the same one used for the valuation of the portfolio last year and as part of the Company's mid-year results.

The Company uses the following macroeconomic assumptions for the cash flows:

Deposit rate sensitivity

The project cash flows are correlated with the deposit rates. The table below demonstrates the effect of a change in deposit rates compared to the macroeconomic assumptions above.

1 Sensitivity in comparison to the assumptions as set out in the macroeconomic assumptions above

The Management Board and the Supervisory Board have approved the net asset value calculation on an Investment Basis as at 31 December 2013. During the period, the reported net asset value per share increased from 103.5 pence to 105.6 pence, an increase of 2.04%.

Financial Results

During the year ended 31 December 2013, the Company early adopted the changes to the accounting standards effecting Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). These revised accounting standards allow the Company (an Investment Entity) to prepare IFRS financial statements, which do not consolidate certain subsidiaries, in a similar manner to the Company's current pro-forma Investment basis tables which to date have been included in the Financial Results section of this Report of the Management Board. These amendments are effective from 1 January 2014 and were endorsed by the EU on 21 November 2013, with early adoption permitted. The Company has opted for early adoption of these amended standards for the year ended 31 December 2013. The Company and its advisers believe that these amended standards will improve the stakeholders' understanding of the financial performance of the Group.

At 31 December 2013, the Group had 16 projects, out of a total of 26 projects which it was deemed to control by virtue of having the ability to govern, directly or indirectly, the financial and operating policies of the project entities. In previous reporting periods under IFRS, the results of these project entities (subsidiaries) would have been required to be consolidated in the Group's consolidated financial statements on a line-by-line basis.

As a result of adopting the amendments to IFRS 10, IFRS 12 and IAS 27, BBGI no longer consolidates on a line-by-line basis its investments in PPP assets that are subsidiaries, but instead recognises them as investments at fair value through profit or loss. Therefore, all investments in PPP assets are now accounted for on the same consistent basis. The results of the Group following the adoption of these amended standards now approximate those results that are presented on an Investment basis. All comparative information for the year ended 31 December 2012 has been restated.

Performance

Cash received from the portfolio of investments during the reporting period was by way of distributions including dividends, interest payments, capital and principal repayments amounted to £17.3 million. After deducting cash outflow for Group level corporate costs the net cash receipts for the period were £13.5 million.

The table below summarise the cash received by the holding companies from the investments net of the cash outflows for the Group level corporate costs.

Summary net corporate cash flow

1 In 2012 the Company received certain cash flows relating to distributions for the year 2011 on acquisitions announced in 2011 but which completed in

 2012. This had a resulting positive effect on the cash generated in 2012. Similarly the Company is entitled to certain distributions on acquisitions that were announced in 2013. These distributions will not be released until completion has occurred therefore will be reflected in the 2014 cash flow. The decrease in the net cash in the table above is primarily due to these timing effects.

2 Certain expenses such as bonus payments, audit and other professional fees, non-recoverable VAT are paid in the year subsequent to their accrual. 

 The cash outflow for 2012 corporate expenses was exceptionally low due to the limited operational period in 2011, and as a result a lower than normal level of payables was carried forward into 2012.

The 2013 amount for Cash outflow from corporate expenses excludes the £1.5 million of acquisition costs relating to the enlarged portfolio. These costs were excluded in order to ensure that the net cash above reflects the performance of the existing portfolio.

Group Level Corporate Cost Analysis 

The table below is prepared on an accrual basis.

1 The Fund is internally managed with no fees payable to external managers. Staff costs in 2012 were lower than 2013 as the Company reached full

 employment during the year 2012.

2 The acquisition related costs are made up of due diligence, legal, and other costs directly related to the acquisitions made during the year and on the

 Pipeline Assets that are not yet completed.

3 Other expenses are made up of support services (IT, treasury and accounting, UK office support) and office running costs.

Ongoing Charges

The ongoing charges percentage represents the reduction in shareholder returns as a result of recurring operational expenses incurred in managing BBGI.

The Company is internally managed and as such is not subject to performance fees or acquisition related fees. Management expect the ongoing charges to decrease further by 31 December 2014 which represents both an efficient and highly competitive cost structure.

1Certain non-recurring costs have been excluded from the ongoing charges, most notably acquisition related costs of £2.2 million (inclusive of VAT of

 £0.3 million), taxes of £0.3 million and finance costs of £0.5 million.

2 The Ongoing charges (%) was calculated using the AIC methodology and excludes all non-recurring costs i.e. costs of acquisition/disposal of

 investments, financing charges and gains/losses arising on investments. The ongoing charges include an accrual for the Short Term Incentive Plan ("STIP") and the Long Term Incentive Plan ("LTIP").

AIFMD on Ongoing charges

Although the effects of AIFMD are not yet fully known Management expect the associated costs to have a negative impact on the Ongoing charges percentage of up to +5 basis points.

Investment Basis NAV

The Investment Basis NAV includes the investments at fair value of £324.1 million. The fair value of these investments is based on the discounted value of their expected future cash flows. For further details refer to the Valuation section of the report of the Management Board.

The analysis below compares the Investment Basis NAV against the net asset value on an IFRS basis. The significant reduction in reconciling adjustments compared to previous reporting periods is as a direct result of the adoption of the amendment to IFRS 10.

Unaudited pro forma balance sheet reconciliation

1 Under the Investment Basis a receivable and subsequent payable were recorded as two separate line items, the receivable as part of the Investment at

 fair value and the related payment obligation as a liability. Under IFRS the payable and the receivable should not be recognised.

2 In 2012 under IFRS, loan issuance cost are presented as a reduction from borrowings.

 3Under IFRS the forward currency contracts are presented at fair value.

Three year comparative of Investment Basis NAV

Unaudited pro forma income statement reconciliation

1 The acquisition price under investment basis uses the hedged Pound sterling cost of all acquisitions denominated in local currency. Under IFRS the

 acquisition cost is recorded at the exchange rate at the date of completion. 

2 This difference is predominantly due to the fact that under IFRS the forward currency contracts are presented at fair value.

Market development

The investment climate for PPP/PFI assets which meet the Company's acquisition strategy continues to be very competitive. The Management Board believes there will likely be more potential acquirers and potentially fewer investments coming to market in 2014 which will continue to put increased pressure on pricing. Additionally, there will be a number of larger portfolios offered which will be sold via a professional auction process which tend to drive the prices further upwards.

While BBGI should benefit as increased pressure on pricing may warrant an increase in valuation of the existing portfolio, it also creates an environment where the potential to overpay for new assets increases dramatically. In this increasingly competitive environment, vendors are requiring prospective purchasers to price in lifecycle savings, aggressive tax structures, portfolio efficiencies and other upsides. The result is that the margin for error has decreased significantly and many of the potential acquisitions we expect to see in 2014 may not be pursued because of the risk that they would not be accretive to shareholder value.

In this competitive landscape, we believe the benefits of our internal management structure will become more and more apparent. As BBGI has no external manager, there are no fees paid based on the size of the portfolio and no acquisition fees, and as a result, we will not be persuaded to grow unless the growth is beneficial to shareholders. The motivation of the Management Board is directly aligned with those of the shareholders. We will not pursue growth for growth sake and will not be encouraged to make wayward investment decisions due to the allure of increased management fees or acquisition fees. We will remain disciplined and will make acquisitions on a selective opportunistic basis.

Despite the increasingly competitive market in 2013, the Management Board completed or announced the acquisition of 22 separate interests in new and existing projects from a variety of parties for total consideration of approximately £205 million. These acquisitions were done on favourable terms and were accretive. In 2013 we avoided broad auction processes and instead tended to focus on one-off opportunities where we had an existing relationship, a pipeline agreement with Bilfinger or a competitive advantage. By avoiding such auctions, BBGI also avoided broken bid costs.

While the Management Board was disappointed to be pre-empted on the purchase of one of the road assets in Australia, we take comfort in our disciplined approach to pricing and realise that our valuation was not excessive given that others were prepared to pay similar prices or more for the asset.

A key component of our growth strategy in 2013 was to consider opportunities in creditworthy countries outside the UK. Often the competition is not quite as intense, and more attractive pricing and terms can be obtained. In this regard, during 2013 we acquired or have agreed to acquire interests in: one asset in Australia, four assets in Canada, one asset in the US, one asset in Norway and four assets in Germany as well as interests in seven projects in the UK. With an established beachhead in these markets, we believe going forward we may benefit from certain synergies and may find the opportunities not as heavily competed as in the UK.

Another key component of our growth strategy will be to consider projects still in the construction stage. While there are typically fewer opportunities to acquire projects still in construction as compared to operational PPP/PFI projects, we believe the pricing on construction projects is quite attractive on a risk adjusted basis. Often the competition for construction assets is less intense as some investors require current yield, do not have sufficient and adequate asset management staff to oversee construction assets, or have mandates that restrict investment at this stage.

The construction risk generally has been passed down to creditworthy construction sub-contractors. The typical construction contract is a fixed-price, date-certain contract where the construction contractor is responsible for any potential cost over-runs or delays.

Construction support packages typically consist of letters of credit or bonds from third parties and to the extent necessary parent company guarantees from the parent of the construction companies.

The Management Board expect it will be able to acquire construction assets at higher discount rates during the construction stage and will be well positioned to realise the potential value uplift when the assets become operational.

We expect we may have some selective opportunities to acquire further construction assets in 2014 and we will analyse these carefully whilst at all times noting the need to balance the expected increased capital returns from taking additional but well controlled construction risk whilst also maintaining our dividend policy. Further information on construction risk can be obtained from the Company's prospectus which is available on the Company's website.

We are committed to maintaining our pricing discipline in 2014. We do not expect to repeat the same level of transactions or investment volume as 2013, unless market conditions change and become more favourable.

We will continue to focus on our core markets in Australia, Canada, US, UK, and Germany but will also look to expand in other creditworthy European countries.

UK

The UK PPP/PFI market is considered one of the most mature and robust in the world. Over 700 PFI projects delivering investments of over £54 billion have been signed since 1992. As a result we expect it will continue to be the largest source of secondary market transactions in principle.

The secondary market in the UK still appears to be the most active market globally, although more equity investors are chasing a similar or reduced number of transactions. This appears to have resulted in a trend of lower discount rates for stable mature secondary projects.

We anticipate a couple of large portfolios that will be offered for sale in 2014 which will attract a lot of attention. BBGI will continue to participate cautiously and selectively in auctions but also actively look for negotiated transactions. Our focus will be on smaller, more opportunistic investments where the competition is less intense.

Canada & USA

Over the years Canada's PPP market landscape has evolved considerably and has established Canada as one of the world's most stable and significant PPP markets in both volume and capital size of transactions.

The Canadian secondary market is expected to be active in 2014 as projects developed over the last couple of years come into operations. During the period 2009-2011 39 PPP deals reached financial close culminating in a combined capital investment of approximately CAD 21.7 billion. With 6 projects in this growing market, BBGI is a well-known market participant and has very good exposure to deal flow.

The USA represents a potentially vast infrastructure market with figures of US$2.32 trillion quoted as the level of infrastructure required over the next five years.

The US market is generally considered to be not one homogeneous market, but a collection of individual state markets with individual legislative and budgetary systems. Having completed its first investment in the US in January 2014 BBGI is familiar with the nuances of this market and will look to expand its presence should attractive investment opportunities become available. 

Continental Europe 

The market differs from country to country quite significantly. In Germany the market is still intermittent and only a limited number of new projects will be tendered this year, predominantly in the transport sector.

France (although slower than expected), the Netherlands, and Belgium still continue on the path to procure infrastructure projects via the PPP route and some secondary transactions are expected in 2014. The Netherlands and France are two markets where BBGI will increase its focus in 2014.

BBGI currently does not focus on Southern and Eastern Europe given the weakened credit ratings of these countries.

Australia

Australia is also considered a strong market for PPP investment as it enjoys a stable economy and a growing popularity of PPP model among different states. BBGI expects that the market activity levels will remain muted and may provide only a handful of opportunities in 2014.

In summary, the Company is actively pursuing acquisitions from third parties in its core markets. BBGI has a reasonable pipeline of opportunities which are being considered. BBGI will continue to remain extremely focused on maintaining pricing discipline and being selective.

Investment opportunity

The Management Board believes that an investment in BBGI provides shareholders with the following benefits:

· Exposure to high quality PPP infrastructure assets with the following attributes:

§ Long-term stable cash flows from assets that are mainly operational (or near operational) and backed by public sector or government backed counterparties

§ Strong yield characteristics and attractive inflation protection characteristics

§ A portfolio which is diversified by sectors with a focus on availability based transport projects

§ Spread across a number of high quality creditworthy countries

§ High degree of project control with at least a 50% ownership in respect of approximately 96% by value of the project entity within the portfolio

§ Availability-based road projects and a range of social infrastructure projects

§ Potential for value enhancement opportunities and acquisition of further stakes

· Alignment of interest between the Company, the management team and shareholders through an internal management structure

· 1.11% ongoing charge percentage which is very competitive within the UK listed infrastructure sector. This is primarily due to the internal management structure; no net asset value based management fees, no acquisition fees and no performance fees charged; director fees earned from the project entities are also for the benefit of BBGI and are not going to a third party

· Experienced PPP/PFI management team

· Continuation vote in 2015 and every two years thereafter

INVESTMENT PORTFOLIO

As at 31 December 2013, BBGI's assets consisted of interests in 26, low risk, predominantly operational, availability-based, PPP/PFI infrastructure assets. The assets, in the transport, health, education, justice and emergency services sectors, are located in Europe, Canada and Australia.

At year end, the Company's portfolio consisted of interests in 26 projects as follows:

Portfolio Summary

* 38.1% equity and 40.0% sub debt

** Entitled to 100% of the cash flow

All of the projects are in operation except for Mersey Care Mental Health Hospital, expected to reach completion end of 2014 and Women's College Hospital, expected to be fully operational in March 2016. These two assets represent approximately 7.6% of the portfolio by value.

The concessions granted to project entities in the portfolio are predominantly granted by a variety of public sector clients including but not limited to central government departments, local, provincial and state governments and corporations set up by the public sector. All project entities in the portfolio are located in countries which are all rated Aa1 /AAA for the UK and Aaa/AAA for Australia, Canada, Norway and Germany by Moody's and Standard & Poors.

Ten Largest Projects - Pro Forma

Pro forma in this context includes the existing portfolio of projects at 31 December 2013 plus those acquisitions announced but not yet completed at 31 December 2013.

AVAILABILITY ROADS

Golden Ears Bridge, Canada

The Golden Ears Bridge in Vancouver is a 1km, six-lane road that spans the Fraser River and connects Maple Ridge and Pitt Meadows to Langley and Surrey. The scheme which was opened in 2009 also includes more than 3.5km of structures including ramps, viaducts, minor bridges and underpasses and more than 13km of mainline roadway, a large part of which has been landscaped.

The project has brought close to CAD 1 billion in construction-related activity to the area. Commuters using the new bridge can save up to 40 minutes per peak-hour round-trip from Maple Ridge to Langley.

M80 Stepps to Haggs, Scotland, UK

The section of road between Stepps and Haggs was an all-purpose dual carriageway and was the only non-motorway section of the A80 between Glasgow and the end of the M80 at Dunblane. During peak hours, the road had suffered heavy congestion, delays and a poor level of service.

This project comprised the construction of 18km of dual two/three lane motorway with associated slip roads and infrastructure from Stepps in North Lanarkshire to Haggs in Falkirk.

Traffic availability was achieved in August 2011 and the scheme now provides a significant reduction in congestion for road users, improved journey times and greater reliability.

M1 Westlink, UK

The project consists of the design, construction upgrade, finance and operation of the existing M1 Westlink road scheme in Belfast

As a result of the project, road users are now able to travel freely along the M1 Westlink in both directions without having to stop at any junctions. This has reduced congestion and provides considerable improvements in journey times. The project commenced in April 2006 and required a significant amount of construction work to upgrade key sections of the existing network. This consisted of approximately 60km of motorway and a short section of linking dual carriageway through the heart of Belfast.

Northwest Anthony Henday Drive, Canada

This portion of the Edmonton Ring Road in Alberta runs 21 kilometres from Yellowhead Trail to Manning Drive. It is the single largest completed PPP transportation investment to date for the Province of Alberta and has improved safety and travel time for both residents and businesses. The project is completely free flow and includes eight interchanges, five flyovers and two rail crossings, for a total of 27 bridge structures.

With the opening of this leg, travellers have access to a total of 69 kilometres of free flow on Anthony Henday Drive. The new construction benefits more than 30,000 motorists who use this ring road daily, as well as the transportation industry as this is a vital route for shipping and receiving goods.

E18 Motorway, Norway

In August 2009 the E18 Highway was opened by the King of Norway. The 38km dual carriageway carves through a very rugged and extremely beautiful landscape. A total of seven tunnels and six major bridges were completed as part of the contract.  This new section of highway between Grimstad and Kristiansand in Norway is part of the trunk road from Oslo to Kristiansand. It is a key element of the transport corridor between southern Norway and the Continent as well as an important connection between the two cities.

Ohio River Bridge -East End Crossing, USA

Ohio River Bridge/ East End Crossing PPP is a long term public-private-partnership concession procured by the Indiana Finance Authority for the development, design, construction, financing, operation and maintenance of a cable stayed bridge and associated roadway and facilities across the Ohio River, connecting Clark County Indiana and Jefferson County, Kentucky. The bridge is in close proximity to Louisville, Kentucky.

The concession term is equal to the construction period plus 35 years of operations. The project payment mechanism comprises a series of milestone payments to be received both during the construction period and shortly after the achievement of substantial completion and monthly availability payments in the operation period.

Justice

Victoria Prisons, Australia

The Metropolitan Remand Centre near Melbourne accommodates up to 600 male prisoners and is the State's major intensive treatment facility for male prisoners. It offers treatment programs aimed to promote rehabilitation, reduce repeat offending and to prepare prisoners for transition back into the community.

The second, smaller facility is the Marngoneet Correctional Centre which houses 300 male prisoners and is also located in greater Melbourne. Both prisons started operation in 2006.

In 2013, two significant augmentation orders were undertaken to expand the prisoner capacity.

Northern Territories Prisons, Australia

The Northern Territory Secure Facilities (NTSF) is a new correctional facility, located on a greenfield site at Holtze, near Darwin. When complete, the facilities will allow Northern Territory Corrections to engage prisoners into structured daily programs in order to foster rehabilitation and stronger re-integration.

The facility is currently under construction with completion expected in H2 2014.

Health

Women's College Hospital, Canada

The project consists of the design, build, finance and maintain a hospital in Toronto.

The new replacement hospital development will be a multi-storey building (approximately 430,000 square feet) consisting of ambulatory care, surgical research and educational facilities, as well as administrative, parking and other non-clinical space to support Women's College Hospital's comprehensive and integrated approach to providing quality women's health care to patients with a need for diagnostics, extended treatments and chronic care. The project is being delivered in two phases. The first phase became operational in May 2013 and partial payments from the authority started at that time. The second phase is under construction and is expected to become operational in March 2016.

Kelowna and Vernon Hospitals, Canada

The Kelowna & Vernon Hospitals project is a long term PPP concession contract to design, construct, operate and maintain a new Patient Care Tower, a new University of British Columbia Okanagan Clinical Academic Campus and car park at Kelowna & Vernon Hospital, and a new Patient Care Tower at Vernon Jubilee Hospital. The facilities are in the cities of Kelowna and Vernon in the interior of British Columbia, Canada.

INVESTMENT POLICY AND OBJECTIVES

Investment policy

The Company's investment policy is to invest in equity, subordinated debt and/or similar interests issued in respect of infrastructure projects that have predominantly been developed under the PPP/PFI or similar procurement models. The Company will principally invest in projects that are operational and that have completed construction. Accordingly, investment in projects that are under construction will be limited to 25% of the portfolio value (calculated as at the time of investment).

Project revenue stream characteristics

The Company invests predominantly in projects whose revenue streams are public sector or government-backed, although the Company may invest in projects whose revenue streams are backed by non-governmental organisations that the Directors believe carry an appropriate credit risk and represent a low counterparty risk, for example as alternative infrastructure procurement models develop (such as private-private partnerships). Investment in projects whose revenue streams are not public sector or government-backed will be limited to 25% of the portfolio value, calculated as at the time of investment.

The Company primarily invests in projects where payments received by the project entities, and hence the revenue streams from the projects, do not generally depend on the level of use of the Project Asset and as such are "availability-based". Projects are characterised as having an "availability-based" revenue stream if, on average, 75% or more of payments received by the relevant project entity do not depend on the level of use of the project asset. Investment in projects where, on average, 25% or more of payments received by the project entities depend on the level of use made of the project assets ("demand based") will be limited to 25% of the portfolio value, calculated as at the time of investment.

Geographic focus

The Directors believe that attractive opportunities for the Company continue to arise in areas of the world where PPP/PFI is a practised route for delivering infrastructure investments. The Company intends to invest predominantly in projects that are located in Europe, North America, Australia and New Zealand. However, the Company may also invest in projects in other markets should suitable opportunities arise.

The Company will seek to mitigate country risk by concentrating predominantly on investment opportunities in countries where the Directors consider that project 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 project documentation.

Origination of investments

Each of the investments in the portfolio complies with the investment policy and further investments will only be acquired if they comply with the investment policy.

Further investments will be subject to satisfactory due diligence and agreement on price which will be negotiated on an arm's length basis and on normal commercial terms. It is anticipated that any further investments will be acquired out of existing cash resources, borrowings including letter of credits, funds raised from the issue of new capital in the Company or a combination of all three.

Single investment limit and diversity of clients and suppliers

In order to ensure that the Company has a spread of investment risk, it is the Company's intention that when any new acquisition is made, the investment (or, in the event of an acquisition of a portfolio of investments, each investment in the portfolio) acquired does not have an acquisition value (or, if it is an additional stake in an existing investment, the combined value of both the existing stake and the additional stake acquired is not) greater than 20 % of the portfolio value of the Company immediately post-acquisition (but subject always to a maximum limit of 25 % of the portfolio value immediately post-acquisition). In order to avoid over-reliance on either a single client or a single contractor when selecting new investments to acquire, the Company will seek to ensure that the portfolio of project entities in which the Company invests has a range of clients and supply chain contractors.

Borrowing and leverage

The Company intends to make prudent use of leverage (and leverage in the context of the Company shall exclude indebtedness in place at project entity level) primarily to finance the acquisition of investments and for working capital purposes. The Company will ensure that the Company's outstanding borrowings, excluding intra-group borrowings and the debts of underlying project entities but including any financial guarantees to support subscription obligations, will be limited to 33% of the portfolio value. The Company may borrow in currencies other than Pounds Sterling as part of its currency hedging strategy. The Company does not use structural gearing.

Currency and hedging policy

The Company will continue to invest in project entities that are located not just in the UK, and as a result some of the Company's underlying investments will be denominated in currencies other than Pounds Sterling. For example, investments in the portfolio are denominated in Australian Dollars, Canadian Dollars, Euro and Norwegian Krone as well as Pounds Sterling. However, any dividends declared and paid on the ordinary shares will be made in Pounds Sterling and the market price and net asset value of the ordinary shares will be reported in Pounds Sterling.

Any currency rate hedging transactions will only be undertaken for the purpose of assisting the Company in meeting its dividend distribution targets. Hedging transactions will not be undertaken for speculative purposes. The Management will continue to review the hedging strategy on an annual basis.

Interest rate hedging may also be carried out to seek to provide protection against increasing costs of servicing any debt drawn down by the Company to finance investments. This may involve the use of interest rate derivatives and similar derivative instruments.

Potential disposals of investments

Whilst the Directors may elect to retain investments over the long-term, they will regularly monitor the valuations of such project entities and any secondary market opportunities to dispose of investments. The Company only intends to dispose of investments where it is considered that appropriate value can be realised for the Company or where the Management Board otherwise believe that it is appropriate to do so. Proceeds from the disposal of investments will generally be reinvested, or may be distributed at the discretion of the Management and Supervisory Board.

Amendments to and compliance with the investment policy

Changes to the investment policy may only be made with the approval of the Commission de Surveillance du Sector Financier ("CSSF") and of the shareholders by way of ordinary resolution in accordance with the Law and (for so long as the ordinary shares are listed on the Official List) in accordance with the Listing Rules. The investment policy restrictions detailed above apply at the time of the acquisition of any new investment. The Company will not be required to dispose of investments and to rebalance its investment portfolio as a result of a change in the respective valuations of investments, although in such circumstances the Management Board will review the composition of the investment portfolio as a whole and consider whether any rebalancing is in the interests of shareholders.

In the event of any breaches of the investment restrictions contained in the investment policy, the Company will inform shareholders through an announcement on a Regulatory Information Service.

Investment objectives

Looking forward into 2014 and beyond, the Company will seek to provide investors with secure and predictable long-term cash flows whilst actively managing the investment portfolio with the intention of maximising the capital value over the longer term. The Company will target an initial annualised yield of 5.5% per annum on the IPO issue price of its ordinary shares. The Company will aim to increase this distribution progressively over the longer term. The Company will target an IRR in the region of 7% to 8% on the initial issue price of its ordinary shares to be achieved over the longer term via active management to enhance the value of existing investments, and by acquisition of further investments, the prudent use of gearing, and growing the Company with the aim of reducing the ongoing charge ratio.

RISK AND RISK MANAGEMENT

The Management Board and the Supervisory Board consider the process of identifying, evaluating and managing the significant risks faced by the Company on an ongoing basis. The Management Board has established internal controls to manage these risks by reference to a risk register and reviews and considers this risk register on at least a quarterly basis. The Supervisory Board also reviews the key risks affecting the Company at each scheduled board meeting, by reference to a risk register developed and monitored in conjunction with the Management Board. If a new risk develops or the likelihood of a risk occurring increases, where appropriate, a mitigation strategy is developed and implemented, together with enhanced monitoring. The Audit Committee also reviews the effectiveness of the Company's risk management and internal control systems on at least an annual basis.

The Management Board set out the material risks relating to the Company's portfolio as at 6 December 2011 in the Company's IPO prospectus, which is available from the Company's web site. General areas of risk and the processes are set out below.

The risk register applies a rating system to each risk. The impact of risk on the business (3 - high, 2 - medium and 1 - low) and the likelihood of the risk occurring (3 - high, 2 - medium and 1 - low) are assigned to each risk. Subsequently it is assessed if effective risk mitigation is in place and the effectiveness of the control (1 - high, 2 - medium and 3 - low).

The three numbers are added up and if the score is between 7 and 9 the risk is considered major, if between 5 and 6 moderate and 3 and 4 low. The risk register is a dynamic document and updated as and when new risks are identified or a change in one of the factors arises.

Economic, external and financial risks

The Company has investments in project entities and business activities in different jurisdictions and external, economic and financial factors have the capacity to impact these.

In particular the performance of the investments can be affected by changes in macro-economic factors such as foreign exchange, inflation rates and interest rates.

A significant proportion of the Company's underlying investments are denominated in currencies other than Pounds Sterling. The Company maintains its accounts, prepares the valuation and pays distributions in Pounds Sterling. Accordingly, fluctuations in exchange rates between Pounds Sterling and the relevant local currencies will directly affect the value of the Company's underlying investments, the distributions and the ultimate rate of return realised by investors. The Company has implemented currency hedging arrangements in respect of the non-Sterling investments denominated in CAD and AUD for a period of four years in order to mitigate some of this risk. The hedging for NOK, EUR and USD will be considered, and if deemed necessary, implemented in H1 2014.

The revenues and expenditure of project entities developed under PPP/PFI are frequently partly or wholly subject to indexation. From a financial modelling perspective, an assumption is usually made that inflation will increase at a long-term rate (which may vary depending on country and prevailing inflation forecasts). The effect on investment returns if inflation exceeds or falls below the original projections for this long-term rate is dependent on the nature of the underlying project earnings, the extent to which the project entity's costs are affected by inflation and any unitary charge indexation provisions agreed with the client on any project. The Company's ability to meet targets and its investment objectives may be adversely or positively affected by higher or lower than expected inflation. There is also a risk that general operating costs may be higher than forecast in the financial model. This may inter alia be due to inflation. Project entities typically mitigate that risk to some extent by seeking to match the indexation of the revenues to the indexation of the operational cost.

The project entities typically have some cash reserves and deposits. From a financial modelling perspective, an assumption is usually made that the deposits can be placed at a forecast rate which varies depending on country and historical long term averages. The effect on investment returns if deposit rates exceed or fall below the original projections for this long-term rate is dependent on the amount of deposits.

Different laws and regulations apply within the jurisdictions the Company and the project entities are located, and the Company and investments in such countries may be affected by changes in law, tax and accounting regimes, directives political climate and other changes that cannot be easily foreseen. The underlying financial models of project entities and the business model of the Company are based on assumptions regarding the prevailing tax, accounting and legal framework. Any change in those assumptions could affect the Company's ability to meet targets and its investment objectives. Where possible, this will be mitigated, but there may be instances where this will not be possible. The Company and the service providers for the underlying project entities continually monitor any potential or actual changes.

To the extent that the Company does not have cash reserves pending investment, the Company expects to bridge finance further investments by way of the credit facility or by issuing additional equity. Although the Company has had a credit facility in place since July 2012, there can be no guarantee that this will always be the case or that it will be able to issue further shares in the market.

The debt facility has a floating rate which is not hedged. The Company's performance may be affected by changes in the interest rates. The underlying project entities have sought to hedge substantially all their floating rate interest liabilities against changes in underlying interest rates.

Operational / asset related risks

Although it is intended that the main construction and operational risks will be passed on by the project entities contractually to the relevant subcontractor or service providers or covered by insurance (including any penalty payments or deductions to the client), there is some risk that the anticipated returns of the project entities will be adversely affected by underperformance or performance failures.

To the extent that the actual costs incurred by a project entity differ from the forecast costs, and cannot be passed on to subcontractors, e.g. insurance cost, the expected investment returns may be adversely affected.

During the life of an investment, components of the project assets (such as asphalt in the case of roads and elevators, roofs and air handling plants in the case of buildings) are likely to need inter alia to be replaced or undergo a major refurbishment. The timing and costs of such replacements or refurbishments is forecast, modelled and provided for by each project entity based upon manufacturers' data and warranties and specialist advisers are usually retained by the project entities to assist in such forecasting of life-cycle timings, scope of work and costs. However, various factors such as shorter than anticipated asset lifespans, vandalism, or underestimated costs and/or inflation higher than forecast may result in life-cycle costs being higher than the financial model projections or occurring earlier than projected. The contractual matrix for the current portfolio is intended to pass this risk down to subcontractors (in particular for the social infrastructure projects), but where this risk is retained (generally on transport projects) or where it is not otherwise effectively passed down to subcontractors, any cost implication will generally be borne by the affected project entities.

If there is a subcontractor service failure or subcontractor insolvency which is sufficiently serious to cause a project entity to terminate or to be required by the client to terminate a subcontract, or the relevant subcontract expires prior to the end of the concession period (which is the case on some road projects), there may be a loss of revenue during the time taken to find a replacement subcontractor. In addition, the replacement subcontractor may levy a surcharge to assume the subcontract or charge more to provide the services. Despite available securities such as parent company guarantees and letters of credit, these losses and costs may not be recoverable from the defaulting subcontractor.

The client is generally given rights of termination under PPP/PFI contractual agreements. The compensation (if any) which the project entity is entitled to receive on termination will depend on the reason for termination and the terms of the project agreement. In some instances, notably default by the project entity, the compensation will not include amounts designed specifically to repay the equity investment. Where termination is for client default or the client voluntarily terminates the project agreement without fault on either side, the compensation is likely to extend to some of the lost equity returns, although this cannot be guaranteed. The Company has currently no indication that any of the clients intend to voluntarily terminate the agreement or of any potential client default.

The costing of, and pricing for, infrastructure projects relies on large and detailed financial models. There is a risk that errors may be made in the assumptions, calculations or methodology used in a financial model. In such circumstances the figures and/or the returns generated by the project entity may be different to those estimated or projected. The risk is mitigated for project entities where the models have been updated a number of times and /or operational model audits have been undertaken.

Typically the client will have the right to terminate the project agreement where the project entity or a shareholder or subcontractor (or one of their employees) has committed bribery, corrupttion or other fraudulent act. In these circumstances it is likely that the majority, if not all, of the investment will be lost. The Company has a compliance system in place and is not aware of any such acts which could trigger that risk.

In some projects, a refinancing may be required to repay the project entity's obligations as they fall due. For the existing portfolio, in relation to senior debt financing, this applies to the Royal Women's Hospital project and only with respect to one of two tranches of bonds, which must be refinanced between 2017 and 2021 and Women's College Hospital where the bond expires in 2018 and in case no refinancing can be arranged a cash sweep applies where all net operational cash will be used to repay the bond. Additionally the Northern Territory Secure Facility asset has a refinancing risk in 2016 when the senior debt facilities expire. Where a project carries a requirement to refinance, there is a risk that such refinancing cannot be secured at the forecasted financing costs or at all. This could have an impact on the timing and/or amounts of distributions or other payments in respect of investment capital by such project entity. The Company believes that the current refinancing assumptions in the models are adequate.

Strategic and management risks

The Company seeks to provide its shareholders with a minimum 5.5% target dividend yield on the IPO issue price and a 7% to 8% IRR based on long term stable and contracted Government-backed revenue streams which are inflation linked. The Company's portfolio value is prepared semi-annually by the Management Board in good faith and independently reviewed by a competent valuer and reviewed/audited by KPMG. However, there is a risk that the Company may fail to reach the return objectives. The ultimate realisation of the market value of an asset depends to a great extent on judgements, economic and other conditions beyond the control of the Company, and valuations do not necessarily represent the price at which an investment can be sold.

Further investments intended to be made by the Company comprise interests in project entities which are not publicly traded or freely marketable and are often subject to restrictions on transfer and may, therefore, be difficult to value. This could lead to an overpayment for investments in an acquisition process. The Company has internal processes in place which seek to minimise these risks through regular review of the peer group, discussions with advisors and regular external confirmation of the portfolio value and the annual audit process.

The due diligence process undertaken during an acquisition process may not reveal all facts and circumstances that may be relevant in connection with an investment. The Company seeks to mitigate where possible this risk by a structured due diligence process, typically with the support of external advisors, market knowledge, site visits and protections in the acquisition agreements.

A single subcontractor may be responsible for providing services to various project entities in which the Company will invest, and the Company has set no limit as to the number of project entities to which a single subcontractor may provide services. In such instances, the default or insolvency of such single subcontractor could adversely affect a number of the Company's investments. A similar situation may apply with respect to default, impairment or insolvency relating to financial counterparties, such as banks and insurance companies. Any credit support provided in respect of the performance of the relevant obligation may not be sufficient and may not respond at all. This could have a material adverse effect on the project entity concerned and might not only reduce financial returns but could adversely affect the Company's reputation. An overview of operational subcontractors is provided in the section Counterparty Exposure below.

Bilfinger is the day-to-day service provider for the majority of these project entities and as such there is some concentration risk from this relationship.

Where the project entities have made deposits with financial institutions, these are typically short or medium term. By monitoring the exposure across the portfolio, the Company seeks to mitigate any over-reliance on any single counterparty and that these institutions have an acceptable credit rating.

The concessions granted to project entities are predominantly granted by a variety of public sector clients in the UK, Canada, Australia, Germany, Norway and the US. Although the Management Board believes such Public Sector Clients generally represent a low counterparty risk, the possibility of a default remains and has increased in recent years, and may vary from country to country. This risk could increase if the Company has one public sector client which is the counterparty to more than one investment. The Company is currently invested in the UK, Canada, Australia, Germany, Norway and the US and has a wide range of public clients.

To assist the Company in managing any share price premiums or discounts to NAV, the Company has the ability to make market purchases of up to 14.99% per annum of the ordinary shares in issue. In addition, a continuation vote is available to shareholders at the Company's annual general meeting in 2015, and at the annual general meeting held every two years thereafter. The vote will require more than 50% of the total voting rights cast on the resolution to be in favour in order for the Company to continue in its current format.

The success of the Company will depend inter alia upon the skill and expertise of the Management Board and the individuals employed by BBGI Management HoldCo in identifying, selecting, acquiring and managing the investments. There is also no certainty that key investment professionals will continue to work for the Group for the long-term.

The Company and its business may be impacted by bribery, fraud and corrupttion. The Company has a compliance system in place and is not aware of any such acts which could trigger that risk.

Counterparty exposure

Within BBGI's portfolio, all the PPP/PFI clients are public sector or public sector backed entities.

Across its investments, BBGI has a diversified mix of service providers who are subcontracted to deliver the facility management services.

BBGI regularly reviews the company's exposure to these operators. Also the Company monitors its financial exposure to financial institutions through its bank deposit accounts, term deposits and interest rate swaps. The review processes have not identified any significant counterparty concerns.

 GOVERNANCE

Introduction

The Company is internally managed with a two-tier governance structure comprising a Supervisory Board and a Management Board, with the responsibilities of each as stated below.

The Boards recognise the importance of a strong corporate governance culture and have put in place a framework for corporate governance which they believe is appropriate for the Company.

Internal controls

The Management Board is responsible for setting up the Company's system of internal control and the Supervisory Board for reviewing its effectiveness, and has therefore established an ongoing process designed to meet the particular needs of the Company in managing the risks to which it is exposed.

The process is based on a risk-based approach to internal control through a risk register which identifies the key mitigants and controls on which the Management Board relies to minimise those risks. The matrix is regularly reviewed and updated and the Supervisory Board is provided with regular reports highlighting all material changes to the risk ratings and the action which has been, or is being, taken.

By their nature these procedures will provide a reasonable, but not absolute, assurance against material misstatement or loss.

At each meeting the Supervisory Board also monitors the Company's investment performance in comparison to its stated objective and reviews its activities to ensure that the Management Board is adhering to the investment policy and guidelines. Further, at each meeting, the Supervisory Board receives reports from the UK Company Secretary in respect of compliance matters.

The Company has considered the need for an internal audit function during the reporting period and has concluded that its systems, procedures and internal review processes, and the work of the external auditors, being the auditors of the Company and the project entities, provide sufficient assurance that a sound system of internal control, that safeguards the Company's assets, is maintained. A Company-specific internal audit function was therefore considered unnecessary. Note that the Company will engage an internal auditor in 2014 as part of its on-going obligations under the Law of 12 July 2013 on Alternative Investment Fund Managers.

The Company recognises control systems can only manage (not eliminate) the risk of failure to achieve business objectives, and to provide reasonable (not absolute) assurance against material misstatement or loss.

The Management Board has agreed clearly defined investment criteria, returns targets and risk appetite, and reports on these issues, including operating performance, cash projections, and investment valuations, are submitted to the Supervisory Board at each quarterly meeting.

AIC

The Company is a member of the Association of Investment Companies (the "AIC") and has carefully considered the principles and recommendations of the AIC Code of Corporate Governance (the "AIC Code") and follows the AIC's Corporate Governance Guide for Investment Companies (the "AIC Guide"). On 22 January 2013, the Financial Reporting Council provided the AIC with an updated endorsement letter to cover the February 2013 edition of the AIC Code. The endorsement confirms that the AIC Code fully meets, for investment company boards, their obligations in relation to the UK Corporate Governance Code and paragraph LR 9.8.6 of the Listing Rules.

The revised UK Corporate Governance Code applies to reporting periods beginning on or after 1 October 2012. The Company applied said updated AIC Code and Guide for the 2013 reporting period. The Company has worked throughout the year with IPES (UK) Ltd in order to ensure it is in full compliance with the updated AIC Code.

Relations with shareholders - AIC Code Principle 19

The Company places great importance on communication with its shareholders and welcomes their views. All members of the Supervisory and Management Boards are available at all reasonable times to meet with principal shareholders and key sector analysts.

Feedback from investor meetings is provided by the Management Board and the Company's Joint Brokers to the Supervisory Board at the quarterly meetings. All relevant market commentary on the Company is also provided to the Supervisory Board.

It is the Company's intention to continue to meet with shareholders periodically to facilitate open two-way communication on the development of the Company.

The Company reports formally to shareholders twice a year and the results of Shareholder General Meetings are announced by the Company on the day of the relevant meeting. Additionally, Interim Management Statements and other current information on the Company provided through the Company's website pages assist in keeping shareholders informed. At Shareholder Meetings, the registrar monitors the voting of shareholders and proxy voting is taken into consideration when votes are cast at such meetings.

Shareholders may contact the members of the Management Board at the registered office of the Company or on the Company's website at www.bb-gi.com.

Disclosure under Principle 5 of the AIC Code

Management Board

The Management Board is responsible for the day-to-day management of the Company, including administration, preparation of semi-annual valuations, the statutory accounts, the management accounts, business plans, presenting results and information to shareholders, coordinating all service providers to the Group and giving the Supervisory Board general advice and feedback. The Management Board is also responsible for undertaking the discretionary investment management of the Company's assets and those of the rest of the Group.

The Management Board comprises three members, each employed by BBGI Management HoldCo, a subsidiary of the Company, therefore none of them is deemed independent by AIC Code Principle 2. The Management Board is responsible inter alia for undertaking the discretionary investment management of the Company's assets and those of the rest of the Group; it therefore carries out the function of investment manager. Accordingly the Company has not engaged an external investment manager.

The function of the Management Board is overseen by the Supervisory Board which itself meets the independence criteria set out in AIC Principle 2. This two tier structure is not envisaged by the AIC Code. However, the Company considers that an independent Supervisory Board ensures that the Company is compliant with AIC Code Principle 2.

The Management Board members are appointed and dismissed by the Supervisory Board on an annual basis, not by the shareholders, and therefore this does not meet the requirements of Principles 3 or 4, which require the shareholders of the Company to vote on the appointment / reappointment of Directors. However, as the Management Board carries out the role of an investment manager, the Supervisory Board deems it appropriate that the Management Board members are appointed and dismissed by the Supervisory Board on an annual basis. The members of the Supervisory Board are elected and dismissed by the shareholders and as such the Company considers that this meets the requirements of Principles 3 and 4.

Supervisory Board

The Supervisory Board consists of three members who are all Non-Executive Directors. In accordance with Principle 2 of the AIC Code, all of the Non-Executive Directors are independent.

In accordance with the Articles, all members of the Supervisory Board are elected for a period ending at the Annual General Meeting of the Company in April every year, at which time they are required to retire. They may, if they so wish offer themselves for re-election by shareholders; however, re-appointment is not automatic. Although the Company is not a member of the FTSE 350, the annual re-election requirement of the AIC Code Principle 3 is met by the Articles which provide for a more stringent process than that required for non-FTSE 350 companies.

The Supervisory Board believes that its members have a sufficient balance of skills and experience to enable them to fulfil their obligations. The Supervisory Board meets at least four times a year and between these formal meetings there is regular contact with the Management Board and the Company's third party service providers. The members of the Supervisory Board are kept fully informed of investment and financial controls, and other matters relevant to their remit. Both Supervisory and Management Board members also have access, where necessary in the furtherance of their duties, to independent professional advice at the expense of the Company. In the period under review, the Supervisory Board met nine times including four unscheduled meetings. Attendance of individual Supervisory Board members is outlined below.

As previously mentioned, the Supervisory Board members have a breadth and diversity of experience relevant to the Company, and the Company believes that any future changes to the composition of the Supervisory Board can be managed without undue disruption. On appointment to the Supervisory Board, new members will be provided with an induction.

The Supervisory Board considers items laid out in the Notices and Agendas of meetings, which are formally circulated to its members in advance of the meeting as part of the Board papers; members may also request the addition of any agenda item they consider appropriate for Board discussion. At each meeting, the members are required to advise of any potential or actual conflicts of interest prior to discussion.

Performance evaluation of Supervisory Board

The Supervisory Board evaluates its performance and considers the term and independence of each member on an annual basis. The Board believes that the mix of skills meet the requirements of the Company. The annual evaluation for the year ended 31 December 2013 has been completed. The evaluation performed comprised completion of a hard copy form followed by collation of all comments into a summary. The Board considered the results of this evaluation process and it was agreed that the current composition of both the Supervisory Board and its Audit Committee reflected a suitable mix of skills and experience, and that each was functioning effectively. For the evaluation of the Chairman, the Senior Independent Director discussed the results of the questionnaire with the Chairman prior to further distribution to, and discussion with, the remaining members.

Performance evaluation of Management Board

The Management Board carries out the functions of the Company's investment manager, and its members are appointed by the Supervisory Board for a period of one year renewable. Mr Ball and Mr Schramm were both originally appointed as members of the Management Board on 5 October 2011; their appointments were renewed for the first time with effect from 5 October 2012. Mr Denny was first appointed to the Management Board with effect from 30 April 2013 and, as such, his appointment has not yet been formally considered for renewal.

During the year under review, the Supervisory Board conducted an evaluation of the performance of the Management Board and its members. It concluded that both the Management Board collectively, and its members individually, were operating effectively and efficiently, and the continued appointment of the individual members was in the best interests of the Company and its shareholders as a whole. Accordingly the Supervisory Board appointed Mr Ball and Mr Schramm as members of the Management Board for a further term of one year with effect from 5 October 2013. Mr Denny's appointment will be considered for renewal prior to 30 April 2014.

Re-election of Supervisory Board members

In accordance with the Articles of Incorporation, Supervisory Board members are elected for a period ending at the Company's next annual general meeting, at which time they are eligible for reappointment. Each member of the Supervisory Board has decided to offer himself for re-election at the forthcoming Annual General Meeting and, as a result of the successful performance evaluation described above, the Supervisory Board recommends the re-election of each member.

Review / monitoring obligations / delegation of responsibilities of Supervisory Board

The primary focus at Supervisory Board meetings is a review of investment performance and associated matters such as risk management, marketing/investor relations, gearing, general administration and compliance, peer group information and industry issues. In addition, it is responsible for establishing and monitoring compliance with the Company's investment policy, appointing the members of the Management Board, supervising and monitoring the appointment and performance of the Company's 3rd party service providers (and those of its subsidiaries) and providing general supervisory oversight to the operations of the Group as a whole.

The Supervisory Board will continue to consider constantly the Company's strategy with regard to market conditions and feedback from both the Management Board and shareholders. The investment strategy, which is set out in the Company's prospectus and this annual report, is reviewed regularly with the Management Board.

Members of the Supervisory Board and Management Board

This table sets out the expiry dates of the current terms of the directors' appointments. All appointments may be renewed in accordance with the provisions of the Company's Articles.

* From time to time there are unscheduled meetings of both the Supervisory Board and Management Board, most of which are short notice meetings to approve documents previously discussed or of a technical nature. Due to the generally short notice of these meetings, not all members are able to attend.

** Mr. Töpfer resigned from the Supervisory Board, with effect from 21 May 2013. Mr. Töpfer attended all scheduled meetings of the Supervisory Board up to the date of his resignation. There were no unscheduled meetings during this period.

*** Mr Denny attended all scheduled and unscheduled meetings in the period post his appointment to the Management Board.

**** Mr Speer attended all scheduled meetings in the period prior to his replacement on the Management Board. There were no unscheduled meetings during this period.

Other listed company directorships

David Richardson (Chairman)

Serco Group plc (resigned with effect 15 May 2013)

Assura Group Limited

Howard Myles

The World Trust Fund

Aberdeen Private Equity Fund Limited

Baker Steel Resources Trust Limited

BlackRock Hedge Selector Limited

JP Morgan Brazil Investment Trust plc

Small Companies Dividend Trust plc

Colin Maltby

HarbourVest Senior Loans Europe Limited

BACIT Limited (formerly known as Battle Against Cancer Investment Trust Limited)

Ocean Wilson Holdings Limited

BlackRock Absolute Return Strategies Limited (delisted on 17 January 2013)

Committees of the Supervisory Board

Audit Committee

The Audit Committee has been in operation throughout the year in accordance with the AIC Code. The Committee operates within clearly defined terms of reference including all matters indicated by Disclosure and Transparency Rule 7.1 and UK Corporate Governance Code and comprises the three independent Non-Executive Directors who are members of the Supervisory Board: Howard Myles is the Chairman of the Committee, with Colin Maltby and David Richardson the other members.

The terms of reference of the Audit Committee are available from the Company Secretary upon request.

The Audit Committee is responsible for:

§ Monitoring the integrity of the financial statements of the Group and any formal announcements relating to the Group's financial performance and reviewing significant financial reporting judgements contained therein

§ Reviewing the Group's internal financial controls and unless expressly addressed by the Board itself, the Group's internal control and risk management systems

§ Making recommendations to the Supervisory Board, for a resolution to be put to the shareholders for their approval at the Annual General Meeting, on the appointment of the external auditor and the approval of the remuneration and terms of engagement of the external Auditor

§ Reviewing and monitoring the external auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements

§ Reviewing the Group's Annual and Interim Reports and Financial Statements

§ Developing and implementing a policy on the engagement of the external Auditor to supply non-audit services, taking into account relevant guidance regarding the provision of non-audit services by the external audit firm

The Audit Committee is required to report its findings to the Board, identifying any matters on which it considers that action or improvement is needed, and make recommendations on the steps to be taken.

In the event of any conflict between the provisions of the AIC Code and the provisions of the law on the Audit Profession, the Company will comply with the provisions of the law on the Audit Profession.

The external auditor is invited to attend the Audit Committee meetings at which the annual and interim accounts are considered.

Meetings

The Audit Committee is required to meet not less than two times a year and at such other times as the Audit Committee Chairman may require. Any member of the Audit Committee may request that a meeting be convened by the Company Secretary. The external Auditor may request that a meeting be convened if it is deemed necessary. Other Directors and third parties may be invited by the Audit Committee to attend meetings as and when appropriate.

Annual General Meeting

The Audit Committee Chairman attends each Annual General Meeting of the Company and is prepared to respond to any shareholder questions on the Audit Committee's activities.

Other Committees

There are no other constituted Committees of the Board. The Supervisory Board considers its size to be such that it would be unnecessarily burdensome to establish separate Management Engagement, Nominations and Remuneration Committees, and therefore the functions of these Committees are carried out by the Supervisory Board as a whole, which is responsible for making recommendations in relation to the Group's remuneration programme and on proposed changes of the Group's senior personnel. There are therefore no terms of reference in relation to these Committees.

The Supervisory Board, in its capacity as Remuneration Committee, met five times during the period under review.

The Supervisory Board, acting as Nominations Committee, met twice in the year to 31 December 2013.

At each scheduled meeting during the reporting period, the Supervisory Board, as Management Engagement Committee, and with the Management Board, considered the performance and ongoing appointment of the Company's 3rd party service providers. Over the year, it has concluded that the ongoing appointments of these 3rd party service providers continue to be in the best interests of the Company as a whole.

Remuneration of Management and Supervisory Board

During the year the Supervisory Board members were paid the following fees:

Supervisory Board £

David Richardson 46,250

Colin Maltby 36,875

Howard Myles 36,875

Thomas Töpfer 11,703

The aggregate remuneration of the members of the Supervisory Board in their capacity as such was £131,703.

It was proposed in the relevant prospectus that the members of the Supervisory Board be paid an ex gratia payment of £20,000 each for their services in relation to the July Issue and the December Issue with such remuneration being deferred pending the approval of shareholders to increase the cap to £300,000. These additional fees have been accrued in the financial results of the Company for the year ended 31 December 2013.

None of the members on the Management Board receive a fee for acting in their capacity as directors of the Management Board.

Board members and other interests

Frank Schramm, Duncan Ball and Michael Denny who are members on the Management Board are also BBGI Management HoldCo managers. Apart from Mr Schramm and Mr Ball, none of the other members have Service Contracts. Michael Denny is an employee of BBGI Management HoldCo.

No loan has been granted to, nor any guarantee provided for the benefit of, any director by the Company.

There are no family relations between the members of the Management Board and the Supervisory Board. David Richardson, Colin Maltby and Howard Myles are all considered to be independent board members as (i) they have not been employees of the Company or the Bilfinger group (ii) have not had material business relationships with the Company (iii) have not received additional remuneration from the Company (iv) do not have family ties with any of the Company's 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) and have not served on the board for more than nine years.

Bilfinger Group's right to appoint a Director

In December 2013 Bilfinger's holding of ordinary shares fell below 10% of the issued Ordinary Share capital of the Company. As a result of this reduced holding, and pursuant to the terms of the shareholding and brand agreement between Bilfinger and the Company, Bilfinger has now lost its entitlement to appoint a representative to the Supervisory Board.

Shareholdings of members of Management/Supervisory Board

*During the period Mr. Thomas Töpfer resigned from the Supervisory Board with effect from 21 May 2013.

**Mr Michael Denny was appointed as a member of the Management Board of the Company with effect from 30 April 2013. With effect from the same date, Mr Arne Speer retired as a member of the Management Board.

Remuneration of the Management

The Supervisory Board and the Management Board believe that an appropriate remuneration programme for the Management Board plays an important role in achieving short and long-term business objectives that ultimately drives business success in alignment with long-term shareholder goals.

The level and structure of the remuneration, compensation and any other benefits to which the Supervisory Board, the Management Board and other management team members that are employed by BBGI Management HoldCo or other members of the Group are entitled are reviewed by the Supervisory Board (acting as the Company's Remuneration Committee) on an annual basis. The Supervisory Board makes recommendations in respect of the remuneration programme to the Management Board who implement these.

The objectives of the remuneration programme are to:

· Attract and retain highly qualified employees with a history of proven success

· Align the interests of the Group's employees with Shareholders' interests and with the execution of the Company's investment policy and fulfilment of the Company's investment objectives

· Establish performance goals that, if met, are expected to improve long-term Shareholder value

· Link compensation to performance goals and provide meaningful rewards for achieving them

The remuneration programme is reviewed annually and appropriate benchmarking with comparable businesses to that of the Company is undertaken with the intention of ensuring that the remuneration programme remains competitive in order to achieve the objectives above.

Under the current remuneration programme, all employees of BBGI Management HoldCo (which include the members of the Management Board, Mr Schramm, Mr Ball and Mr Denny) are entitled to an annual base salary payable monthly in arrears, which is reviewed annually by the Supervisory Board. In addition, certain senior executives (including Mr Schramm and Mr Ball) are also entitled to participate in a short-term incentive plan ("STIP") and a long-term incentive plan ("LTIP").

Service contracts

BBGI Management HoldCo S.à r.l. has entered into service contracts with both Mr Schramm and Mr Ball (each such contract being a "Service Contract"). The Service Contracts for Mr Schramm and Mr Ball are on identical terms and conditions save that the payments to Mr Schramm are in Euros and those to Mr Ball are in Canadian Dollars and are each terminable by BBGI Management HoldCo with immediate effect for "cause" or "without cause", subject to payment of 24 months' pay and benefits, or can be terminated by the relevant individual by giving twelve months' written notice to BBGI Management HoldCo.

Mr Schramm and Mr Ball are each entitled to an annual base salary payable monthly in arrears of EUR 259,375 per annum and CAD 366,123 per annum respectively which is reviewed annually by the Supervisory Board. The salaries are reviewed with effect from 1 July each year. In 2013, both Mr Schramm and Mr Ball received a salary increase equating to 3.75% of their base salary. Mr Schramm received an increase of EUR 9,375 and Mr Ball an increase of CAD 13,233.

Short-Term Incentive Plan (STIP)

Under the STIP, Mr Ball and Mr Schramm are entitled to an annual award ranging from 0% to 80% of their annual base salary, subject to the achievement of pre-determined performance objectives set by the Supervisory Board at the beginning of the relevant financial year. The maximum amount payable under the STIP is 80% of the relevant executive's base salary, and the target performance is 48% of an executive's annual base salary.

Payments under the STIP will be payable in cash or near cash instruments and will be made by the relevant member of the Group that employs the relevant executive (i.e. BBGI Management HoldCo in the case of Mr Schramm and Mr Ball). The Supervisory Board is responsible for determining both whether the relevant performance objectives (which may be financial and non-financial) have been satisfied and the level of the payment under the STIP for the relevant year.

On termination where the individual resigns or is terminated for "cause", the individual will be paid on the normal STIP payment date a sum based on actual contributions towards performance objectives and then pro-rated based on the individual's service during the applicable STIP year. If the individual is terminated "without cause", they will receive a sum on termination based on the performance objectives being deemed to have been met and then pro-rated based on the individual's service during the applicable STIP year. In addition, where termination is "without cause", the individual will receive a payment equivalent to twice the target annual STIP payment based on achievement of performance objectives.

In May 2013, Mr Schramm received a bonus of EUR 187,500 and Mr Ball CAD 264,667.50 in respect of the period from 1 January 2012 to 31 December 2012.

The bonus payment for Mr Schramm in respect of the financial year ending on 31 December 2012 was not paid in cash but by way of DAX warrants that BBGI Management HoldCo acquired (for the cash price equal to the bonus figures referred to above) and assigned to Mr. Schramm.

Both Mr Schramm and Mr Ball will receive a bonus of EUR 203,750 and CAD 287,605 respectively for the year ending 31 December 2013. Bonuses will be paid in May 2014.

Long-Term Incentive Plan (LTIP)

Under the LTIP, Mr Ball and Mr Schramm may be awarded a percentage of the executive's salary, depending on the performance of the Company, measured by the total shareholder return over each rolling three year Return Period.

Subject to the achievement of predetermined targets, Mr Ball and Mr Schramm are each entitled to an annual award ranging from a target of CAD 176,445 and EUR 125,000 to a maximum of CAD 352,890 and EUR 250,000 respectively. The target award will be determined by reference to a threshold hurdle of a total shareholder return of 16.5% over the three year return period starting from 21 December 2011. The maximum award requires a total shareholder return of approximately 28% over the three year period.

Awards under the LTIP will be made at the beginning of each return period but will only accrue at the end of the return period. Continued employment is a normal condition of the award. Payments under the LTIP will be payable in cash or near cash instruments after the end of the return period, once the determination has been made by the Supervisory Board, and will be made by the member of the Group that employs the relevant executive (i.e. BBGI Management Holdco in the case of Mr Schramm and Mr Ball).

On termination where the individual resigns or is terminated for "cause", all LTIPs unpaid to the relevant individual by the termination date will be forfeited. If the individual is terminated "without cause", a payment will be made at the normal LTIP payment dates in respect of any outstanding LTIP calculated on the basis of target total shareholder return being deemed to have been met and the LTIP sum then pro-rated to reflect actual service to termination plus deemed service for a further 24 months during the relevant LTIP term.

No long term incentive payment was due for the year 2013.

In view of the significant increase in scale and responsibility of the management we have instigated a third party review of management remuneration which will include the LTIP. As a result, we have determined to delay making the proposed amendment of the LTIP to provide for the delivery of awards partly in cash and partly in shares which was approved by shareholders at the Annual General Meeting on 30 April 2013. A decision on the future structure of the LTIP will be made following the completion of the third party review and will be communicated to shareholders at this time.

An accrual equating to the target award for Mr. Schramm, EUR 125,000, and Mr. Ball, CAD 176,445, has been recorded in the financial statements as 31 December 2013.

No loan has been granted to, nor any guarantee provided for the benefit of, any manager by BBGI Management HoldCo.

There are no family relationships between Mr Schramm and Mr Ball.

Neither Mr Schramm nor Mr Ball will acquire or have options over any shares in BBGI Management HoldCo, which is and is intended to be wholly owned by the Company.

As at the date of this Annual Report, there are no amounts set aside or accrued by the Company to provide pension, retirement or similar benefits.

Employment contract

BBGI Management HoldCo has entered into a contract of employment with Mr Denny, which is terminable on three months' written notice by either party.

Mr Denny is entitled to an annual base salary payable monthly in arrears of EUR 145,549 per annum which is reviewed annually by the Supervisory Board. In addition, Mr Denny is entitled to be considered for a discretionary bonus. The maximum amount payable under this bonus is EUR 50,000, and the target performance is EUR 40,000.

Mr. Denny received a pro-rated bonus of EUR 36,667 for his period of employment during the year ending 2012. This bonus was paid in May 2013. Mr Denny also received a one off EUR 20,000 payment in respect of the year ending 31 December 2012 as an incentive to join the Group and leave his previous employment which was paid in March 2013. In December 2013 Mr Denny received a one off project related bonus of EUR 50,000. Mr Denny will receive a bonus of EUR 40,000 for the year end 31 December 2013. Payment will be made in May 2014.

The bonus payments for Mr Denny in respect of the financial year ending on 31 December 2012 were not paid in cash but by way of DAX warrants that BBGI Management HoldCo acquired (for the cash price equal to the bonus figures referred to above) and assigned to Mr Denny.

As at the date of this Annual Report, there are no amounts set aside or accrued by the Company to provide pension, retirement or similar benefits.

AIFMD

The Company will be subject to the EU Alternative Investment Funds Manager's Directive ("AIFMD"). Implementation of the AIFMD in national legislation will occur in July 2014. The Company will apply to the CSSF for authorisation as an authorised Alternative Investment Fund Manager ("AIFM"). Under the law of 12 July 2013 on Alternative Investment Fund Managers, the Company, being the AIFM, will be subject to increased regulatory supervision from the CSSF. Among other requirements the Company is required to have a dedicated Risk Management function which is both functionally and hierarchically separate from the functions of the operating units, including the function of portfolio management. In addition the Company is required to have a Compliance function and an Internal Audit function. Management are currently implementing measures to ensure the Company is compliant with the obligations of the law on 12 July 2013 by 22 July 2014. The recurring cost of compliance with the AIFMD is currently being assessed, but is not expected to exceed £120,000 per annum.

Investor communications

The Management Board and the Supervisory Board are keen to maintain and develop engagement with shareholders. Regular and comprehensive feedback from investors is received via the Management Board and the Corporate Brokers. The Management Board have made themselves available to major shareholders, collectively and on a one-on-one basis, for discussion of key issues and expectations around Company performance.

The Management Board and the Supervisory Board regularly review the level and quality of the information which the Company published both on the Company website and in reports and presentations. Our intention is to remain at the forefront of disclosure and transparency for our asset class.

Directors' and officers' liability insurance

The Company has taken out Directors' and Officers' Liability Insurance on behalf of the Directors of the Management Board and the Supervisory Board at the expense of the Company.

Environmental and Social Governance ("ESG")

As part of their corporate social responsibility, the Management Board and the Supervisory Board recognise the importance of ensuring that the Company develops appropriate environmental, social and ethical policies. The Company has implemented its ESG policies which have been designed to ensure that the Company follows best practices in relation to corporate responsibility. The policies are monitored and updated on an ongoing basis.

In respect of further investments, as part of the due diligence process, the Company will analyse the environmental, social and ethical policies of potential new acquisitions and, where possible, the adherence to those policies by key contractors and service providers. In addition, the Company will undertake an analysis of governance procedures at the relevant project entity with the intention of ensuring that the Company has appropriate Board representation and influence at the project entity level.

Once the Company has acquired an investment in a project entity, BBGI Management HoldCo undertakes regular reviews of the environmental, social and ethical policies that the project entities have in place and their adherence to these policies in the delivery of their services. Health and safety are also monitored across the Company's portfolio and any serious breaches of health and safety are reported to the Management Board who in turn report to the Supervisory Board.

Board Diversity

The Supervisory Board and the Management Board have considered their diversity, as recommended by the AIC Code, along with the "Women on Boards" report of February 2011(the "Davies Report") as supplemented in April 2013. They concur with the Davies Report and the AIC Code that Board appointments must always be made on merit, that Boards should have a balance of relevant skills, experience, length of service and knowledge of the Company, and that Independent Directors should take the lead in the appointment of new Directors.

The Company is still early in its life and no new appointments have been made to the Supervisory Board since its shares were first listed and admitted to trading on the London Stock Exchange. The Supervisory Board and the Management Board believe that their present composition embodies an appropriate diversity of perspectives and relevant skills, qualifications and experience. As the Company matures, it may become relevant to seek a greater diversity by length of service, gender, ethnicity, nationality or other criteria. However, the Supervisory Board and Management Board remain committed to conducting any evaluation of prospective candidates, as of their own members, without discrimination on grounds of gender, age, nationality, ethnicity, faith or sexual orientation. Their overriding objective is to select Directors on merit with relevant and complementary skills to help the Company maximise value for shareholders. 

Donations

The Company made no political or charitable donations during the reporting period.

Material contracts

No contracts, not being contracts entered into in the ordinary course of business, have been entered into by the Company during the year ended 31 December 2013.

AUDIT COMMITTEE REPORT

The Audit Committee met twice in the year to 31 December 2013 and considered, inter alia:

· The 2012 Annual and 2013 semi-annual accounts

· The Reports of the Auditors

· Auditors' terms of appointment and remuneration (including overseeing the independence of the Auditors particularly as it relates to the provision of non-audit services) in accordance with the Law on the Audit Profession dated 18 December 2009

· Reviewing and approving the external auditors' plan for the following financial year

· Reviewing the appropriateness of the Company's accounting policies

· Reviewing the risk register of the Company

· Ensuring the adequacy of the internal control systems and standards

The most significant risk in the Company's accounts is whether its investments are fairly valued and this issue is considered carefully when the Committee reviews the Company's annual and interim Accounts. The Management Board are available during the Audit Committee review process to provide detailed explanations of the rationale used for the valuation of each investment. The external auditor is invited to attend the Audit Committee meetings at which the annual and interim accounts are considered in order to present the conclusion of their work. The Committee concluded that the valuation process had been properly carried out and that the investments have been fairly valued.

The Committee annually reviews the performance of KPMG Luxembourg S.à r.l., the Company's external auditors. In doing so the Committee considers a range of factors including the quality of service, the auditors' specialist expertise and the level of audit fee. The Committee remains satisfied with their effectiveness and therefore has not considered it necessary, to date, to require the auditors to tender for the audit work. There are no contractual obligations restricting the choice of external auditor. The reappointment of the external auditors is subject to shareholder approval at the Annual General Meeting.

The Committee has reviewed the provision of non-audit services and believes them to be cost-effective and not an impediment to the external auditors' objectivity and independence.

As a result of its work during the period, the Audit Committee has concluded that it has acted in accordance with its terms of reference and has ensured the independence and objectivity of the external auditor. The Audit Committee has recommended to the Board that the external auditor is re-appointed.

Finally, the Audit Committee has concluded that the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

APPROVAL

On behalf of the Audit Committee

Howard Myles

Chairman of the Audit Committee

25 March 2014

MANAGEMENT BOARD RESPONSIBILITIES STATEMENT

The Management Board of the Company is responsible for ensuring proper preparation of the annual report and financial statements of the Company for each financial period in accordance with applicable laws and regulations, which require them:

i) 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; and

ii) to give a true and fair view of the development and performance of the business and the position of the Group as well as a true and fair description of the principal risks and uncertainties the Group may encounter.

In addition, the Management Board is responsible for ensuring that the Company is in compliance with applicable company law and other UK or Luxembourg applicable laws and regulations and to provide a description of the risks and uncertainties the Group may encounter and to put in place an appropriate control framework designed to meet the Group's particular needs and the risks to which it is exposed.

In preparing such financial statements the Management Board is responsible for:

· Selecting suitable accounting policies and applying them consistently

· Making judgments 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 which disclose with reasonable accuracy the financial position of the Group and enable them to ensure that the financial statements comply with all relevant regulations

· Safeguarding the assets of the Group and hence for 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, 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 as a whole.

• The Chairman's statement and the report of the Management Board include a fair review of the development and performance of the business and the position of the Company and Group included in the consolidation taken as a whole together with a description of the principal risks and uncertainties that it faces.

Luxembourg, 25 March 2014

Signatures

Duncan Ball, Co-CEO Frank Schramm, Co-CEO Michael Denny, Director

To the Shareholders of

BILFINGER BERGER GLOBAL INFRASTRUCTURE SICAV S.A.6 E, route de Trèves

L-2633 Senningerberg

Luxembourg

REPORT OF THE REVISEUR D'ENTREPRISES AGREE

Report on the consolidated financial statements and separate financial statements

We have audited the accompanying consolidated financial statements of Bilfinger Berger Global Infrastructure SICAV S.A. (the 'Company') and its subsidiaries (the 'Group'), which comprise the consolidated statement of financial position as at 31 December 2013 and the consolidated statements of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory notes.

We have also audited the accompanying separate financial statements of the Company, which comprise the statement of financial position as at 31 December 2013 and the statements of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory notes.

Management Boards' responsibility for the consolidated financial statements and separate financial statements

The Management Board is responsible for the preparation and fair presentation of these consolidated financial statements and separate financial statements in accordance with International Financial Reporting Standards 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 and separate financial statements that are free from material misstatement, whether due to fraud or error.

Responsibility of the Réviseur d'Entreprises agréé

Our responsibility is to express an opinion on these consolidated financial statements and separate financial statements based on our audits. We conducted our audits in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance whether the consolidated financial statements and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and separate financial statements. The procedures selected depend on the judgement of the Réviseur d'Entreprises agréé, including the assessment of the risks of material misstatement of the consolidated financial statements and the separate financial statements, whether due to fraud or error. In making those risk assessments, the Réviseur d'Entreprises agréé considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements and the separate financial statements 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 entity's internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Management Board, as well as evaluating the overall presentation of the consolidated financial statements and the separate financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Bilfinger Berger Global Infrastructure SICAV S.A. as of 31 December 2013, and of its consolidatedfinancial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

In our opinion, the separate financial statements give a true and fair view of the financial position of Bilfinger Berger Global Infrastructure SICAV S.A. as of 31 December 2013, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Other matters

Supplementary information included in the annual report has been reviewed in the context of our mandate but has not been subject to specific audit procedures carried out in accordance with the standards described above. Consequently, we express no opinion on such information. However, we have no observation to make concerning such information in the context of the consolidated financial statements and separate financial statements taken as a whole.

Report on other legal and regulatory requirements

The Report of the Directors, including the corporate governance statement, which is the responsibility of the Board of Directors, is consistent with the consolidated financial statements and the separate financial statement and includes the information required by the law with the respect to the Corporate Governance Statement.

Luxembourg, 25 March 2014 KPMG Luxembourg S.à r.l.

Cabinet de révision agréé

Frauke Oddone

The accompanying notes form an integral part of the consolidated financial statements.

The accompanying notes form an integral part of the consolidated financial statements.

The accompanying notes form an integral part of the consolidated financial statements.

The accompanying notes form an integral part of the consolidated financial statements

The accompanying notes form an integral part of the consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

for the year ended 31 December 2013

1. Reporting entity

Bilfinger Berger Global Infrastructure SICAV S.A. (the 'Company' or the 'Group' if referred to together with its subsidiaries) is an investment company domiciled in Luxembourg that was incorporated on 3 October 2011 under the law of 17 December 2010 concerning undertakings for collective investment. The address of the Company's registered office is the EBBC, 6E, route de Trèves, L-2633 Senningerberg, Luxembourg. The Company is admitted to the official list of the UK Listing Authority (premium listing, investment company) and to trading on the main market of the London Stock Exchange.

The Company is a closed-ended investment company that seeks to invest in a diversified portfolio of operational (or near operational) Public Private Partnership (PPP)/ Private Finance Initiative (PFI) infrastructure assets or similar assets.

The Group employed 11 employees as of 31 December 2013 (9 as of 31 December 2012).

Reporting period

The Company's reporting period runs from 1 January to 31 December, every year. The Company's ("the Group" if referred together with its consolidated subsidiaries) consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows includes comparative figures as at 31 December 2012 (as restated - see Note 2).

The amounts presented as non-current in the consolidated statement of financial position are those which are expected to be settled after more than one year. The amounts presented as current are those which are expected to be settled within one year.

Certain modifications have been made to the 31 December 2012 comparative information. Such modification being necessary to align the comparative information with the current consolidated financial statements and to allow a better comparison with the 31 December 2013 amounts (see Note 2).

2. Basis of preparation

Statement of compliance

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the provisions of the Standard of Recommended Practices issued by the Association of Investment Companies (AIC SORP).

Due to changes in accounting policy, specifically the adoption of the new and amended IFRS 10 (see below), all items presented in the consolidated income statement and consolidated comprehensive income are considered "capital" in nature. As such, no further disclosure is required as there are no longer items deemed "revenue" in nature.

These consolidated financial statements were approved by the Management Board and Supervisory Board on 25 March 2014.

Changes in accounting policy

Except for the changes below, the Group has consistently applied the accounting policies as set out in Note 3 to all periods presented in these financial statements.

The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2013:

· Amendments to IFRS 10, IFRS 12 and IAS 27 (2012) (see a) - early adopted

· IFRS 10 Consolidated Financial Statements (2011) - early adopted

· IFRS 11 Joint Arrangements - early adopted

· IFRS 13 Fair Value Measurements (see (b))

· Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) (see (c))

· Disclosures - Offsetting Financial Assets and Financial Liabilities ( Amendment to IFRS 7)

· Annual improvements to IFRS 2009 - 2011

The adoption of the abovementioned standards does not have any significant impact on the consolidated financial statements of the Group, other than those referred to below :

a) Amendments to IFRS 10, IFRS 12 and IAS 27 (2012)

The Group has early adopted Investments Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (2012) (the amendments) with a date of initial application 1 January 2013. This standard requires entities which qualify as Investment Entities to not consolidate certain subsidiaries even if it obtains or has control over that subsidiary. Instead, the standard requires an Investment Entity to measure investments on certain subsidiaries at fair value through profit or loss in accordance with the provisions of IAS 39 (Financial Instruments : Recognition and Measurement). The Group meets the definition of an Investment Entity and therefore no longer consolidates on a line by line basis its interests in subsidiaries directly linked to PPP/PFI operations. The Group presents these subsidiaries as investments at fair value through profit or loss (or FVPL Investments) in the consolidated statement of financial position as a single line item. Any fluctuation in the fair values of FVPL Investments is reflected in the consolidated income statement as profit or loss.

Although the Company qualifies as an Investment Entity and is required to value certain subsidiaries at fair value, the Company has a number of subsidiaries which provides services that relate to the Company's investment activities which are required to be consolidated on a line by line basis. These subsidiaries (consolidated on a line by line basis) are as follows:

· BBGI Management Holdco S.à r.l. ("MHC")

· BBGI S.à r.l. ("GP")

· BBGI Investments S.C.A. ("Lux Holdco")

· BBGI Holding Limited ("UK Holdco")

· BBGI CanHoldco Inc. (incorporated in 2013 - see Note 16)

· BBGI Guernsey Holding Limited (incorporated in 2013 - see Note 16)

· BBGI (NI) Limited (incorporated in 2013 - see Note 16)

The following table summarizes the adjustments made to the 31 December 2012 consolidated statement of financial position, consolidated income statement and consolidated comprehensive income as a result of the early adoption of the abovementioned standards: