BBGI Global Infrastructure Regulatory News (BBGI)

28 March 2019

BBGI SICAV S.A.

('BBGI' or the 'Company')

Annual Results for financial year ended 31 December 2018

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (Regulation 596/2014). Upon the publication of this Announcement via a Regulatory Information Service this inside information is now considered to be in the public domain.

A copy of this Annual Report is also available for viewing on the Company's website at https://www.bb-gi.com/investors/results-reports-presentations/

FINANCIAL HIGHLIGHTS

· Investment Basis NAV ('NAV') up 24.4 per cent to £774.5 million as at 31 December 2018 (31 December 2017: £622.5 million).[i]

· NAV per Share up 2.8 per cent to 133.5 pence per share as at 31 December 2018 (31 December 2017: 129.9 pence per share).

· Total Shareholder Return ('TSR') since listing in December 2011 to 31 December 2018 of 111.4 per cent[ii], equating to an annualised TSR of 11.2 per cent which is well above the IRR target of 7 to 8 per cent on the £1 IPO issue price.[iii]

· Dividend Distribution per Share up 3.8 per cent to 6.75 pence per share as at 31 December 2018.

· Target Minimum Dividend for 2019 raised to 7.00 pence per share.

· Strong cash dividend cover of 1.5x (31 December 2017: 1.5x).[iv]

· An Ongoing Charges ratio of 0.93 per cent (31 December 2017: 0.99 per cent).[v]

PORTFOLIO HIGHLIGHTS

· 48 high-quality, availability-based PPP infrastructure assets with portfolio performance and cash receipts ahead of business plan contributing to the increase in the 2018 dividend.

· Value enhancements achieved through accretive management resulting in 1.9 per cent increase in NAV.

· Further de-risking of assets including the opening of North Commuter Parkway and Stanton Territorial Hospital in Canada, which moved from construction to ramp-up phase.

· Refinanced and de-risked Northern Territory Secure Facilities ('NTSF') in Australia with longer-term financing.

· Equity capital of £128 million raised through two new ordinary share issues in April and September 2018.

· New four-year revolving credit facility of £180 million came into effect in January 2019, with access to a further accordion tranche of £70 million.

· At 31 December 2018, the Group had, on an Investment Basis, a net debt position of £3.9 million consisting of a total cash balance of £11.4 million and total borrowings outstanding of £15.3 million.

· Selective acquisition strategy has resulted in investments in eight PPP assets during 2018 with a total value of £90.5 million. (31 December 2017: £93.3 million)

· Attractive global pipeline of availability-based assets in highly rated investment grade countries including a North American strategic investment partnership which provides additional investment opportunities in availability-based PPP assets via right of first offer.

· Signatory to the United Nations Responsible Investment Principles ('UNPRI') and commitment as a long-term investor in public infrastructure assets with strong relationships with all significant stakeholders.

PORTFOLIO OVERVIEW

(based on portfolio value at 31 December 2018)

100% availability-based PPP revenue stream with no exposure to demand or regulatory risk assets

Geographically diversified in stable, developed countries

Well-diversified sector exposure with large allocation to lower risk availability-based roads & bridges (includes one rail project in Canada), and limited acute health exposure

Low risk 100% operation portfolio (by value)

Long investment life with 66% of portfolio by value enjoying a duration >20 years; average life of 21.3 years

79% of assets in the portfolio 50% owned or more

Well diversified portfolio with no major single asset exposure

All assets located in countries with ratings between AA and AAA

The NTSF asset is the only remaining asset in the BBGI portfolio carrying refinancing risk

The chart below based on the portfolio at 31 December 2018 illustrates a steady stream of portfolio cash flows deriving from the underlying assets until 2051. The cash flows are stable and long-term with their predictability enhanced by government or government-backed counterparties and the contracted nature of the cash flows. The index-linked provisions provide a positive inflation correlation.

Typically, new investments contribute to both the cash flows and the weighted average length of the portfolio. Based on current estimates, the existing portfolio is forecast to enter into the repayment phase in 2036 whereby cash inflows from the portfolio will be paid to BBGI's shareholders as capital and the portfolio valuation will reduce as assets reach the end of their concession term.

[Please refer to the .pdf version of this document on the Company's website for the graph to show projected portfolio cash flow].[vi]

As at 31 December 2018, BBGI has a weighted average portfolio life of 21.3 years, a decrease of 0.5 years compared with 31 December 2017.

CHAIRMAN'S STATEMENT

Dear Shareholders,

It is a pleasure to address you for the first time as BBGI's new Chairman. 2018 has been another successful year for our Company and I am pleased to report that the Management Board has delivered a strong set of financial results with long-term, predictable returns to you, our shareholders.

The Management Board continued to follow a strict investment strategy into low-risk, availability-based assets, where our selective acquisition strategy secured both new and follow-on interests in eight assets. This now brings our portfolio to a total of 48 assets with a NAV of £774.5 million.

LONG-TERM SHAREHOLDER RETURNS

Our portfolio continued to benefit from regular, contracted payments which are largely uncorrelated to general market or economic factors and are received from government or government-backed entities that procure the assets in which we invest. These sustainable cash flows remained well-supported by prudent financial management and helped us to achieve our target full-year dividend of 6.75pps for 2018, representing a 3.8 per cent increase on the prior year.

Since our IPO in 2011, we have achieved a Total Shareholder Return of 111.4 per cent, or 11.2 per cent on an annualised basis. This gives the Company the confidence to maintain a proven, progressive dividend policy by reaffirming our target dividend for 2019 of 7.00 pps.

ROBUST PORTFOLIO PERFORMANCE

The Management Board's value-driven active asset management of the entire portfolio was proven by the Company's assets generating cash receipts ahead of business plan. Notwithstanding the heightened pressure on some procuring authorities - particularly in the UK - to use deductions as a mechanism to recover capital through the penalty regime, our dedication to active asset management of the Company's portfolio and the emphasis we place on maintaining positive client relationships, ensured that we maintained a very high level of asset availability, at around 99.7 per cent. The portfolio's assets recorded no material lock-ups or events of defaults and deductions over the period were either borne by third-party facility managers and road operators, or as part of planned lifecycle budgets.

Over the period, we achieved £11.8 million of operational and value accretive enhancements, contributing a 1.9 per cent increase in the Company's NAV. This included de-risking several assets under construction and those which have recently entered operations. Please refer to the Portfolio Review section for more information. Construction de-risking has resulted in significant organic NAV growth of approximately 5.2 per cent since listing.

A priority for the Management Board's risk management framework is monitoring supply chain exposure very closely, of which more can be found in the Portfolio Review section. We continue to have diversified partnerships with subcontractors spread across internationally developed markets and have had no exposure to Carillion plc.

PRUDENT FINANCIAL MANAGEMENT

Irrespective of unfavourable market sentiment towards the wider infrastructure sector in the first half of 2018, investor confidence in the Company's investment case was further demonstrated by our successful equity issue of £60.8 million in April 2018 followed by a further £67.2 million equity issue in September 2018, both of which were significantly oversubscribed. We remain grateful for the support from both existing and new shareholders.

For the Management Board to execute efficiently on pipeline acquisitions and avoid holding unutilised cash on the Company's balance sheet, the Company has a tried and tested method of drawing on our revolving credit facility (RCF) to finance new acquisitions. To support our strong pipeline, the Company's RCF was enhanced to £180 million secured for the next four years, with an additional £70 million incremental accordion tranche.

Managing foreign exchange (FX) risk continued to be a core component of the Management Board's prudent approach to financial management. To help reduce and mitigate FX risk, the Management Board put in place a revised hedging strategy designed to limit NAV sensitivity to FX to 3 per cent for an adverse 10 per cent FX movement.

SELECTIVE ACQUISITION STRATEGY

Throughout 2018, the private market valuations for the types of investments that the Company assesses remained high, with competition for these assets consistently strong. Our investment activity over the period involved opportunistic acquisitions and the realisation of long-term strategic pipeline opportunities which together enabled approximately £90.5 million of new cash investments.

Our origination strategy continued to demonstrate the value in the Management Board's credentials and relationships with leading contractors in our various target markets. Our North American strategic investment partnership signed in 2017 resulted in our investment into Quebec's largest English-speaking hospital, McGill University Health Centre. In December 2018, the acquisition of three Dutch road and social infrastructure PPP assets was originated from one of the largest contractors in the Netherlands. All these assets were acquired through private bid processes.

This supported our strategic ambition to maintain well-diversified sector exposure with a large allocation to lower-risk, availability-based road and bridge assets - where the Company's investment in transport infrastructure now amounts to 46 per cent[vii] of portfolio value.

CORPORATE GOVERNANCE

A core component of good corporate governance continued to be the full alignment of the Management Board's interests with shareholders through our internal management structure. Our incentivisation and remuneration policies dictate that the Company does not charge NAV-based management or acquisition fees. As a result, I am pleased to report an ongoing charge to shareholders of 0.93 per cent, down from 0.99 per cent a year earlier.

During the year, the Financial Reporting Council released a new Corporate Governance Code designed to emphasise the importance of the relationship between a company and all its stakeholders. As part of our internally managed structure, the Company continues to see relationships with its government and government-backed clients and suppliers, together with shareholders, as critical to maintaining and delivering its strategy. The Company is a member of the Association of Investment Companies (AIC) which has adopted a similarly structured new Code of Corporate Governance for its members to adhere to.

As a long-term partner to the public sector, our role is more than a financial investor. The Company's asset stewardship is designed to provide value for money to our clients, committing to a high-quality health and safety record and making sure our portfolio actively and positively contributes to the communities and environments in which we operate.

The Supervisory Board also acknowledges the increasing significance of demonstrating the value and contribution of the Company's non-financial performance and as a responsible investor, we look forward to continuing to enhance our reporting in this area. We are pleased to confirm that as of February 2019, the Company became a signatory of the United Nations Principles for Responsible Investment.

On behalf of the Company, I would also like to thank Mr David Richardson for his service as Chairman following the announcement of his retirement and my subsequent appointment to the same role. The Supervisory Board was also delighted to welcome Ms Jutta af Rosenborg who joined as a Non-Executive Independent Director on 1 July 2018 and subsequently became Chair of the Audit Committee on 31 August 2018.

OUTLOOK

Given our exposure to public sector procurement, the Company cannot be immune to political risk. The UK Labour Party has increased its political scrutiny of the Private Finance Initiative (PFI), through which the Company has invested. Despite our view that wholesale nationalisation of all PFI contracts would be difficult for any government to achieve in practice, we continue to monitor the political situation and policy debate.

In his budget speech on 29 October 2018, the Chancellor of the Exchequer stated that the UK Government will end the use of PFI and its successor, PF2, and will not enter into further PFI projects. However, the Chancellor also confirmed that the UK Government will honour all existing commitments to PFI contracts.

Elsewhere, the pipeline for PPP transactions remains strong with Continental Europe, North America and Australia continuing to provide promising construction and operational investment opportunities in our target sectors. The Company will maintain its selective acquisition strategy and pricing discipline in pursuing these low-risk opportunities by leveraging the Management Board's extensive industry relationships to enhance the existing portfolio through accretive acquisitions.

Accordingly, I remain confident in the Company's ability to continue generating stable, predictable returns to shareholders.

Colin Maltby

Chairman

27 March 2019

STRATEGIC REPORT

CO-CEO Q&A

In an interview with BBGI's co-CEOs, Frank Schramm and Duncan Ball (pictured below) outline the key highlights for the Company during 2018, from portfolio and risk management to the market outlook for global infrastructure investment

1. What was the focus for management in 2018?

Our priority continued to be portfolio management first, and portfolio growth second. With 48 assets now under management, a large proportion of our time was dedicated to actively managing, enhancing and preserving asset value. As a result, we recorded no material lock-ups or events of default over the period and the portfolio continued to perform ahead of expectations.

We continued to pursue disciplined growth in 2018. We assessed numerous potential transactions over the period. Where we did acquire new assets, our focus remained on lower risk PPPs acquired on a negotiated basis - avoiding both the temptation to venture up the risk curve and engage in auction processes where there is a greater possibility to overpay.

2. What were the biggest changes made to the portfolio over the past year?

2018 was not a year of change, but more about consistent delivery against our strategic objectives.

We continued to de-risk the portfolio and add value in the process. In Canada, both the newly acquired Stanton Hospital in Yellowknife and North Commuter Parkway in Saskatoon completed construction on time and on budget.

In Australia, we took advantage of increasingly favourable market conditions for longer-term debt finance and concluded an early refinancing on the NTSF in Darwin, extending the debt tenor to run for a further seven and 15 years, thereby significantly de-risking the asset. As we enter what may be the later stages of the credit cycle, we take comfort in having a diversified portfolio which is largely immune to refinancing risk. Although significantly de-risked with the extended tenors, NTSF retains a refinancing obligation, the only asset in our portfolio to do so. This risk is limited to a change in credit margin only and not base interest risk. All other assets in the portfolio have secured finance to the end of their respective concessions .

These activities helped generate enhanced value for our shareholders by de-risking new and existing assets. In addition, we have continued to maintain a portfolio of 100 per cent operational assets.

Of the pipeline activity we assessed, we decided to acquire new and additional interests in eight availability-based PPP assets in the roads, education, accommodation and health sectors. The acquisition of the A1/A6 and N18 roads assets, Westland Town Hall in the Netherlands and McGill University Health Centre in Canada demonstrated the strength of our relationships with leading construction companies.

We identified a growing trend where leading construction companies with an established market share in their respective geographies are increasingly divesting their financial interests in high-quality operational assets. These vendors often maintain responsibility for the assets' operation and maintenance, through facility management or operational and maintenance agreements, which only strengthens our long-term partnership and ensures all parties preserve skin in the game.

By acquiring further interests in two UK LIFT assets and in East Down Colleges, Northern Ireland, we generated accretive portfolio growth through opportunistic acquisitions. The margin for unknowns was reduced significantly given our familiarity with these assets via our existing stakes. All acquisitions were value accretive.

Following Carillion plc's liquidation, we also opportunistically acquired an equity interest in Stanton Hospital, Canada previously held by Carillion Canada Inc. After the appointment of an alternative facility maintenance provider prior to the transaction's completion, we executed on attractive terms and Stanton became operational in November 2018. We maintain no exposure to Carillion plc or any of its subsidiaries.

Collectively, with these portfolio enhancements, and the additional exposure to the Euro via our Dutch acquisitions, we successfully increased our diversification and maintained our balanced global portfolio composition.

3. How are you preparing for the future? 

Although our standard approach to hedging foreign exchange (FX) risk on anticipated cash flows has not changed, we revised our hedging strategy by continuing our four year cash flow hedging policy and introducing balance sheet hedging though the use of derivatives. The overall aim is to limit NAV sensitivity to FX to 3 per cent for a 10 per cent adverse FX movement by hedging a portion of the non-Sterling, non-Euro portfolio value.[viii]

For 2018, this strategy has seen the Company record an FX hedging gain of £3.9 million. As we take on non-Sterling exposure, we continue to carefully monitor our portfolio's sensitivity to fluctuations in the global FX market.

The new enhanced credit facility, which was negotiated on more favourable terms, will be in place until January 2022, and will help ensure that we have sufficient dry powder to consider attractive acquisitions.

4. Following the collapse of Carillion plc, how is counterparty risk managed?

For much of the industry, Carillion served as a reminder of the importance of supply chain management. Monitoring our supply chain exposure is a key feature of our risk management framework. We carry out rigorous subcontractor monitoring which combines regular quantitative and qualitative analysis of our counterparties' standalone operational performance, including the monitoring of staff turnover on our assets, and their overall creditworthiness and long-term financial stability.

We are also continuously evaluating our relationships to ensure we are not too reliant on one subcontractor or market, or too exposed to assets that require specialist or niche service skills, where competition is inherently lower. Whilst we carried no exposure to Carillion, we remain very alert to the ongoing scrutiny of the sector's financial health - particularly in the UK - and place great emphasis on operational and financial performance.

5. How is the political environment evolving in BBGI's key markets?

Generally, the support for private sector investment in public infrastructure via the PPP procurement model remains strong in Continental Europe, North America and Australia. The political pressure to improve public services that assets like ours deliver helps create a positive investment environment for our clients and their end-users.

In the UK, this sentiment was dampened following recent political scrutiny of historical PFI contracts. However, the certainty that our long-term contractual obligations provide has given important reassurance, and despite the UK Government's intention to abolish general PFI/PF2 procurement, all these existing contracts are expected to be honoured. Taking a long-term view, the UK will continue to be an important market for us, but with approximately a third of our assets in the UK, geographical diversification remains a key strategic pillar irrespective of the shorter-term political sentiment of the day.

Despite the UK's negotiations to leave the European Union being mired in uncertainty, we continued to monitor the impact of Brexit on our portfolio. In the event of a hard Brexit as the currently anticipated extreme-case scenario, our London listing will remain valid under the Financial Conduct Authority's Temporary Permissions Regime. We anticipate no material impact on our portfolio or to our shareholders. Refer to the Risk Section for further details on Brexit planning.

6. What is the outlook for BBGI?

We are looking to the future with real confidence in our existing portfolio and our continued availability-based, low-risk, geographically diversified and internally managed investment strategy. Although the competition for the types of assets we invest in is strong, our focus is to remain within our area of expertise and not invest in higher risk asset classes such as demand based or regulated assets.

The offshore transmission sector (OFTOs) is increasingly aligning with our strategic interests, where long-term, 25-year availability-based revenue streams provide a fit with our low-risk availability-based investment strategy. We will continue to explore the sector and are looking to participate in the upcoming tendering rounds in the UK where we believe our PPP track record positions us well in the bidding process - more about which can be found in the Market Trends and Pipeline section.

Elsewhere, the transaction pipeline remains particularly strong in Continental Europe and North America, providing us with new opportunities to maintain portfolio diversification.

Overall, our pipeline includes five assets under consideration in North America via a strategic investment partnership, four additional road assets in our key markets, two social assets and OFTO infrastructure opportunities.

7. Global engineering and construction management company SNC Lavalin has been in the news recently. Do you have any concerns about SNC Lavalin's ability to perform their obligations and what impact do recent events have on BBGI's pipeline agreement with SNC Lavalin?

SNC Lavalin is Canada's largest engineering company and has a market capitalisation in excess of C$6.2 billion (11/03/2019). The company continues to benefit from diverse business lines including clean power, infrastructure, mining and metallurgy, nuclear, and oil and gas. SNC Lavalin has an investment grade credit rating from S&P and DBRS. Their performance where we have them as an operator remains very strong and we have no concerns about their service levels or financial health, but we will continue to monitor their performance and financial situation as we do for all sub-contractors.

BBGI is having an ongoing positive dialog with SNC Lavalin and business is as usual. The current pipeline agreement with SNC Lavalin covers 5 PPP assets and we expect that these assets will be offered to BBGI in the short to medium term.

INVESTMENT PROPOSITION & OPERATING MODEL

Investment proposition

The Company seeks to provide its shareholders with unique access to a global portfolio of high-quality infrastructure assets which generate stable, predictable cash flows over the life of government or government-backed contracts that typically extend to more than twenty years in length.

The predictability of these government-backed revenues enables BBGI to return to investors a sustainable and progressive income stream in the form of a semi-annual dividend.

The Company's investment policy dictates that no more than 25 per cent of the Company's portfolio value calculated at the time of investment will be derived from assets whose revenue streams are not public sector or government-backed, currently zero per cent. To ensure a spread of investment risk, any new acquisition will not have an acquisition value greater than 25 per cent of the portfolio value at the time at which it is acquired.

The Company follows a low-risk, globally diversified and internally managed investment strategy to target an internal rate of return (IRR) in the region of 7 to 8 per cent on the IPO issue price of 100pps.

[Please refer to the .pdf version of this document on the Company's website for the chart to show investment proposition.]

Operating model

The Management Board follows a proven operating model of value-driven active asset management, prudent financial management and a selective acquisition strategy to preserve value and achieve portfolio growth. These three functional pillars are fundamental to the Company's success.

We ensure stable operational performance through an active asset management approach, where we actively seek to identify and incorporate value enhancements over the lifetime of asset ownership.

In turn, this helps to reduce cost to our public sector clients and the asset's end-users and enhance the operational efficiency of each asset. This approach allows the Company to generate a high level of asset availability, which supports high client satisfaction rates.

Our prudent financial management is defined by focused cost management, which helps generate portfolio-wide savings and maintains the sustainability of the Company's portfolio performance.

By taking measured exposure to assets under construction and managing them through into operation, we de-risk assets and seek to increase shareholder value.

The portfolio's geographical diversification brings with it exposure to multiple currencies. We actively seek to manage geographical concentration and mitigate foreign exchange risk by balance sheet hedging through FX forward contracts, hedging of forecast portfolio distributions and borrowing in non-Sterling currencies. Furthermore, Euro-denominated running costs provide a natural hedge against the Euro-denominated portfolio distributions.

The Company's selective acquisition strategy ensures that the Management Board's focus remains within its area of expertise and that the strategic pillars defined by the Company's investment proposition are upheld.

We actively consider acquisitions that have inflation-protection characteristics to maintain the portfolio's inflation correlation.

Value-driven active asset management:

We pursue a standardised approach across all investments in the portfolio to help derive operational and value enhancements and preserve value, including:

· Measured exposure to construction risk to support NAV uplift by de-risking assets over the construction period

· Ensuring fulfilment of contractual and legal obligations, which additionally serves to maintain high availability levels and prevent deductions

· Strong client relationship management, including regular meetings, to uphold client satisfaction

· Focused and active asset management including site visits to all significant assets annually and management of issues when they arise

· Focused cost management and portfolio-wide cost-saving initiatives leveraging economies of scale (e.g. portfolio insurance, MSA contracts)

· Applying a high quality corporate governance framework, as part of an enhanced ESG profile

· Identifying and continuing initiatives at the individual asset level to outperform base case (e.g. lifecycle reviews)

Prudent financial management:

We maintain focus and attention to cash performance at the asset and portfolio level to drive efficiencies and generate portfolio optimisation, including:

· Focused management at the asset level to ensure distributions are on time, and on or above budget

· The portfolio's geographical diversification brings with it exposure to multiple currencies. We actively seek to manage and mitigate foreign exchange risk through our hedging strategy

· Maintaining modest cash balances to limit cash drag

· Maintain a low ongoing charge through an efficient internal management strategy

· Progressive future dividend growth underpinned by strong portfolio distributions

Selective acquisition strategy:

We maintain strategic discipline in our acquisition strategy and portfolio composition to ensure we pursue growth, not just for growth's sake, including:

· Broad industry relationships in multiple geographies to pursue off-market opportunities

· Pre-emption rights to acquire co-shareholders' interests

· Global exposure to avoid geographical concentration

· Revolving corporate debt facility to support transaction execution and maintain prudent leverage

· Visible pipeline through a North American strategic partnership

· Maintain focus on the Management Board's core area of expertise

Avoiding style drift

As the competition to acquire PPP assets at attractive valuations has intensified, the Company's Management Board has consciously worked to avoid "style drift". This refers to the practice of moving up the risk spectrum both to find investible assets and to make the targeted returns promised to investors.

Style drift for the Company could manifest itself in many ways, including: investing in more complex transactions with more business risk, accepting greater counterparty risk or acquiring assets in jurisdictions with lower credit ratings.

The Management Board has made the conscious decision to avoid investing in infrastructure transactions where the revenue stream is demand-based, correlated to Gross Domestic Product ('GDP') or subject to uncertainty due to regulatory review periods. However, some emerging regulated asset subsectors are increasingly reaching a level of maturity whereby the regulatory regime provides long-term, secure, availability-based payments akin to the investment profile of more traditional PPPs - as is the case in the OFTO sector. The management team are following these opportunities closely.

While this disciplined approach may result in periods of lower portfolio growth, we believe the benefits of this continued specialisation and focus on a low-risk, availability-based investment model result in dependable and consistent income and returns with low volatility. By staying focused on the availability sector and by remaining within our sphere of expertise, we believe there should be fewer surprises and the returns to our shareholders should remain predictable and consistent.

[Please refer to the .pdf version of this document on the Company's website for the chart to show style drift.]

Strategic investment partnerships

To help avoid competitive pricing in the secondary market and leverage the Management Board's experience in procuring assets through off-market transactions, the Company continues to leverage strong relationships with leading construction companies to source a potential pipeline that supports a low-risk and globally diversified investment strategy.

Typically, these contractors have secured the mandate to design and build new assets but are increasingly looking to divest financially - thereafter maintaining facility management contracts through a long-term partnership. The Company is an attractive partner for a number of reasons:

· We have extensive asset credentials and a strong track record that can assist with the shortlisting process

· Having a financial partner is a pre-requisite for some construction companies so they can avoid consolidating the asset company debt onto the balance sheet of the parent company

· Our cost of capital is often lower than construction companies, so involving BBGI can make the bid more competitive

· We are a long-term investor which is attractive to government and government-backed counterparties

· We are considered a reliable source of liquidity should a construction partner decide to sell in the future.

PORTFOLIO REVIEW

Portfolio summary

As at 31 December 2018, the Company's assets consisted of interests in 48 high-quality, availability-based, PPP infrastructure assets in the transport, healthcare, education, justice and other[ix] sectors. The portfolio has no exposure to demand-based or regulatory risk assets, and with well-diversified sector exposure, the Company has a 46 per cent[x] allocation to lower risk availability-based roads and bridges, with limited exposure to acute healthcare assets.

The concessions granted to asset companies in the Company's portfolio are predominantly granted by a variety of public sector clients or counterparties that are government-backed.

Located in the UK, North America, Australia and Continental Europe, all asset companies in the portfolio are in stable, well-developed operating environments where we have focused exposure to highly-rated investment grade countries.

Portfolio breakdown[xi]

*legal ownership

For portfolio statistics, refer to Portfolio Overview.

Operating model in action

Value-driven active asset management

A variety of active asset management initiatives during the year resulted in over £11.8 million of operational and value accretive enhancements, equating to a 1.9 per cent increase in NAV, and a TSR on a NAV growth and dividend paid basis of 8.0 per cent. The portfolio's assets are all fully operational and owing to the Management Board's value-driven active asset management, the availability level[xii] of the Company's assets was recorded at approximately 99.7 per cent and deductions were either borne by third-party facility management companies and road operators or were part of planned lifecycle expenditures. No assets were reported to be in a material lock-up or event of default at period-end.

Over the period, both Stanton Territorial Hospital and North Commuter Parkway in Canada successfully completed construction on time, and on budget.

In addition we successfully refinanced the NTSF, a prison facility in Darwin, Australia. A unique aspect of the Australian market is that after the global financial crisis it has often been challenging to secure long-term debt for infrastructure assets. During the period we took advantage of increasingly favourable market conditions for longer-term, secured debt finance and completed an early refinancing of NTSF. As the market enters what may be the later stages of the credit cycle, the Company is focused on building a diversified portfolio with a disciplined approach to refinancing risk. NTSF is the only asset which has a refinancing obligation, and the Company is only exposed to a change in credit margin risk, not base interest risk.

The Management Board continues to place a great emphasis on building and maintaining a transparent and regular dialogue with the Company's public sector clients and operating partners. Our relationship management ensures that we identify issues as they arise, if not before. Assets under the Company's management are active facilities, meaning we proactively identify efficiencies and help facilitate variations that benefit both our clients, their end-users, and the ultimate valuation of our portfolio.

During the year, the Company continued fire safety surveys across all of its UK accommodation assets. These surveys have now concluded, as has all material rectification work recommended in those reports. The Company continues to take building safety seriously, with all assets actively monitored for any potential issues either independently or in collaboration with its public sector clients.

Prudent financial management

In January 2018, the Company entered into a new four year revolving credit facility of £180 million, with the ability to increase the total commitment to £250 million by utilising an accordion provision. This allows us to execute portfolio acquisitions efficiently and enables the Company to be a trusted and repeat partner in the markets in which we invest.

Furthermore, two capital raises through new ordinary share issues amounting to £128 million allowed us to repay existing debt and maintain a modest cash balance.

During the year the Company also revised its hedging strategy aimed at limiting a 10 per cent adverse foreign exchange sensitivity to c. 3 per cent of NAV.

Selective acquisition strategy

In addition, the Company successfully pursued a selective acquisition strategy over the period. The Company has continued to benefit from the Management Board's ability to source attractive investment opportunities in a competitive marketplace by maintaining full pricing discipline for new acquisitions.

These additions to the portfolio included the Company's investment into eight availability-based PPP assets in the transport, education, accommodation and health sectors. Assets were secured on attractive terms consistent with the Company's stated strategy and demonstrated the Management Board's commitment to avoiding style drift. A mixture of opportunistic primary investments and the realisations of long-term strategic pipeline opportunities together totalled approximately £90.5 million of new cash investments.

Roads

· A1/A6 Motorway (Netherlands): a road asset that is part of the Schiphol-Amsterdam-Almere (SAA) expansion involving the reconstruction and widening of an 18km motorway including reversible lanes. The asset became operational in 2017 and the concession runs until 2042.

· N18 Motorway (Netherlands): a road asset between Varsseveld and Enschede comprising 15km of existing and 27km of new 2x2-lane motorway. The asset became operational in 2018 and the concession runs until 2043.

Education

· East Down Colleges (Northern Ireland): a further 33.33 per cent equity interest to bring to total 100 per cent equity ownership. East Down Colleges is an educational PPP asset located in County Down, Northern Ireland that comprises Ballynahinch, Downpatrick and Newcastle Colleges.

Accommodation

· Westland Town Hall (Netherlands): a PPP asset consisting of a new approximately 11,000m2 town hall for the municipality of Westland. The asset became operational in 2017 and the concession runs until 2042.

Healthcare

· McGill University Health Centre ('MUHC') (Canada): 40 per cent investment in MUHC through the existing North American strategic partnership. MUHC is now the largest English-speaking hospital in Quebec. The asset became operational in October 2014 and the concession runs until 2044.

· Stanton Territorial Hospital (Canada): 25 per cent equity interest in the Stanton Territorial Hospital, a new 27,000m2 state-of-the-art facility with 100 patient rooms and the largest construction project ever undertaken by the Government of the Northwest Territories. The asset became operational in December 2018 and has a concession duration of 30 years.

· Follow-on interests in North London Estates Partnerships and Liverpool and Sefton Health Partnership (UK): 6.67 per cent equity interest in North London Estates Partnerships LIFT asset and Liverpool and Sefton Health Partnership LIFT asset, bringing our equity interests to 60 per cent in both assets. The two LIFT assets consist of 21 primary health care facilities and local community hospitals in North London and Liverpool providing the delivery of a broad range of primary healthcare services such as GP, dental and outpatient services.

Supply chain monitoring

The Management Board continually reviews the potential concentration risk in respect of operational and maintenance (O&M) contractors. The table below illustrates the level of O&M contractor exposure as a percentage of portfolio value.

Management has not identified any significant exposure risk and therefore remains comfortable with the current contractor allocation.

As discussed in the co-CEO Q&A, the Company did not have any exposure to Carillion plc either as a constructor of facilities or as a service provider.

Furthermore, the Company does not have any counterparty exposure to Interserve plc, which filed for administration subsequent to the year end.

The unfortunate collapse of the high-profile contractor and service provider highlighted the importance of supply chain monitoring and appropriate risk mitigation policies. We believe that by having a diversified supply chain with no concentrated exposure, by being geographically diversified and by having a rigorous supply chain monitoring policy in place, we continue to have risk mitigation measures at our disposal in the event of supply chain failure. We continue to pay close attention to how subcontractors are performing.

Partnerships in action

Measured exposure to North America

In June 2017, the Company entered into the North American strategic partnership with SNC-Lavalin to invest initially in five PPP assets in Canada. Founded in 1911, and with a market capitalisation of approximately C$6 billion (£3.5 billion), SNC-Lavalin is a leader in the Canadian PPP market and has built up an extensive portfolio of assets.

The transfer of four of the five initial assets was completed in September 2017 and the fifth asset, McGill University Health Centre, in June 2018. All five assets procured through this strategic investment partnership are operational and availability-based. The total cash consideration for all five asset interests thus far has amounted to approximately C$191 million (£111 million).

As part of its partnership, the Company benefits from a pipeline agreement that provides a right of first offer with respect to the potential future acquisition of select interests in a robust pipeline of Canadian availability-based PPP assets currently under construction or in ramp-up phase, thus creating additional investment opportunities once the assets become operational.

These assets include the Highway 407 East Extension Phase I (Ontario), the Confederation Line (Ottawa, ON), the John Hart Generating Station (Campbell River, BC), the New Corridor for the Champlain Bridge (Montreal, QC), and the Eglinton Crosstown LRT (Toronto, ON).

Enhanced global diversification into the Netherlands

The Company enhanced its global diversification via a partnership with Koninklijke VolkerWessels N.V. in the Netherlands resulting in the acquisition of significant equity interests in three operational PPP assets in December 2018. These included: A1/A6 Motorway, N18 Motorway and Westland Town Hall each located in the Netherlands.

VolkerWessels remains responsible for long-term operation, maintenance and lifecycle works on the N18 Motorway and Westland Town Hall and is part of the operation and maintenance consortium on the A1/A6 Motorway asset. The joint venture provided the Company the ability to invest in three attractive PPP assets in a new, stable geography with a strong credit rating, and offered VolkerWessels the opportunity to co-operate with an active long-term investor experienced in secondary market transactions.

Portfolio snapshot

Our five largest assets

1) Golden Ears Bridge

· Type: Availability-based

· Status: Operational

· Equity Holding (%) BBGI: 100%

· Total Investment Volume (Debt & Equity): C$1.1 billion

· Financial Close/Operational: March 2006 / June 2009

· Concession Period: 32 years (post construction) ending in 2041

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 road, which opened in March 2009, also includes more than 3.5 km 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 asset consists of the design, construction upgrade, finance and operation of the bridge, and has brought close to C$1 billion in construction-related activity to the area. Over its tenure, BBGI has managed multiple sub-contractors through the delivery of complex contracts and coordinated with stakeholders. The asset represented the largest private financing for a greenfield P3 in Canada at the time of its launch.

2) Northern Territory Secure Facilities

· Type: Availability-based

· Status: Operational

· Equity Holding (%) BBGI: 100%

· Total Investment Volume (Debt & Equity): A$620 million

· Financial Close/Operational: October 2011/ November 2014

· Concession Period: 30 years (post construction) ending in 2044

The facility, located near Darwin (the 'Territory'), consists of three separate centres including: a 1,000-bed multi-classification male and female correctional centre, a 30-bed secure mental health and behavioural management centre, the first of its kind in the Territory, and a 48-bed supported accommodation and programme centre for community-based offenders designed to support the government's goals of enhanced rehabilitation, education and reduced reoffending rates in the Territory.

BBGI acquired its initial 50 per cent interest in the asset while it was still in construction and subsequently acquired the remaining 50 per cent stake in July 2015. Substantial resources were required to not only build this state-of-the-art facility, but to ensure smooth transitioning from construction through to operations in a particularly challenging geographic climate. In 2018, BBGI took advantage of favourable market conditions for longer-term, debt finance and completed an early refinancing of the facility thereby further de-risking the asset.

3) McGill University Health Centre

· Type: Availability-based

· Status: Operational

· Equity Holding (%) BBGI: 40%

· Total Investment Volume: C$2,013 million

· Financial Close/Operational: July 2010 / October 2014

· Concession Period: 34 years ending in 2044

As part of its North American strategic partnership, the Company completed its 40 per cent investment in MUHC's new Glenn campus in June 2018. MUHC is one of the most innovative academic health centres in North America and at 214,000m2, the largest English-speaking hospital in Quebec. One integrated campus consolidates the Montreal Children's Hospital, the Royal Victoria Hospital and the Montreal Chest Institute, as well as the new Cedars Cancer Centre and the Research Institute of the MUHC. The asset became operational in 2014 and the concession runs until 2044.

4) Ohio River Bridges

· Type: Availability-based

· Status: Operational

· Equity Holding (%) BBGI: 33%

· Total Investment Volume: US$1.175 billion

· Financial Close/Operational: March 2013/December 2016

· Concession Period: 35 years (post construction) ending in 2051

One of the largest transportation assets ever undertaken in the US, this asset is at the cutting-edge of partnership working in the emerging US PPP market. It is the first US PPP transport deal not to use the Transportation Infrastructure Finance and Innovation Act (TIFIA) in its capital structure, demonstrating to other states how even the most complex deals can be structured without reliance on federal funding. Instead, the scheme uses a private activity bond issue[xiii] - the first for a US PPP highway availability-based asset.

The asset includes a 760m cable stay bridge, a 500m long twin vehicular tunnel and 2.25km of associated 6-lane Interstate Highway, with more than 21 bridges and multiple roundabout style interchanges. Despite the scale and complexity of the transaction, it reached commercial close just 10 months after final tender documents were issued.

5) Victoria Prisons

· Type: Availability-based

· Status: Operational

· Equity Holding (%) BBGI: 100%

· Total Investment Volume: A$244.5 million

· Financial Close/Operational: January 2004 / March 2006

· Concession Period: 25 years (post construction) ending in 2031

Victoria Prisons is an availability-based PPP asset entailing the design, finance, construction and operation of two new correctional facilities for the State of Victoria, Australia (the 'State'). The first facility, Metropolitan Remand Centre, accommodates up to 1,000 male prisoners and is located approximately 20km from Melbourne city centre. The second, smaller facility is the Marngoneet Correctional Centre that houses up to 550 male prisoners and is located approximately 65km from Melbourne city centre. The operational period is 25 years and runs until 2031.

A substantial augmentation was requested by the State to reinforce the facility and this completed in June 2018. Over its management tenure, BBGI has received regular demands from the State to increase the capacity of the facilities, which are now more than 50 per cent greater than originally envisaged.

MARKET TRENDS & PIPELINE

2019 and beyond

The Management Board believes that the geographic diversification offered by participation in numerous countries is attractive to the Company. BBGI has significant investment expertise in key infrastructure markets internationally, and its global portfolio provides a platform to access opportunities and build relationships with potential vendors to support the Company's selective acquisition strategy.

PPP procurement and levels of competition vary between markets. In all BBGI's target markets, infrastructure under-investment persists, and public finance budget constraints necessitate the involvement of the private sector to deliver the finance and expertise required to build, maintain and operate much-needed infrastructure assets.

Investment activities in 2019 will involve sourcing and originating, bidding for and winning new operational PPP assets, with consideration for measured exposure to construction assets to support valuation uplift.

The pipeline for availability-style transactions remains generally strong within the Company's key markets. The Company will maintain its selective acquisition strategy in assessing any potential new assets and we remain confident in our ability to originate investment opportunities. We anticipate these will come from a variety of sources, including:

· A North American strategic partnership, which has already resulted in the acquisition of five assets amounting to approximately C$191 million;

· Avoiding the competition of public auctions by soliciting off-market transactions through BBGI's extensive network of market participants in Australia, Europe and North America;

· Participating in primary investment opportunities and bidding on new availability-based assets as part of public sector procurement processes;

· Acquiring equity interests from co-shareholders in existing assets; and

· Participating selectively in competitive sale processes.

The Company will continue to source assets that fit the requirements of its low-risk and globally diversified investment strategy. The key markets in which BBGI is active offer different opportunities. 

UK

As referred to in the co-CEO Q&A, how the UK PPP market will evolve in the future remains uncertain following the cancellation of the UK's flagship procurement programmes, PFI and PF2. Private infrastructure investors like the Company still have a significant role to play in managing existing investments procured under PFI and PF2; all of which the UK Government has committed to honour.

Alternative models of private finance do exist, but all require considerable development to meet the UK Government's balance sheet constraints and none currently offer the readily repeatable and industry-accepted model that existed historically under PFI/PF2. A review and consultation process on Infrastructure Finance will now take place to find a way forward post-PFI with all interested parties invited to respond. In March 2019, during its annual Spring Statement the Government reconfirmed the vital role that private finance plays in supporting investment in infrastructure with the UK Government projecting £600 billion of infrastructure investment over the next 10 years, with half forecast to come from the private sector.[xiv]

At the devolved level in the UK, Wales' PPP sector looks more promising. Three assets are currently in the pipeline procured under the Mutual Investment Model, which is substantially similar to PFI/PF2: the A465 motorway asset, the Velindre Cancer Hospital and the 21st Century Schools Programme.

The UK market continues to be a source of secondary market transactions. However, the reduction in secondary market PPP/PFI deal flow reflects the slowdown in public sector procurement since 2010 and the large amount of secondary activity in previous years. While supply has decreased, there has been no corresponding decrease in demand. This has resulted in a trend of lower discount rates for stable, mature secondary assets since c.2010.

The Management Board notes that some other asset classes are demonstrating a risk-return profile that increasingly matches the Company's low-risk, availability-based investment strategy. This includes OFTOs, which are very similar to PPPs and include a long-term availability income stream from credit worthy government-backed counterparties. A recent change in the transaction structure means that the regulated availability-type revenue stream will now be for a 25-year period instead of the previous 20-year concession period. This modification to the transaction structure reduces or eliminates the importance of residual value assumptions, thus making the asset class more consistent with our risk appetite and area of expertise. Accordingly, BBGI has formed a consortium to prequalify and, if successful, bid on the next round (OFTO Tender Round Six) which includes three assets.

Our appetite as long-term responsible investors of capital into the UK has not diminished. We will continue to pursue primary, secondary and emerging OFTO opportunities on a selective basis.

Canada

Canada has remained one of the world's most prolific PPP markets, and is one of the most mature and stable of the Company's target markets. A total of 281 assets across Canada are procured under the PPP model, with those already in operation or under construction valued at C$136.9 billion including hospitals, courthouses, highways and bridges, and transit. A recent poll by Nanos Research showed that a majority of Canadians remain fully supportive of PPPs to build much-needed infrastructure.

Looking forward to 2019, there is a well-defined pipeline of PPP transactions. With 13 assets in Canada, BBGI is well positioned to participate in the attractive primary pipeline, either on its own, or in conjunction with the North American strategic partnership. The pipeline agreement currently covers five assets in construction and has the potential to be expanded should both parties agree. The Company estimates that further investment opportunities in excess of £150 million could result from the pipeline agreement; all of which will be assessed on a case-by-case basis.

The Canadian secondary market is expected to be active in 2019 as assets developed over the last several years come into operation and may come to market.

USA

In 2018, the US positioned itself as fourth in the world ranking by deal value for greenfield PPPs. Eight transactions reached financial close with a total value of US$4.49 billion. Although the number of transactions is higher than the five deals to close in 2017, the value is down US$0.3 billion.

The US PPP market remains one of great potential, with nascent deal flow. We are currently tracking several transactions and are in active discussions regarding upcoming transportation and social infrastructure opportunities.

Going forward, we expect that the success of the Ohio River Bridges/East End Crossing asset, which opened on time and on budget, will create opportunities for BBGI, as this asset is one of a limited number of high-profile availability-style transportation assets to have reached construction completion.

Continental Europe

Continental European infrastructure markets remain active with certain countries offering an attractive pipeline of new assets. We believe these markets are likely to provide attractive investment opportunities over the medium term.

Norway: the biggest upcoming PPP in the region is the kr9.5 billion (c. £850 million) 9km Rv555 Sotra Road on the west coast of Norway, with prequalification for the asset expected to take place later in 2019. The kr6-7 billion (c. £540-630 million) E10/RV85 road in the northern counties of Nordland and Troms is expected to follow the Sotra asset.

Netherlands: Following our recent investment in three assets in the Netherlands, we are actively investigating further investment opportunities in the Netherlands where a mix of transportation and social infrastructure opportunities are being considered.

Belgium: The PPP market is promising and we expect a pipeline of road and prison assets to come to the market.

Germany: the expectation is that the road PPP scheme will continue with two new procurements each year. With six existing assets in Germany, strong credentials and German language skills within our Management team, BBGI is well positioned to consider these upcoming opportunities.

Southern Europe: countries including Spain, Italy, Portugal and Greece have PPP pipelines. While some of these programs may be viewed as attractive in terms of their size and the availability-style nature of the assets, the credit rating of the counterparties and certain risk transfer expectations make these investment opportunities unattractive to the Company. Consequently, BBGI has not focused on these opportunities.

Australia

New construction assets in the transport sector and, increasingly, in the social infrastructure sector look to dominate the Australian landscape once the New South Wales and federal elections are completed by mid-2019. Overall, 2019 is expected to generate a relatively small number of very large PPPs compared to previous periods where there would be a steady stream of small deals. This may change, however, if Victoria and New South Wales embark on rumoured PPP procurement in schools.

BBGI has three large operational assets in Australia and will continue to monitor the market and the Company is hopeful that some select opportunities may emerge in 2019.

Pipeline assets:

Primary bidding opportunities:

OPERATING & FINANCIAL REVIEW

The Management Board is very pleased to present the Operating and Financial Review for the year ended 31 December 2018.

Highlights and Key Performance Indicators

Please see Financial Highlights for a summary of the Year in Numbers for 2018. Certain key performance indicators ('KPIs') for the last four years are highlighted below:

Asset Management

Cash Performance

The Company's portfolio of 48 high quality, availability-based PPP infrastructure investments performed well during the year, with cash flows ahead of the business plan and the underlying financial models.

Construction exposure

The Company's investment policy is to invest principally in assets that are operational and that have completed construction. Accordingly, investment in assets that are under construction will be limited to 25 per cent of the portfolio value. The rationale for this approach is to be able to produce a stable dividend for our shareholders, while at the same time gaining some exposure to the potential NAV uplift that occurs when assets move from a successful construction stage to the operational stage.

As at 31 December 2018, 100 per cent of the assets were operational.

The Management Board believes that the Company's ability to meet its dividend targets is not compromised by having some construction exposure and monitors this closely. Further information on construction risk can be obtained from the Company's prospectus, which is available on the Company's website.

Investment performance

Return track record

The Company's share price has performed well and has maintained a strong premium to NAV through the reporting period. We continue to believe that a key benefit of the portfolio is the high-quality cash flows derived from long-term availability-based government or 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.

[Please refer to the .pdf version of this document on the Company's website for the graph to show share price performance.][xvi]

The share price closed the year at £1.55, an increase of 2.8 per cent in 2018 and representing a 16.1 per cent premium to the NAV per share at the year-end.

TSR in the calendar year 2018 was 15.6 per cent whilst TSR from IPO to 31 December 2018 was 111.4 per cent or 11.2 per cent on an annualised basis.

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 six months to 31 December.

Dividends

On 6 June 2018, the Company paid a second interim dividend of 3.25pps for the period 1 July 2017 to 31 December 2017. The 2018 interim dividend of 3.375pps was paid on 24 October 2018. Subsequently to the year end, in February 2019, the Company declared a second interim dividend of 3.375pps in respect of the six-month period ended 31 December 2018; this will result in a total dividend of 6.75pps for the year. Furthermore, it was announced in August 2018 that the Company's 2019 target dividend would increase to 7.00pps, which represents a further increase of 3.7 per cent for the year and an average annual increase of 3.5 per cent since IPO.

[Please refer to the .pdf version of this document on the Company's website for the graph to show dividend performance].

Investor communications

The Company places great importance on communication with its shareholders and welcomes their views. It is the intention of the Company to remain at the forefront of disclosure and transparency in its asset class, and therefore the Management Board and Supervisory Board regularly review the level and quality of the information that the Company makes public.

The Company formally reports twice a year through the Annual and Interim Reports and Financial Statements. Other current information on the Company is provided through the Company's website and through market announcements. At Shareholder General Meetings, each share is entitled to one vote; all votes validly cast at such meetings (including by proxy) are counted, and the Company announces the results of such meetings on the day of the relevant meeting.

The Boards are keen to develop and maintain positive relationships with the Company's shareholders. As part of this process, immediately following release of the annual and interim results at the end of March and August each year, the co-CEOs present the Company's results to market analysts and subsequently conduct investor roadshows and offer shareholder visits to discuss the results, explain the ongoing strategy of the Company, and to receive feedback.

Outside of these formal visits, feedback from investors is received via the Management Board and the Corporate Brokers and, together with the feedback from results meetings, this is reported to the Supervisory Board. Throughout the year under review, the co-CEOs have made themselves available to major shareholders and key sector analysts, both collectively and on a one-to-one basis, for discussion of key issues and expectations around Company performance, and will continue to do so. The co-CEOs and other Board members intend to continue to be available to meet with shareholders periodically to facilitate open two-way communication on the development of the Company. Shareholders may contact members of both the Management and Supervisory Boards at the registered office of the Company, which address can be found on the final page of the Annual Report or on the Company's website at www.bb-gi.com. Given this level of engagement with shareholders, the Boards consider therefore that they meet the requirements of AIC Code Principle 19.

Share capital

The issued share capital of the Company is 580,005,151 ordinary shares of no par value. All of the ordinary shares issued rank pari passu. During the year ended 31 December 2018, the Company issued 100,899,931 shares.

Share Issue Price Restriction

As previously reported, under the Luxembourg law of 17 December 2010 on undertakings for collective investments, the Company was restricted from issuing shares at a price exceeding the NAV per share plus 5 per cent.

On 4 April 2018, the Commission de Surveillance du Secteur Financier ('CSSF') advised the Company that they had waived the 5 per cent requirement. Following this confirmation, an Extraordinary General Meeting ('EGM') was held on 29 August 2018 to amend the articles of the Company to remove this limitation.

PRIIPs Regulations

On 1 January 2018, the EU's Packaged Retail and Insurance-based Investment Products ('PRIIPs') regulation came into effect. This requires 'manufacturers' of such products to prepare and make available (via the Company's website) a Key Information Document ('KID'). A copy of the latest BBGI KID can be found on the Company's website and is updated whenever there is a material change in content, and more generally following publication of Interim and Annual Results.

Voting rights

There are no special voting rights, restrictions or other rights attached to any of the ordinary shares. There are no restrictions on the voting rights attaching to ordinary shares.

Discount management

Although the Company's shares have continuously traded at a premium since IPO, the Management Board will actively monitor any discount to the NAV per 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.

Purchase of ordinary shares by the Company in the market

In order to assist in the narrowing of any discount to the NAV at which the ordinary shares may trade from time to time and/or to reduce discount volatility, the Company may, subject to shareholder approval:

§ make market purchases of up to 14.99 per cent annually of its issued ordinary shares; and

§ make tender offers for ordinary shares.

No shares have been bought back during the year ended 31 December 2018. The most recent authority to purchase ordinary shares which may be held in treasury or subsequently cancelled was granted to the Company on 30 April 2018. This authority expires on the date of the next Annual General Meeting ('AGM') to be held on 30 April 2019, at which point the Company will propose that its authority to buy back shares be renewed.

Continuation vote

The Company's Articles of Association require the Boards to offer a continuation vote to the Company's shareholders at the AGM to allow the Company to continue in its current form, with a further vote every two years. The first of these continuation votes was held on 30 April 2015, with the second on 28 April 2017, and in each case received unanimous support from shareholders who voted. In accordance with the Articles therefore, a further continuation vote will be offered to shareholders at the next AGM being held on 30 April 2019.

To ensure continuity of listing post-Brexit, the Company has notified the FCA under its Temporary Permissions Regime (TPR), of its intention to continue to market its fund into the UK. For further information on the TPR, refer to the Risk section of the Corporate Governance Report.

Registration number

Registre de Commerce et des Sociétés Luxembourg B163879

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. The valuation is reviewed by an independent third party professional.

The valuation is determined using the discounted cash flow methodology. The cash flow forecasts, generated by each of the underlying assets, are received by the Company or its subsidiaries, adjusted as appropriate to reflect risks and opportunities, and discounted using asset-specific discount rates. The valuation methodology remains unchanged from previous reporting periods.

The Company uses the following assumptions (Assumptions) for the cash flows:

1 Represents CPI indexation only. Certain projects are however subject to a basket of indices.

2 80 per cent of the US asset indexation factor for revenue is contractual and not tied to CPI.

3 Individual tax rates vary among Canadian Provinces.

Key Project Company and portfolio cash flow assumptions underlying NAV calculation include:

· The discount rates and the Assumptions as set out above continue to be applicable.

· The financial models for the Project Companies accurately reflect the terms of all agreements relating to the Project Companies and represent a fair and reasonable estimation of future cash flows accruing to the Project Companies.

· Cash flows are converted to Sterling at either the hedged rate or at the reporting period closing rate for unhedged future cash flows.

· Cash flows from and to the Project Companies are received and paid at the times anticipated.

· Where the operating costs of the Project Companies are fixed by contract, such contracts are performed, and where such costs are not fixed, they remain within the current budgets.

· In cases where lifecycle costs/risks are borne by the Project Companies they remain in line with the current budgets.

· Contractual payments to the Project Companies remain on track and are not terminated before their contractual expiry date.

· Any deductions or abatements during the operations period of the Project Companies are fully passed down to subcontractors under contractual arrangements or are part of the planned (lifecycle) budgets.

· Where the Project Companies own the residual property value in an asset, that the projected amount for this residual value is realised.

· In cases where the Project Companies have contracts which are in the construction phase they are either completed on time or any delay costs are borne by the construction contractors.

· There are no tax or regulatory changes in the future which negatively impact cash flow forecasts.

· In forming the above assessments, BBGI works with Project Company management teams, as well as using due diligence information from, or working with, suitably qualified third parties such as technical advisors, legal advisors and insurance advisors.

Portfolio movement 31 December 2017 to 31 December 2018

[Please refer to the .pdf version of this document on the Company's website for the chart to show portfolio movement].

1 These figures represent the assets and liabilities of the Group; after excluding the portfolio of asset investments and include, amongst other items, the Group's net cash/(borrowings) and the fair valuation of the foreign exchange hedging derivatives.

2 Net of withholding tax

The net effect of inflation, against the 31 December 2017 modelled Assumptions, on the portfolio value has been positive and is included in the value above.

Key drivers for NAV growth

Growth based on rebased valuation

During the year, the Company recognised £62.7 million, or a 10.1 per cent increase in NAV, from the unwinding of discounts and value accretive enhancements. As the Company moves closer to forecast asset dividend payment dates, the time value of those cash flows increases on a net present value basis. The portfolio value growth from unwinding of discount during the year was approximately £50.9 million or an 8.2 per cent change in NAV.

The remaining £11.8 million, or a 1.9 per cent change in NAV, represents the net effect of value accretive enhancements across the portfolio through active management, which includes amongst others:

· Net valuation uplift from adjusting risk premium reflected in specific asset discount rates (e.g. asset reaching construction completion, asset moving towards the stable operational phase);

· Actual costs and forecasted costs lower on some assets;

· The net effect of cash optimisation and restructuring on certain assets and the refinancing on NTSF, Australia.

· Insurance cost savings

Discount rates and sensitivity

The discount rates used for individual assets range between 6.80 per cent and 8.70 per cent. The value weighted average rate is approximately 7.20 per cent (31 December 2017: 7.45 per cent) which management believe to be towards the conservative end. This methodology calculates the weighted average based on the value of each asset in proportion to the total portfolio value, i.e. based on the net present value of their respective future cash flows.

The discount rates used for individual asset cash flows are based on BBGI's knowledge of the market, discussions with advisors and publicly available information on relevant transactions. Furthermore, the discount rates used as part of the portfolio valuation process are reviewed by an independent third party professional.

The demand for PPP infrastructure assets remained very robust. This was evidenced by a number of high profile single asset transactions concluded at compelling valuations. These include the sale by John Laing Group to AXA of its 15 per cent interest in the Intercity Express Programme Phase 1 PPP asset, UK, at a price of £227.5 million; sale of Highlands Schools PPP asset, UK, at a premium of 21 per cent over carrying value, and the sale by Balfour Beatty of interests in M25 PPP asset, UK, of a total interest of 25 per cent for a combined value of £207 million. This demand was further validated in September 2018, when John Laing Infrastructure Fund (JLIF) was taken private by two fund managers via a cash offer for the issued share capital of JLIF, at a 20.6 per cent premium to JLIF's closing share price on the last trading day prior to the announcement. These transactions suggest that the discount rates in the secondary market remained very competitive, with evidence demonstrating transactions below a 7 per cent discount rate.

We have differentiated the asset classes with respect to discount rates. For stable operational assets, such as typical schools, hospitals and roads assets, we have applied discount rates at the lower end of the range mentioned above. Adjustments have been applied to acute hospitals in the UK where a risk premium of 50bps continues to be applied. This risk premium reflects the special situation in the UK where some public health clients are under cost pressure and are actively looking for savings. This drive for cost savings has resulted in some large deductions on UK acute hospitals and, consequently, distribution lock ups. To date, BBGI has not been affected. The only UK acute hospital in the portfolio is Gloucester Royal Hospital, which represents less than 1 per cent of the overall portfolio value, and there are no similar assets identified in the current pipeline.

BBGI continues to apply a modest risk premium for complex prison assets to reflect the higher complexity of such assets, and has also applied a risk premium to a limited number of other assets to reflect the individual situations.

The following table shows the sensitivity of the NAV to a change in the discount rate:

1 Based on the weighted average discount rate of 7.20 per cent.

Foreign exchange and sensitivity

BBGI values its portfolio of assets by discounting anticipated future cash flows. The present values of these cash flows are converted to Sterling at either the hedged rate, for a predetermined percentage of cash flows forecast to be received over the next four years, or at the closing rate for unhedged future cash flows.

A significant proportion of the Company's underlying investments are denominated in currencies other than Sterling. The Company maintains its accounts, prepares the valuation and pays distributions in Sterling.

Accordingly, fluctuations in exchange rates between Sterling and the relevant local currencies will affect the value of the Company's underlying investments. During 2018, the appreciation of Sterling against the Australian Dollar and Canadian Dollar and the depreciation of Sterling against the Euro, Norwegian Krone and US Dollar accounted for a net decrease in the portfolio value of £7.4 million. Since listing in December 2011, the net cumulative effect of foreign exchange movement on the portfolio value has been a decrease of £8.7 million or 1.1 per cent of NAV at 31 December 2018.

The table below shows those closing rates, which were used to convert unhedged future cash flows into the reporting currency at 31 December 2018.

Although the closing rate is the required conversion rate to use, it is not necessarily representative of future exchange rates as it reflects a specific point in time.

In addition to the hedging of anticipated cash flows on a four-year rolling basis, we revised the hedging strategy during the year and introduced balance sheet hedging through the use of foreign exchange forward contracts. The aim is to limit the NAV decrease to approximately 3 per cent for a 10 per cent adverse movement in foreign exchange rates. This is achieved by hedging a portion of the non-Sterling, non-Euro portfolio value.[xvii]

The following table shows the sensitivity of the NAV to a change in foreign exchange rates:

1 Sensitivity in comparison to the spot foreign exchange rates at 31 December 2018 and taking into account the contractual and natural hedges in place, derived by applying a 10 per cent increase or decrease to the Sterling/foreign currency rate.

Inflation sensitivity

The asset cash flows are positively correlated with inflation (e.g. RPI or CPI). The table below demonstrates the effect on the NAV of a change in inflation rates compared to the Assumptions in the table above:

Deposit rate sensitivity

The asset cash flows are positively correlated with the deposit rates. The table below demonstrates the effect on the NAV of a change in deposit rates compared to the Assumptions above:

Lifecycle costs sensitivity

Of the 48 assets in the portfolio, 16 assets retain the lifecycle obligations. The remaining 32 assets have this obligation passed down to the subcontractor. The table below demonstrates the impact on the NAV of a change in lifecycle costs:

1Sensitivity applied to the 16 assets in the portfolio which retain the lifecycle obligation, i.e. the obligation is not passed down to the subcontractor.

Corporate tax rate sensitivity

The profits of each portfolio company are subject to corporation tax in the country where the company is located. The table below demonstrates the effect on the NAV of a change in tax rates compared to the Assumptions outlined above:

Senior debt refinancing sensitivity

Assumptions are used where a refinancing of senior debt financing is required for an asset during the remaining asset concession term. There is a risk that such assumptions may not be achieved. The below table shows the effect of a +100bps adjustment to the forecasted margins. The base rate for senior debt is either fixed or a long term interest swap is available with the effect that none of our assets is subject to changes in base rates.

1The NTSF asset is the only remaining asset in the BBGI Portfolio with refinancing risk.

GDP sensitivity

The BBGI portfolio is not sensitive to GDP.

The principal risks faced by the Group and the mitigants in place are outlined in the Risk section.

FINANCIAL RESULTS

The Consolidated Financial Statements of the Company for the year ended 31 December 2018 are in the Financial Statements section of this Annual Report

BASIS OF ACCOUNTING

The Group has prepared its Consolidated Financial Statements in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. In accordance with IFRS, the Company qualifies as an Investment Entity and as such, does not consolidate its investments in subsidiaries that qualify as investments at fair value through profit or loss ('FVPL investments'). Certain subsidiaries that are not FVPL investments, but instead provide investment related services or activities that relate to the investment activities of the Group, are consolidated.

INCOME AND COSTS

The Group's FVPL investments performed well during the year, which has resulted in FVPL income of £70.1 million, an increase of 20.0 per cent on the prior year. A combination of the positive effect of unwinding of discount, value enhancements and changes in market discount rates with a partial offset of foreign exchange loss, has driven the FVPL income. A more detailed analysis of the movement in FVPL investments is highlighted in the Valuation section of this Report.

The Group has implemented a policy of using forward currency contracts to hedge a portion of its anticipated foreign currency cash flows and uses short-term forward currency contracts to hedge part of the non-Sterling, non-Euro denominated portfolio values. Collectively these hedges have resulted in an operating income during the year amounting to £3.9 million (31 December 2018: £2.2 million).

The Group continued to maintain a selective acquisition strategy during the year resulting in five new and three follow-on investments in availability-based PPP assets in the transport, education, accommodation and healthcare sectors. The acquisition costs relating to these investments amounted to £1.1 million (31 December 2017: £1.0 million), which included unsuccessful bid costs amounting to £0.6 million during the year (31 December 2017 £ 0.2 million). Foreign currency exchange losses during the year amounting to £3.0 million (31 December 2017: nil). Both the acquisition related costs and foreign exchange losses are classified as other operating expenses in the Group's consolidated financial statements.

The administration expenses and net finance result increased to £11.7 million (31 December 2017: £9.5 million). The Group Level Corporate Cost Analysis section below provides further details.

Profit from continuing operations for the year ended 31 December 2018 increased by 13.9 per cent to £55.9 million (31 December 2017: £49.1 million).

Group Level Corporate Cost Analysis

The table below is prepared on an accruals basis.

The increase in net finance costs from £2.6 million for 2017 to £4.0 million for 2018 was predominantly due to an increase in utilisations under the RCF. A significant portion of these utilisations was repaid in H2 2018, using available cash and Placing proceeds, with only £15.3 million of borrowings outstanding at 31 December 2018. The cash flow analysis section of this report provides further information regarding utilisation and repayments under the RCF during the year.

Please refer to the Remuneration section of this report for further analysis of staff costs during the year.

Ongoing Charges

The Ongoing Charges percentage, presented in the table below, is prepared in accordance with the AIC recommended methodology.[xviii] The percentage represents the annualised reduction or drag on shareholder returns as a result of recurring operational expenses incurred in managing the Group's consolidated entities, and provides an indication of the level of recurring costs likely to be incurred in managing the Group in the future.

As the Group is internally managed, it is not subject to performance fees or acquisition-related fees. The Ongoing Charges include an accrual for the Short-Term Incentive Plan ('STIP')/bonuses and the Long-Term Incentive Plan ('LTIP') and exclude all non-recurring costs such as the costs of acquisition/disposal of assets, financing charges and gains/losses arising from assets.

For the year ended 31 December 2018, certain non-recurring costs were excluded from the Ongoing Charges, most notably acquisition-related advisory costs of £1.2 million (inclusive of VAT), direct taxation of £2.4 million and net finance costs of £4.0 million.

A reconciliation of Ongoing Charges and Ongoing Charges Percentage to the administration expenses under IFRS is as follows:

Cash flows

The table below summarises the sources and uses of cash and cash equivalents for the Group.

1 Distributions shown gross of withholding tax

The Group's portfolio of investments performed well during the period, with cash flows ahead of business plan. Distributions from FVPL investments, shown above gross of withholding tax, increased during the year by 11.6 per cent to £55.1 million.

Additional investments during the year were financed through a combination of RCF utilisation, Placing proceeds and reinvestment of distributions received from FVPL investments.

The Group borrowed under the RCF during the year, partly to finance the acquisition of new and follow-on investments and partly to provide a form of balance sheet hedging prior to the implementation of the revised hedging strategy whereby the local currency borrowings were replaced by foreign currency forward contracts as a means of balance sheet hedging. In H2 2018, the Group repaid a significant amount of borrowings, using £128 million of Placing proceeds and available cash, leaving only £15.3 million outstanding at 31 December 2018. Furthermore, cash dividends paid during the year resulted in a net cash outflow of £26.5 million.

For the year ended 31 December 2018, the Group has a cash dividend cover ratio of 1.5x (year ended 31 December 2017: 1.5x) and is calculated as follows:

Balance Sheet

Pro forma Balance Sheet

1 Represents the value of the Group's total assets less the value of its total liabilities under the Investment Basis.

The Investment Basis NAV represents the residual interest of the shareholders in the Group, after all the liabilities of the Group, if any, are settled. The Investment Basis NAV per share is the Investment Basis NAV divided by the number of Company shares issued and outstanding. This information presents the residual claim of each Company shareholder to the net assets of the Group.

As at 31 December 2018, the Group has 48 availability-based FVPL investments (31 December 2017: 43). The main drivers of the increase in FVPL investments are:

· Increase of £90.5 million from acquisitions of new assets and additional investment in existing assets;

· Increase of £70.1 million due to the effect of unwinding of discount, value enhancements and changes in market discount rates, partly offset by foreign exchange loss on portfolio value during the year;

· Offset by a decrease due to cash distributions received from Investments of £55.1 million.

Adjustments to FVPL investments relate to cash balances not included in the consolidation and that fall outside of the asset valuation. This amount is included as part of the cash balance under the Investment Basis NAV.

The derivative financial asset adjustment of £0.9 million reflects the fair value of forward currency contracts used to hedge future portfolio distributions. Under the Investment Basis NAV, the contracted forward rates are applied to hedged future distributions. The unhedged distributions are converted at the 31 December 2018 closing rate.

As at 31 December 2018, cash and cash equivalents amounted to £10.4 million (£20.6 million as at 31 December 2017).

A reconciliation of Net Debt as compared to net borrowings under IFRS is as follows:

Three-year comparative of Investment Basis NAV

The Investment Basis NAV increased by 24.4 per cent to £774.5 million at 31 December 2018 (31 December 2017: £622.5 million). This equates to a growth in Investment Basis NAV per share of 2.8 per cent to 133.5p at 31 December 2018 (2017: 129.9p).

CORPORATE GOVERNANCE

Introduction

The Company is internally managed with a two-tier governance structure that comprises a Supervisory Board and a Management Board (together, the 'Boards'), with the responsibilities of each as indicated in this Report.

The Management Board's principal responsibility is the day-to-day management of the Company, including the discretionary investment management of the Company's assets and those of the rest of the Group. In carrying out the function of investment manager via the Management Board, the Company does not engage an external function to provide such services.

The Management Board is otherwise responsible for the overall administration of the Company including the preparation of semi-annual valuations; statutory financial statements and management accounts and the business plan that defines the Company's active approach to asset management. Given its role as investment manager, the Management Board is the interface for investor relations, including engagement with the Supervisory Board on shareholders' behalf.

The Company is regulated by the CSSF under Part II of the amended Luxembourg law of 17 December 2010 on undertakings for collective investments and is subject to the Luxembourg amended law of 12 July 2013 on Alternative Investment Fund Managers ('AIFM Law') that implemented the EU Alternative Investment Funds Managers Directive ('AIFMD') into national legislation.

Governance and Regulatory Environment

As an internally managed investment company, having effective controls in place is paramount to securing the sound financial and operational performance of the Company's investments. Equally, the Company recognises the importance of effective engagement with its stakeholders, viewing it as a key part of its own long-term success and sustainability.

BBGI is a member of the AIC and as such reports against the AIC Code of Corporate Governance ('AIC Code'), whose principles and recommendations are carefully considered, by reference to the AIC Corporate Governance Guide for Investment Companies ('AIC Guide').

In July 2018, the Financial Reporting Council ('FRC') introduced its revised Corporate Governance Code, applicable to financial years beginning on or after 1 January 2019. This new Code promotes, amongst others, a need for wider stakeholder engagement and greater demonstration of diversity at both board level and within the wider employee population. The AIC has accordingly updated its AIC Code to reflect the FRC's new UK Corporate Governance Code, also applicable to financial years beginning on or after 1 January 2019. The Company intends to continue to comply with the AIC Code, and will accordingly adopt the new AIC Code for its 2019 Annual Report.

The AIC Code relevant to this reporting period ('2018') was published in mid-2016, applying to reporting periods beginning on or after 17 June 2016. The Company has therefore followed the revised AIC Code dated July 2016 for the 2018 reporting period; it has worked throughout the year to ensure it complies with the AIC Code and, where it does not, this Corporate Governance report explains why. More details can be found here;

AIC Principle 2 (majority of the board independent): Management Board - General section

AIC Principle 3 (director re-election): Management Board - General section

AIC Principle 5 (in relation to establishing separate Remuneration and Nomination Committee): Committees of the Supervisory Board

The Boards consider that reporting against the AIC Code, and by reference to the AIC Guide (which incorporates the UK Code), provides appropriate information to shareholders.

AIFM

During 2018, there have been no material changes in respect of Art. 20 Para. 2(d) of the AIFM Law that would warrant further disclosure to shareholders.

A new circular from the CSSF, 18/698, (the 'Circular') governing the authorisation and organisation of investment fund companies based in Luxembourg took effect in August 2018. In addition to confirming the existing obligations applicable to an Alternative Investment Fund Manager, the Circular requires investment management companies to comply with new provisions in relation to governance and administration, internal controls, anti-money laundering and key functions such as delegated activities and valuation.

Following publication of the Circular, the Company engaged a professional advisor to assist in undertaking a comprehensive analysis of existing governance and controls and to assist with developing an implementation plan to ensure compliance with any new requirements. This process, as well as any actions deemed necessary as a result, will be completed during the course of 2019.

THE BOARD OF DIRECTORS as at 31 December 2018

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.

Supervisory Board

Biographies of Directors

Colin Maltby: Independent Chairman of the Supervisory Board

Colin Maltby has been involved in the financial sector since 1975 when he joined NM Rothschild's international currency management department. Between 1980 and 1995, he held various roles at Kleinwort Benson Group plc, including as a Group Chief Executive at Kleinwort Benson Investment Management, as well as a Director of Kleinwort Benson Group plc. From 1996 to 2000, Mr Maltby was Chief Investment Officer at Equitas Limited, and from 2000 to 2007, he worked for BP, as Chief Executive for BP Investment Management Limited and Head of Investments for BP plc. Since 2007, he has served as advisor to institutional investors and as an Independent Non-Executive Director of several listed companies. Mr Maltby was Senior Independent Director until 31 August 2018, when he became Chairman. Mr Maltby holds MA and MSc degrees from Oxford University and has been a member of the Chartered Institute for Securities and Investment since its formation in 1992.

Howard Myles: Senior Independent Director

Howard Myles began his career in stockbroking in 1971 as an equity salesman, before joining Touche Ross in 1975 where he qualified as a chartered accountant. In 1978, he joined W. Greenwell & Co in the corporate broking team, and in 1987 moved to SG Warburg Securities where he was involved in a wide range of commercial and industrial transactions, in addition to leading Warburg's corporate finance function for investment funds. Mr Myles worked for UBS Warburg until 2001 and was ubsequently a partner in Ernst & Young LLP from 2001 to 2007, where he was responsible for the Investment Funds Corporate Advisory team. Mr Myles was Chairman of the Audit Committee until 31 August 2018, when he became Senior Independent Director. Mr Myles holds an MA from Oxford University. He is a Fellow of the Institute of Chartered Accountants, a Fellow of the Chartered Institute for Securities and Investment, and a Non-Executive Director of a number of listed investment companies.

Jutta af Rosenborg: Independent Director and Chair of the Audit Committee

Jutta af Rosenborg has extensive experience in management and strategy derived from senior operational roles in a number of companies and vast experience with group finance and auditing, risk management, merger & acquisitions and streamlining of business processes.

Ms af Rosenborg serves as an Independent Non-Executive Director on several listed companies. Ms af Rosenborg served as the Chief Financial Officer, Executive Vice President of Finance and IT and Member of Board of Management at ALK-Abelló A/S until 2010. Prior to this, Ms af Rosenborg served at Chr. Hansen Holding A/S as its Vice President of Group Accounting from 2000 to 2003. From 1978 to 1992, she worked for the Audit Group at Deloitte. Ms af Rosenborg was appointed to the Supervisory Board on 1 July 2018 and became Chair of the Audit Committee on 31 August 2018.

Ms af Rosenborg obtained a certificate in Business Administration from Copenhagen Business School in 1982 and gained an MSc in Business Economics and Auditing from Copenhagen Business School in 1987 and qualified as a state authorised public accountant in 1992.

General

The Supervisory Board consists of three Independent Non-Executive Directors. Mr David Richardson retired from his position as Chairman and member of the Supervisory Board on 30 August 2018. He was immediately succeeded in the role of Chairman by the existing Senior Independent Director, Mr Colin Maltby.

In accordance with the Articles, all members of the Supervisory Board are elected for a period ending at the AGM of the Company in April each 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. During the year, the Company became a member of the FTSE 350 index, as a result of which all directors are subject to annual re-election, at the Company's AGM. Prior to becoming a FTSE 350 constituent, the Company had already voluntarily complied with the requirement of the AIC Code Principle 3 by virtue of specific provisions set out in its Articles. Going forward, FTSE 350 constituency requires that under the AIC Code Principle 7 (and as part of the new AIC Code Provision 26), an externally facilitated evaluation of the Supervisory Board must be carried out at least every three years. The Board is committed to complying with the requirements of the AIC Code in this respect, and intends to facilitate an external performance evaluation exercise by 2021.

The Supervisory Board believes that its members continue to have an appropriate 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 corporate brokers. The members of the Supervisory Board are informed of investment and financial controls, and other matters relevant to their remit, by the Management Board. Where necessary, both Supervisory and Management Board members also have access to independent professional advice at the expense of the Company.

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.

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. At each meeting, members are required to advise of any potential or actual conflicts of interest prior to discussion.

Role and Responsibilities of the Supervisory Board

The primary focus at Supervisory Board meetings is a review of investment performance and associated matters, including risk management, marketing/investor relations, gearing, general administration and compliance, peer group information and industry issues.

The Supervisory Board will continue to regularly consider the Company's strategy taking account of market conditions and feedback from the Management Board, the Company's joint corporate brokers and engagement with shareholders. The Company's investment strategy is reviewed regularly in conjunction with the Management Board.

In addition, it is responsible for establishing and monitoring compliance with the Company's investment policy, providing general supervisory oversight to the operations of the Group as a whole; appointing the members of the Management Board, and supervising and monitoring the appointment and performance of the Company's third-party service providers (and those of its subsidiaries). In the case of these latter two roles, the Board acts as Nominations Committee and Management Engagement Committee respectively, as described below.

Annual performance evaluation

The Supervisory Board formally evaluates its performance, and that of its Chairman, and considers the term and independence of each member on an annual basis. The Supervisory Board considered the results of this evaluation process by way of questionnaire and agreed that the current composition of both the Supervisory Board and its Audit Committee reflected a suitable mix of skills and experience; that each body was functioning effectively, and that the performance of each individual member continued to be effective. The current Chairman's evaluation was also conducted by way of questionnaire, led by the Senior Independent Director and the results of which were subsequently discussed with the Chairman and the remaining member. The Chairman's evaluation concluded that he continued to be carrying out his role effectively.

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

**Retired from the Supervisory Board 30 August 2018. Prior to this, Mr Richardson attended all meetings held in the period and to which he was entitled to attend.

*** Joined the Supervisory Board 1 July 2018. Ms af Rosenborg was unable to attend one unscheduled meeting due to a prior commitment.

Other listed company directorships

As part of the Supervisory Board's annual performance evaluation process it was concluded that throughout the reporting period each member had, and was expected to continue to have, sufficient capacity to carry out their duties properly with no one member being over-boarded by their current directorship mandates.

COMMITTEES OF THE SUPERVISORY BOARD

The Audit Committee is the only constituted committee of the Supervisory Board as it considers its size to be such that it would be unnecessarily burdensome to establish additional committees at no material benefit to the Company and its shareholders. It operates under clearly defined terms of reference, and these are available from the Company Secretary.

Audit Committee

The Audit Committee operated throughout the year in accordance with the AIC Code. As indicated above, it does so within clearly defined terms of reference including all matters indicated by Disclosure Guidelines and Transparency Rule 7.1 and the AIC Code. It comprises the three independent Non-Executive Directors who are also members of the Supervisory Board: Jutta af Rosenborg was appointed Chair of the Committee with effect from 31 August 2018, following Mr Richardson's retirement from the Board and Committees. Colin Maltby and Howard Myles are the other members.

The Audit Committee is required to report its findings to the Supervisory Board, identifying any matters on which it considers that action or improvement is recommended. 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 and will disclose any such conflict.

The External Auditor is invited to attend those Audit Committee meetings at which the annual and interim financial statements are considered, and at other times if considered necessary by the Audit Committee.

The Audit Committee is required to meet not less than twice a year, and at such other times as the Audit Committee Chair may require. Additional meetings may be requested by any other member of the Audit Committee, or the External Auditor, if deemed necessary. Other Directors and third parties may be invited by the Audit Committee to attend meetings as and when appropriate.

*Ms af Rosenborg became a member and Chair of the Audit Committee from August 2018 and attended all meetings held during her period of appointment.**Mr Richardson retired from the Audit Committee in August 2018.

Further details on the Audit Committee and its work during the year can be found in the Audit Committee report.

The Committee Chair attends each AGM of the Company and is prepared to respond to any shareholder questions on the Committee's activities.

Other Committee functions

Remuneration Committee

Acting as Remuneration Committee, the Supervisory Board met four times during 2018 to review the levels and structure of the remuneration, compensation, and other benefits and entitlements of the Management Board of the Company. Further information in relation to both Executive and Non-Executive Directors remuneration can be found in the Remuneration section of this Report.

Nominations Committee

During the year, the Supervisory Board met five times as the Nominations Committee to consider the renewal of the appointments of the Management Board members (which appointments are renewable annually for one year only) and to review the succession plans for both Boards.

As stated under 'Management Board - Performance Evaluation and Reappointment', each member of the Management Board was reappointed for a further year. In respect of succession planning, the detailed plans developed for all senior positions were reviewed. These plans are regularly updated by the Management Board and reviewed with the Supervisory Board at least annually.

Management Engagement Committee

In its role as Management Engagement Committee, the Supervisory Board met on four occasions during the year under review to consider, together with the Management Board, the performance and ongoing appointments of the Company's third-party service providers.

The Supervisory Board therefore carries out the functions of Management Engagement, Nominations and Remuneration Committees, including inter alia 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 such Committees. When acting in the capacity as these individual Committees, the meetings are chaired by Mr Maltby, the Independent Chairman of the Supervisory Board.

Re-election of Supervisory Board members

In accordance with the Articles, Supervisory Board members are elected for a period ending at the Company's next AGM, at which time they are eligible for reappointment. Apart from Mr Richardson, who retired during the year, all members of the Supervisory Board have decided to offer themselves for re-election at the forthcoming AGM and, as a result of the successful performance evaluation, the Supervisory Board recommends the re-election of each.

Management Board

Biographies of Directors

Duncan Ball: Co-CEO and member of the Management Board at BBGI

Duncan Ball has been co-CEO of BBGI from inception and was actively involved in the establishment and IPO listing of BBGI in 2011 and the subsequent growth from 19 assets at IPO to 48 assets currently. Mr Ball has worked in the infrastructure sector, investment banking and advisory business for over 30 years. As co-CEO of BBGI, he is responsible for overall strategy and management of the Company. He is one of three members of the Management Board, and sits on the Investment Committee. Additionally, he is a shareholder representative or holds directorships in key assets of BBGI.

Frank Schramm: Co-CEO and member of the Management Board at BBGI

Frank Schramm has been co-CEO of BBGI from inception and was actively involved in the establishment and IPO listing of BBGI in 2011 and the subsequent growth from 19 assets at IPO to 48 assets currently. Mr Schramm has worked in the infrastructure sector, investment banking and advisory business for over 23 years. As co-CEO of BBGI, he is responsible for overall strategy and management of the Company. He is one of three members of the Management Board, and sits on the Investment Committee. Additionally, he is a shareholder representative or holds directorships in key assets of BBGI.

Michael Denny: CFO and member of the Management Board at BBGI

Michael Denny has over 18 years' experience in corporate finance with a focus on the infrastructure and real estate sectors.

He joined BBGI in early 2012, shortly after the Company's IPO. As CFO of the Group, he is primarily responsible for all corporate financial matters including but not limited to financial reporting, UK listing requirements, taxation, foreign exchange hedging and regulatory compliance. Mr Denny is a member of the Management Board and sits on the Group's Investment Committee.

General

The Management Board comprises three members, each contractually engaged by BBGI Management HoldCo S.à r.l., a direct 100 per cent subsidiary of the Company. As a result, no member is deemed independent under AIC Code Principle 2. However, the Management Board's functions are overseen by the Supervisory Board which itself meets the independence criteria set out in Principle 2. Whilst this two-tier structure is not explicitly covered by the AIC Code, the Company considers that an independent Supervisory Board ensures the Company is compliant with Principle 2.

The Company's Articles require that the Management Board's members be elected on an annual basis by the Supervisory Board, and not by shareholders. As a result, this does not meet the requirements of AIC Code Principle 3, which requires that directors should be subject to election by shareholders. However, as the Management Board carries out the role of investment manager, the Supervisory Board deems it appropriate that it elects the members of the Management Board. The Articles also require that the members of the Supervisory Board themselves be subject to annual election by shareholders, who may also dismiss any such member. Accordingly, the Company considers that this procedure satisfies the requirements of Principle 3.

Internal controls

The Management Board has established an ongoing process and system of robust internal controls designed to meet the particular needs of the Company in managing the risks to which it is exposed. This process included the implementation of a wide range of policies and procedures, which are reviewed at least annually, together with continual, ongoing monitoring.

At each quarterly meeting, the Supervisory Board monitors the Company's investment performance against its stated objectives and reviews its activities to ensure that the Management Board is adhering to the investment policy and guidelines - including clearly defined investment criteria, returns targets and risk appetite. During these meetings, the Management Board reports KPIs in relation to operating performance, cash projections, investment valuations and corporate governance matters.

The Company recognises that effective control systems can only seek to manage and mitigate the risks of failure to achieve business objectives. They cannot eliminate them. By their very nature, these procedures are not able to provide absolute assurance against material misstatement or loss.

Performance evaluation and reappointment

As stated above, the Management Board carries out the functions of the Company's investment manager, and its Directors are appointed by the Supervisory Board for a period of one year, which is renewable. Mr Ball and Mr Schramm were both originally appointed on 5 October 2011 at the time of the Company's IPO, with Mr Denny originally appointed to the Management Board on 30 April 2013.

Re-election of the Management Board members

The Supervisory Board evaluates the performance of the Management Board and its Directors annually to ensure that the Management Board and its individual members continue to operate effectively and efficiently, and that the continued appointment of the individual Directors is in the best interests of the Company and its shareholders. Satisfied with the evaluations carried out in 2018, the Supervisory Board resolved to renew Mr Denny's appointment for a further term of one year with effect from 30 April 2018, and those of Mr Ball and Mr Schramm for a further term of one year with effect from 5 October 2018.

Attendance at Management Board meetings during the financial year ended 31 December 2018

*Mr Denny was unable to attend one scheduled meeting due to personal circumstances.

Delegated functions

Amongst other requirements, the Company is required under the AIFM Law to have dedicated Risk Management, Compliance, and Internal Audit functions; each of which is required to be both functionally and hierarchically separate from the functions of the operating units. Accordingly, the following third party service providers, which are experts in their respective fields, have been appointed to these roles:

Risk Management: SGG Fund Management S.A.

Compliance: 99 Advisory Luxembourg - ICE S.A.

Internal Audit: Grant Thornton Advisory

Other key delegates are noted below:

Custodian, Depository, Paying Agent, Transfer Agent: RBC Investor Services Bank S.A.

Information Technology: G.I.T.S. PSF

Notwithstanding each of these delegated functions, the Company's Management Board retains overall responsibility for the correct and effective operation of the delegated functions. The Company is currently reviewing the delegated function structure as part of the overall Circular review and implementation process.

Board members and other interests

The members of the Management Board are also BBGI Management HoldCo S.à r.l. managers. Mr Ball and Mr Schramm both hold service contracts and Mr Denny holds a management contract in respect of BBGI Management HoldCo S.à r.l. Otherwise, no other member of the Group held service or management contracts during the year under review.

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

There are no family relationships between the members of the Boards. Mr Maltby, Mr Myles and Ms af Rosenborg, and during his tenure as Chairman of the Company, Mr Richardson, are all considered to be independent Board members as they: (i) have not been employees of the Company; (ii) have not had material business relationships with the Company; (iii) have not received performance-based 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; and (vii) have not served on the Board for more than nine years.

Board members' shareholdings

REMUNERATION

Supervisory Board remuneration

The Supervisory Board members are the Company's Non-Executive Directors and are paid a fixed quarterly fee. In its capacity as the Remuneration Committee, the Supervisory Board considered fees annually based on the advice and recommendations of the Management Board. No member of the Supervisory Board is entitled to vote on his or her own remuneration. Supervisory Board members are not entitled to any other fees, pension payments, incentive plans or any other form of compensation, with the exception of ex gratia fees that are considered in the event of exceptional and substantial increase in the members' workload.

The Chairman of the Supervisory Board is entitled to a fixed annual fee of £65,000 and the Senior Independent Director and the Chair of the Audit Committee are each entitled to a fixed annual fee of £50,000.

The table below outlines the fees paid in Sterling to each of the Supervisory Board members in 2017 and 2018.

* In addition to the standard fees each director was entitled to ex gratia fees during 2018 in relation to Placings carried out in 2017 and 2018.

Executive and staff remuneration

The Company believes that an appropriate remuneration programme for each executive and employee of the Group plays an important role in achieving the short and long-term business objectives that ultimately drive business success and alignment with long-term shareholder goals.

In its capacity as the Company's Remuneration Committee, the Supervisory Board reviews the level and structure of annual remuneration to which the Management Board members and employees of the Group are entitled. Appropriate benchmarking with comparable listed companies is periodically undertaken with the intention of ensuring that the remuneration programme remains competitive. Other than the LTIP payment mechanism - which is subject to shareholder approval - the Supervisory Board is responsible for setting the remuneration levels and targets of the Management Board. It should be noted that the annual review may not result in any change in the levels of remuneration.

Remuneration programme objectives

The objectives of the remuneration programme are to:

· attract and retain highly qualified executives and employees with a history of proven success;

· align the interests of the Group's Management Board and employees with shareholders' interests, the execution of the Company's investment policy and the fulfilment of the Company's investment objectives;

· establish performance goals that, if met, are expected to be accretive to long-term shareholder value; and,

· link compensation to performance goals and provide meaningful rewards for achieving these goals.

Under the programme, every employee of the Group receives an annual base salary payable monthly in arrears.

Management Board remuneration

Each member of the Management Board receives an annual base fee payable monthly in arrears and participates in a LTIP. In addition, each member participates in a STIP. No member of the Management Board receives an additional fee for acting as a member of the Management Board.

Both Mr Denny and Mr Schramm receive all cash entitlements under the remuneration programme in Euro. Mr Ball receives all cash entitlements in Canadian Dollars. Payments in currencies other than Sterling (the reporting currency of the Group) can result in both positive and negative foreign exchange movements.

Executive contracts

BBGI Management HoldCo S.à r.l. has agreed separate service contracts with the co-CEOs, Mr Schramm and Mr Ball. These contracts are on identical terms and conditions, save for the currency of payment as noted above. The key features of the service contracts are as follows:

· the Threshold, Target and Maximum levels of the STIP are set at 50 per cent, 100 per cent and 125 per cent of the total base fee paid in the year respectively;

· the Threshold, Target and Maximum levels of the LTIP awards are set at 50 per cent, 100 per cent and 150 per cent of the base fee at the date of grant;

· LTIPs granted will be settled in shares;

· an expected shareholding of 150 per cent of the base fee was set. This can be attained over a five-year period commencing May 2014;

· Malus clauses enabling unpaid bonuses to be withdrawn are included for both the STIP and LTIP.

Mr Denny's 2018 STIP performance objectives set a target payment of €135,000 up to a maximum of payment of 125 per cent of target. LTIPs issued to Mr Denny each have a maximum value at their respective award dates of €100,000.

Notice periods to and from the Company of 12 months apply in respect of Mr Ball and Mr Schramm with a period of 6 months applying to Mr Denny.

Fixed remuneration

The combined annual base fee received by the members of the Management Board during the year ended 31 December 2018 was £965,855 (2017: £924,717).

In addition to their base fees, both Mr Schramm and Mr Ball received a monthly car allowance during the year amounting to £27,541 (2017: £27,878) and a supplementary annual payment to provide pension, retirement or similar benefits equating to 15 per cent of their annual base fee.

Variable remuneration

Short-term incentive plan

The Supervisory Board, acting in its capacity as Remuneration Committee, is responsible for determining both whether the relevant financial and non-financial performance objectives have been satisfied and the level of award under the STIP for the relevant year. If agreed, awards will be paid after the accounts have been audited.

During the year ended 31 December 2018, the combined amount expensed in respect of the 2018 STIP amounted to £897,663 (2017: £863,171). Payments under the STIP are made in Canadian Dollars and Euro.

Long-term incentive plan

During the year under review a combined amount of £486,000 (2017: £459,000) was expensed against those LTIPs which have been awarded but had not vested.

As of 31 December 2018, the total amount accrued in respect of all LTIPs which have been awarded but have not vested amounted to £837,000 (2017: £766,000). Further details on the individual awards are set out below.

- Share-based LTIP awards

A key feature of these awards is that they will be settled entirely by way of Company shares and not in cash. All awards, which are to be settled by shares, fall under the scope of IFRS 2 'Share-Based Payments' and its specific requirements. The Company continues to engage EY to carry out the valuation of awards falling under the scope of IFRS 2 with the resulting valuation being used as the basis for the cost to be amortised over the return period. Refer to the Consolidated Financial Statements for further detail on share-based payments. The below table outlines the amount expensed during the year for each of the outstanding share-based LTIP awards.

The 2018 award was issued in December 2018. No expense was accrued for this particular award during the reporting period.

During the year ended 31 December 2018, the Company settled the 2014 award obligation by issuing the net share entitlement, after tax, to each member of the Management Board. In total the Company issued and allotted 357,320 shares by way of settlement.

As at the date of this Report, there are no amounts set aside, needing to be set aside or accrued by the Company to provide pension, retirement or similar benefits to any member of the Management Board.

Total basic and variable remuneration for the financial year

The total basic remuneration paid to all members of staff (including the Management Board members) during the year ended 31 December 2018 was £2.33 million (2017: £2.07 million). The total cash settled variable remuneration accrued, but not yet paid, for the financial year ending 31 December 2018 was £1.29 million. The total variable remuneration paid in cash in 2018 relating to the financial year ended 31 December 2017 was £1.42 million.

Remuneration and AIFM law

In 2013, the European Securities and Markets Authority ('ESMA') published its final guidelines on sound remuneration policies under the AIFMD. These guidelines indicate that remuneration disclosures may be made on a 'proportional' basis and acknowledge that the application of proportionality may lead exceptionally to the 'disapplication' of some requirements provided this is reconcilable with the risk profile, risk appetite and strategy of the AIFM and the AIFs it manages. According to the Guidelines, the different risk profiles and characteristics among AIFMs justify a proportionate implementation of the remuneration principles and, where a company chooses to disapply requirements, it must be able to explain the rationale to a competent authority.

The Company's position

As part of the AIFM authorisation application, the Company obtained the following derogations from the CSSF, on proportionate grounds, from three of the remuneration policy principles: i) to pay a substantial part of the variable remuneration in shares; ii) the ex post incorporation of risk for variable remuneration ('malus' or 'clawback'); and iii) to establish a Remuneration Committee. Accordingly, the Company has technically disapplied these three remuneration policy principles. However, the Company has applied the spirit of the rules. LTIPs granted from the 2014 award onwards will be settled in Company shares. Furthermore, malus clauses are included in their STIP and LTIP contracts. As mentioned above, the Supervisory Board acts as the Company's Remuneration Committee.

Board tenure and diversity

In its capacity as the Nominations Committee, the Supervisory Board, and the Management Board regularly reviewed the succession plans for the Company. As part of a structured succession plan, each of the original non-executive directors is planning to retire on a staggered basis and the Company is recruiting additional independent directors over a timeframe that enables the knowledge and experience built up over the preceding years to be both retained and enhanced. Ms af Rosenborg represents the first of these appointments under the succession plan.

The Hampton-Alexander review (November 2018) highlighted the progress made towards improving gender balance in FTSE Leadership, with the ultimate aim of having at least 33 per cent representation of women on the Boards of FTSE 350 companies by the end of 2020. Having entered the FTSE 350 Index during the period, the Directors acknowledge both the Hampton-Alexander Review as well as the Parker Review on Ethnic Diversity on Boards in encouraging broader ethnic representation on FTSE company boards.

The Boards of BBGI take into full consideration both the gender and ethnic diversity of their composition. Female representation on the Supervisory Board currently stands at one third. The Company will continue to make future appointments on the basis of the full merits of the individual candidates, and the strengths, skills and experience that they would bring to the composition and balance of the Supervisory Board as a whole. The process of appointing any new Directors is led by the Independent Directors.

In recruiting the new Directors, the Nominations Committee is actively seeking greater diversity by gender, ethnicity, nationality and other criteria, whilst remaining committed to selecting members on merit with relevant and complementary skills to help the Company maximise shareholder value.

General Meetings

2018

Three shareholder meetings were held during 2018, including the AGM on 30 April, an Ordinary General Meeting ('OGM') on 29 June and an EGM on 29 August. The notices of these meetings (and associated documents) and the results of each meeting may be found in the Investor Relations section of the Company's website.

2019

The next Company AGM will be held on Tuesday 30 April 2019 at the registered office address. The Notice of Meeting, proposed Resolutions and Explanatory Notes, and the associated Proxy Form, will be circulated to shareholders to meet the regulatory deadlines. These will also be made available on the Company's website.

Substantial shareholdings

Pursuant to DTR5 of the FCA's Disclosure Guidance and Transparency Rules, the Company had received notice of substantial interests (5 per cent or more) in the total voting rights of the Company as follows, in compliance with DTR 7.2.6R:

ADMINISTRATION

Incorporation and administration

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

Articles of Association

The Articles were approved and formalised before a Luxembourg notary public on 24 November 2011. The Articles are filed with the Luxembourg Registre de Commerce et des Sociétés and are published in the Mémorial. The Articles may be amended in accordance with the rules set out in article 32 of the Articles. Most recently, this occurred following an EGM of the Company's shareholders held at the registered office of the Company on 29 August 2018.

A copy of the current Articles is available for inspection at the Company's registered office during normal business hours.

VIABILITY

Viability statement

As part of their ongoing process of monitoring risk, and as required by the UK Corporate Governance Code Provision C.2.2 and the AIC Code Principles 15 and 21, the Directors have considered the viability and prospects of the Company for a period of five years. This period continues to be considered an appropriate and acceptable length of time in which to consider the Company continuing in existence from a risk perspective. In making this judgement, the Directors have considered detailed information provided at Board meetings, including: the Company's investment policy, the investment pipeline; asset reviews; the risk matrix (including the principal risks and uncertainties); current relevant financial and economic information; long-term economic assumptions; scenario testing; and annual and semi-annual valuations.

Each of the principal risks and uncertainties the Company faces, along with detailed descriptions of the areas and factors of the risks as well as explanations of the processes by which the Boards monitor, review and assess them, can be found in the Governance section of this Annual Report and under the heading Risk. The Company has put in place a robust risk and internal controls framework with the objectives of reducing the likelihood and impact of poor decision-making, risk-taking above agreed levels, and human error. The Boards regularly review and assess the principal risks facing the Company - including and in particular those that could threaten its business model, strategy, solvency, liquidity and future performance - as well as the monitoring, management and mitigation of the exposure to these risks.

In addition to the risk management and mitigation in place, a valuation of each asset is carried out every six months at each of the Company's financial half-year and year-ends (30 June and 31 December, respectively). Such valuations are based on long-term discounted future cash flows that are themselves predominantly based on long-term contracts and other assumptions which together form a key part of the overall viability assessment. Once complete, each valuation is independently reviewed by a professional valuer and is also subject to audit/review by the Company's External Auditor. A more detailed description of the valuations, assumptions and stress-testing applied can be found in the Valuation section of the Strategic Report.

Given the investment policy, risk management and valuation processes that are in place, the Boards have the reasonable expectation that the Company can continue in operation and be able to meet its liabilities, commitments and dividend targets over the five-year period assessed, subject to world markets, no adverse unexpected event occurring and the global economy continuing to function within a range of stressed scenarios. The Company is also subject to a biennial shareholder continuation vote, the next of which is scheduled to take place at the 2019 AGM of shareholders.

RISK

Corporate governance

BBGI is an Equal Opportunities Employer and is committed to the principles of respect, fairness, loyalty, as well as equal treatment and pay between men and women.

It has a strict Code of Conduct policy in place to ensure equal treatment of all its staff, and to prevent any employee suffering any form of discrimination or harassment due to their nationality, gender, sexual orientation, ethnicity, religion, ethical beliefs, handicap or age, and it will not tolerate any such abuse.

Once the Company has acquired an investment in an asset entity, it then, through its representatives on the Board of the asset company, undertakes regular reviews of the environmental, social and governance policies that the asset companies have in place and (to the extent possible) their adherence to these policies in the delivery of their services.

Health and Safety

Health and safety practices are monitored across the Company's portfolio and any serious breaches or incidents are reported to the Management Board, and as appropriate, to the Supervisory Board. Each year several health and safety audits are carried out by external health and safety consultants to ensure appropriate procedures and policies are in place and being followed.

Bribery Act

The Company does not offer, pay or accept bribes and is committed to working only with third parties whose standards of business integrity are substantively consistent with its own. The Company also expects the businesses it invests in to commit to avoiding corruption in all its forms and to comply with anti-bribery, anti-fraud and anti-money laundering laws applicable to them. The Company has an anti-bribery policy and is fully compliant with the provisions of the UK Bribery Act.

Procurement

BBGI has developed policies and procedures in relation to the procurement of services received from third-party providers.

The Company aims to have a collaborative relationship with its service providers, and wherever possible to work with them when problems or issues arise to help them meet its requirements.

Insurance

The Company has taken out both Directors and Officers liability insurance and Professional Indemnity ('PI') insurance. The cover provided under the PI policy is compliant with the requirements of the AIFM law.

Donations

The Company made no political donations during the year. Total charitable donations for the year did not exceed £1,000.

RESPONSIBLE INVESTMENT

Introduction

BBGI believes that the principles and practices of Responsible Investment ('RI') are key components for success in delivering good asset management and corporate governance.

RI is an approach to investing that aims to incorporate environmental, social and governance ('ESG') factors into investment decisions, to better manage risk and generate sustainable, long-term returns.

The assets under the Company's custodianship have a direct impact on the daily lives of the people, communities and economies which they serve. A commitment to good governance, investing responsibly and strong corporate citizenship is what makes BBGI a positive long-term custodian of these assets. Here, the Company's own prudent, low-risk investment strategy focused on delivering long-term, predictable shareholder returns is closely aligned to an RI philosophy.

The BBGI RI philosophy  

· Include RI/ESG into the investment review and decision-making process

· Ensure RI/ESG objectives are integrated into management policies and practices

· Seek appropriate disclosures on RI/ESG issues by the entities in which the investments are made

· Promote adoption of RI/ESG principles amongst co-shareholders

· Monitor and report on RI/ESG initiatives

Principles for Responsible Investment

The Company recognises the global momentum behind responsible investment and welcomes the transition to an ESG focused approach. ESG factors play a material role in determining risk and return for our shareholders. Incorporating these factors into daily practice is a key part of investors' fiduciary duty to their clients and beneficiaries. BBGI's RI philosophy seeks to comply with this requirement through applying them to the Company's investment strategy.

It is BBGI's policy to satisfy all applicable legislation, achieve industry standards and conform to specific national standards wherever the Company operates.

The tangible and intangible benefits of properly integrating RI principles into core business practices are clear. BBGI considers ESG performance frameworks to be long-term indicators of the sustainability of business operations. The ability to maintain and preserve asset life through RI makes this issue a key concern for BBGI in regard to its investment strategy of generating stable, predictable cash flows over the life of public sector-backed contracts typically extending to more than twenty years in length. The Company recognises its responsibility to the end-users of its assets and duty to act in the best long-term interests of its beneficiaries.

To that end, in February 2019 post-period end, BBGI became a signatory to the UNPRI and follows the PRI Principles ('Principles'), which include:

· Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.

· Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.

· Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.

· Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.

· Principle 5: We will work together to enhance our effectiveness in implementing the Principles.

· Principle 6: We will report on our activities and progress towards implementing the Principles.

Implementing RI policies

The Company's management review process will in the future provide a framework for the development, implementation and review of quality RI objectives to achieve BBGI'S ESG aspirations and business objectives.

BBGI seeks to ensure that it is an active manager of such issues by having clear and comprehensive management disciplines and procedures across all aspects of an asset, and that they are implemented throughout the life of the Company's involvement.

This includes actively working with third-party contractors (e.g. management services providers, facility maintenance providers and road operators) to ensure they adhere to BBGI's 'ESG Best Practices Guidance'. These principles are reviewed annually and amended where necessary.

BBGI monitors the performance of RI initiatives of its assets through an annual ESG questionnaire. To the extent possible, the questionnaire remains consistent from year to year. This consistency aids BBGI's management with the tracking of progress and improvement in ESG performance of each asset.

The RI performance of each asset is then reviewed at annual board meetings against BBGI's benchmarks to ensure compliance with the ESG Best Practices Guidance.

Environmental and social impact in action

The Company hopes to institute a responsible approach to the environment via the adoption of a series of procedures and working practices that support BBGI's vision to promote the conservation, protection and improvement of the physical and natural environments surrounding its assets, including careful monitoring, local engagement and management.

This includes enhancing the energy, water and waste efficiency of each asset, where possible, to act as a catalyst to develop or promote broader activities or actions within the wider community within which the asset operates.

Accordingly, the Company requires that its representatives within its assets strive to ensure that the asset companies develop and maintain positive relationships with the communities which they serve. This includes promoting the community interests of the asset to the client organisation, client staff who use the asset facilities and wider stakeholders and users of the asset.

Several environmental and social initiatives took place across the portfolio in the year, including:

· Reducing energy consumption and carbon emissions through retrofit upgrades

Victoria Prisons (Australia)

Throughout the latter half of 2018, an extended programme of replacing all lights within Victoria Prisons with LED fittings was undertaken. This programme included prisoner bed and main cell lights within the correctional facilities. Once completed, the upgrades will result in significantly reduced power consumption, material carbon savings and improved lifecycle outcomes.

Golden Ears Bridge (Canada)

Over the period, the Company's asset management team initiated discussions with the Operations & Maintenance (O&M) Contractor and the local authority of British Columbia to promote environmentally and economically beneficial upgrades to its management of Golden Ears Bridge, reducing its overall carbon footprint to nearly half its current level. Solar-powered speed-signals were introduced to improve safety along the corridor, and the installation of five solar-powered speed feedback signals helped control the speed of motorists. Air quality monitoring was continuously conducted as part of the asset's routine environmental compliance, whilst several upgrades were undertaken by the O&M contractor. It switched to solar-powered LED arrow boards throughout the asset and the contractor's patrol fleet was replaced with propane-powered trucks to reduce carbon emissions.

· Supporting vulnerable communities through additional construction

Golden Ears Bridge (Canada)

During the peak of the snowmelt in May 2018, several communities near the Fraser River were at high risk of flooding including the Katzie First Nation in Pitt Meadows, one of the asset's neighbouring communities. The O&M Contractor immediately deployed equipment outfitted to fill sandbags at a rapid pace and all its employees volunteered their time during a weekend to help contain the emergency in the affected areas.

Tor Bank Education Partnership Ltd (UK)

Tor Bank Education Partnership (TBEP) provides education facilities to students with disabilities or special needs, some of whom have difficulty in coping with unexpected fire drills and evacuating during these tests. In July 2018, TBEP, together with its on-site sub-contractor Graham FM, built a 'safe place' shelter where those pupils could be brought to in advance of a fire drill to ease discomfort.

Blue Light Partnership (ASP) Ltd (UK)

ASP operates four police authority sites in the Avon and Somerset region. Through the 'Strategic Fit Programme' driven by ASP, the Police Authority and FM contractor Engie, BBGI contributes financially to support the Authority in sustainability, environmental and corporate responsibility activities. In 2018, BBGI assisted in redecorating a 'Woman and Children Refuge' area and provided labour to help convert a 'Help Bristol Homeless Project' (HBH) unit in Bedminster, Bristol where restaurant owner Jasper Thompson is working on a project to transform shipping containers in an attempt to combat homelessness.

AUDIT COMMITTEE REPORT

I am pleased to present the Audit Committee's (the 'Committee') report to shareholders on its activities in respect of the year ended 31 December 2018. This is my first statement as Chair of the Committee since succeeding Howard Myles in August 2018, who will continue to provide his insight and expertise to the Committee as a member. I am committed to maintaining his work in leading the Committee, challenging and monitoring the effectiveness and integrity of our financial reporting, internal controls and risk management systems. The Committee has been operating throughout the year in line with its terms of reference.

Composition of the Committee

Each of the three Independent Non-Executive Directors is a member of the Committee, which is chaired by me, and our biographies can be found in the Corporate Governance section of this Annual Report. The Supervisory Board considers that at least one Committee member has recent and relevant financial experience for the Committee to discharge its functions effectively.

Due to the size of the Supervisory Board, its Chairman, Colin Maltby, is also a member of the Committee, and this has enabled him to bring his extensive knowledge to the table.

During the year, David Richardson stepped down as Chairman of the Supervisory Board and as a member the Committee.

Responsibilities

The Committee's terms of reference include all matters indicated by Disclosure and Transparency Rule 7.1 and the UK Corporate Governance Code. The terms of reference are reviewed at each formally scheduled meeting by the Committee and are then referred to the Supervisory Board for approval. A copy of the terms of reference is available from the Company Secretary on request.

The Committee's main responsibilities are as follows:

§ where requested, providing advice to the Supervisory Board on whether the Group's Annual and Interim Reports and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy;

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

§ reviewing the Group's internal financial controls and, unless expressly addressed by the Supervisory Board itself, the Group's internal control and risk management systems, including reviewing the Internal Auditors annual regulatory report;

§ monitoring and reviewing the effectiveness of the Company's internal audit function;

§ making recommendations to the Supervisory Board for resolutions to be put to shareholders for approval at the AGM on the appointment, re-appointment and removal of the External Auditor, and for approval of the associated remuneration and terms of engagement;

§ reviewing and monitoring the External Auditor's independence and objectivity and the effectiveness of the audit process, taking into consideration relevant UK and Luxembourg professional and regulatory requirements;

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

§ reviewing the Group's Annual and Interim Reports and Financial Statements.

2018: the year under review

The Committee met twice in the year to 31 December 2018 and member attendance can be found within the Corporate Governance section of this Annual Report, under the heading 'Committees of the Supervisory Board'. At these meetings, the Committee considered, inter alia:

§ the 2017 Annual and 2018 Interim Reports and Financial Statements;

§ the valuation of the Company's investments;

§ the Reports of the External Auditor;

§ the External Auditor's terms of appointment and remuneration (including overseeing the independence of the Auditor, particularly as it relates to the provision of non-audit services);

§ review and approval of the External Auditor's plan for the following financial year;

§ the appropriateness of the Group's accounting policies;

§ new IFRS reporting standards, including IFRS 9 'Financial Instruments' in relation to classification, measurement, as well as the impact, if any, that new IFRS reporting standards might have on Group financial reporting;

§ the risk register of the Company;

§ the adequacy of the internal control systems and standards; and

§ the Internal Auditor's Annual Report of the year under review.

The year under review also saw the introduction of a new CSSF circular 18/698 concerning the authorisation and organisation of Luxembourgish investment management companies; Specific provisions on the fight against money laundering and terrorist financing applicable to investment fund managers. The Company has engaged Deloitte Luxembourg to conduct a detailed analysis of the organisation in accordance with the requirements as set out in the circular. Where gaps are identified, the Management Board will work closely with the Supervisory Board to agree on suitable rectification measures and an appropriate implementation plan to be concluded in H2 2019. The Management Board regularly updates the Committee on its progress in this regard.

Significant risks considered

During the year under review, the Committee held discussions with each of the Management Board, the External Auditor and the Internal Auditor. The Committee concluded from these discussions that the most significant risk of material misstatement in the Company's financial statements continues to be the fair valuation of the investment portfolio which makes up 100.76% of the Company's Net Asset Value at 31 December 2018. The Management Board carries out a fair market valuation of the investments every six months at 30 June and 31 December respectively, which is then reviewed by an independent third-party valuer, after which it is presented to the Supervisory Board. The External Auditor was invited to attend the Committee meetings at which the Annual and Interim Financial Statements were considered in order to present the conclusion of its work, which included a review of the adequacy of the valuation. During these meetings the External Auditor, including the External Auditor's valuation specialist, delivered a review of the Company's Annual and Interim Financial Statements, paying particular attention to the portfolio valuation, discount rates applied and key assumptions used in deriving the fair valuation of the investments. This risk of material misstatement is therefore carefully considered when the Committee reviews the Company's annual and interim financial statements.

The Management Board members were available during the Committee review process to provide detailed explanations of the rationale used for the valuation of investments.

Subsequent to the valuation and ensuing reviews, the Committee concluded that the valuation process of the Company's investments for the year ended 31 December 2018 had been properly carried out and the investments fairly valued.

Non-Audit Services

The Committee considered the extent of non-audit services ('NAS') provided by the External Auditor. To the extent that the NAS are not prohibited, the Committee will continue to review and, where appropriate, approve NAS engagements performed by the External Auditor on controlled subsidiaries. As a general principle the Company will not look to retain the services of the External Auditor for NAS unless there is a specific justification for doing so, for example legacy knowledge whereby the appointment of another advisor would potentially be sub optimal to the business.

Appointment of External Auditor

As stated above, the Committee annually reviews the performance of KPMG Luxembourg, Société coopérative ('KPMG'), the Company's External Auditor. In doing so, we consider a range of factors including the quality of service, specialist expertise and the level of audit fee. Following that review, the Committee remains satisfied with KPMG's effectiveness and therefore has not considered it necessary, to date, to require it to tender for the audit work. There are no contractual obligations restricting the choice of External Auditor. The reappointment of the External Auditor is subject to shareholder approval at the Annual General Meeting. In accordance with the new Audit Reform Law, a mandatory audit tendering process will be carried out in 2021 after the completion of a 10-year audit cycle by KPMG. The audit partner on the Group audit engagement was rotated in 2017. The current audit partner, Ms Emmanuelle Ramponi, presided over both the 2018 interim review and the 2018 year end audit process.

As a result of its work during the period, the Committee concludes that it has acted in accordance with its terms of reference and has ensured the independence and objectivity of the External Auditor. The Committee has recommended to the Board to re-appoint KPMG Luxembourg, Société coopérative as the Group's External Auditor.

Conclusion

In conclusion, the Committee is of the opinion that the Annual Report and Financial Statements, taken as a whole, are fair, balanced, understandable and provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

APPROVAL

On behalf of the Audit Committee

Jutta af Rosenborg

Chair of the Audit Committee

27 March 2019

MANAGEMENT BOARD RESPONSIBILITIES STATEMENT

The Management Board of the Company is responsible for ensuring proper preparation of the Company's Annual Report and financial statements for each financial period in accordance with applicable laws and regulations, which require it to:

i) 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;

ii) give a true and fair view of the development and performance of the business and the position of the Group; and

iii) give a true and fair description of the principal risks and uncertainties the Group may encounter, and put in place an appropriate control framework designed to meet the Group's particular needs and the risks to which it is exposed.

In addition, the Management Board is responsible for ensuring that the Company complies with applicable company law and other UK or Luxembourg applicable laws and regulations.

In preparing such Financial Statements, the Management Board is responsible for:

§ selecting suitable accounting policies and applying them consistently;

§ making judgements and estimates that are reasonable and prudent;

§ stating whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

§ preparing the financial statements on a going concern basis, unless it is inappropriate to presume that the Group will continue in business;

§ maintaining proper accounting records which disclose with reasonable accuracy the financial position of the Group and enable it to ensure that the financial statements comply with all relevant regulations; and

§ safeguarding the assets of the Group and taking reasonable steps for the prevention and detection of fraud and other irregularities.

Management Board Responsibilities Statement

We confirm that to the best of our knowledge:

§ the financial statements have been prepared in accordance with the applicable set of accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and Group included in the consolidation as a whole.

§ the Chairman's Statement and the Report of the Management Board ('Strategic Report') include a fair review of the development and performance of the business and the position of the Company and Group included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that it faces.

Luxembourg, 27 March 2019

Duncan Ball, Co-CEO

Frank Schramm, Co-CEO

Michael Denny, CFO

FINANCIAL STATEMENTS

INDEPENDENT AUDITOR'S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

To the Shareholders of

BBGI SICAV S.A.

6E, route de Trèves

L-2633 Senningerberg

REPORT OF THE RÉVISEUR D'ENTREPRISES AGRÉÉ

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of BBGI SICAV S.A. and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at 31 December 2018, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2018, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 on the audit profession (the "Law of 23 July 2016") and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the "Commission de Surveillance du Secteur Financier" (the "CSSF"). Our responsibilities under the EU Regulation N° 537/2014, the Law of 23 July 2016 and ISAs are further described in the « Responsibilities of "Réviseur d'Entreprises agréé" for the audit of the consolidated financial statements » section of our report. We are also independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (the "IESBA Code") as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements, and have fulfilled our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Investments at fair value through profit or loss

a) Why the matter was considered to be one of most significance in our audit of the consolidated financial statements of the current period

We refer to the accounting policy "Investments at fair value through profit or loss" and to Note 10 in the consolidated financial statements. 98% of the Group's assets are infrastructure assets that have been developed predominantly under the PPP/PFI or similar procurement models ("Infrastructure Investments"), held at fair value through profit or loss. The valuation of infrastructure investments is a significant judgement area resulting from a number of assumptions in the financial models. The valuation is inherently subjective due to the absence of a liquid market for these investments. The complexity of this methodology as well as assumptions taken in the financial models mean that there is a risk that the fair value of these investments may not be appropriate. The key assumptions used by the Management Board are among others in respect of discount rates and components of budgets used being part of long term forecast cash flows. In addition, the Management Board also used assumptions such as inflation, deposit interest and tax rates that have an impact on the long term forecast cash flows. The significance of the estimates and judgements involved, coupled with the fact that a small percentage difference in the key assumptions in individual infrastructure investment valuations, when aggregated, could result in a material misstatement on the consolidated income statement and consolidated statement of financial position, warrants specific audit focus in this area.

b) How the matter was addressed in our audit

Our audit procedures over the valuation of investments at fair value through profit or loss included, but were not limited to the following:

- We tested the design, implementation and effectiveness of the controls around the determination and monitoring of the discounted cash flows and the determination and monitoring of related key assumptions;

- We used our own valuation specialists and their market knowledge to perform the following procedures:

o We considered and commented the approach and methodology documented by the Management Board used in BBGI SICAV S.A.'s Valuation Report against International Private Equity and Venture Capital Valuation guidelines;

o We obtained market benchmarks for discount rates from public and private sources. We considered the discount rates applied in BBGI SICAV S.A.'s Valuation Report against market benchmarks in the light of market, project, sector and country issues;

o We performed research on key assumptions and commented and compared those against the assumptions applied in BBGI SICAV S.A. 's Valuation Report;

o We reviewed the results of the sensitivity analyses on key assumptions taken by the Management Board;

o We challenged and determined the appropriateness of the Management Board's assumptions used for the valuation of a sample of Infrastructure Investments applying following procedures:

§ We agreed the underlying shareholder cash flows inputs (such as dividends, subordinated debt interest and principal repayment and directors fees) from the underlying project model to BBGI SICAV S.A.'s valuation model;

§ We considered if the methodology for assessing fair value has been applied consistently across the assets;

§ We read the latest board minutes, board packages and other supporting documents and information in respect of the sampled investments;

Other information

The Management Board is responsible for the other information. The other information comprises the information stated in the annual report but does not include the consolidated financial statements and our report of "Réviseur d'Entreprises agréé" thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report this fact. We have nothing to report in this regard.

Responsibilities of the Management Board and Those Charged with Governance for the consolidated Financial Statements

The Management Board is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal control as the Management Board determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Management Board is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management Board either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Responsibilities of the Réviseur d'Entreprises agréé for the audit of the consolidated financial statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report of "Réviseur d'Entreprises agréé" that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

· Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management Board.

· Conclude on the appropriateness of Management Board's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the "Réviseur d'Entreprises agréé" to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report of the "Réviseur d'Entreprises agréé". However, future events or conditions may cause the Group to cease to continue as a going concern.

· Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

· Obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation precludes public disclosure about the matter.

Report on other legal and regulatory requirements

We have been appointed as "Reviseur d'Entreprises Agree" by the General Meeting of the shareholders on 30 April 2018 and the duration of our uninterrupted engagement, including previous renewals and reappointments, is eight years.

We confirm that the prohibited non-audit services referred to in the EU Regulation No 537/2014, on the audit profession were not provided and that we remain independent of the Group in conducting the audit.

Luxembourg, 27 March 2019

KPMG Luxembourg

Société coopérative

Cabinet de révision agréé

Emmanuelle Ramponi

CONSOLIDATED FINANCIAL STATEMENTS UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS

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