BBGI Global Infrastructure Regulatory News (BBGI)

29 March 2018

BBGI SICAV S.A.

('BBGI' or the 'Company')

Annual Results for financial year ended 31 December 2017

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.

FINANCIAL AND OPERATIONAL PORTFOLIO HIGHLIGHTS 

Financial Highlights

§ Investment Basis NAV[1] ("NAV") up 14.2% to £622.5 million as at 31 December 2017 (£545.0 million - 31 December 2016).

§ NAV per share up 3.0% to 129.9 pence as at 31 December 2017 (126.1 pence - 31 December 2016).

§ Total shareholder return ("TSR") since listing in December 2011 to 31 December 2017 of 82.8%[2] equating to an annualised TSR of 10.5%[3] which is well above the IRR target of 7% to 8% on the £1 IPO issue price.

§ During the year, the Board increased the 2017 dividend target by 4.0% to 6.50 pence per share.

§ Target dividend for 2018 raised to 6.75 pence per share, which represents a further increase of 3.8%.

§ Strong cash dividend cover of 1.5x[4].

§ An Ongoing Charges ratio of 0.99%[5] that we believe continues to be the lowest in the UK listed infrastructure sector.

Portfolio Highlights

§ 43 high quality, availability-based PPP infrastructure assets with portfolio performance and cash receipts ahead of business plan contributing to the increase in the 2017 dividend.

§ Value enhancements achieved through accretive management resulting in 2.9% increase in NAV.

§ Further de-risking of significant assets including the opening of Mersey Gateway Bridge in Liverpool, UK and Ohio River Bridges in the US, which moved from construction to ramp-up phase.

§ Refinanced and de-risked Women's College Hospital in Canada and Royal Women's Hospital in Australia with long-term financing.

§ Equity capital of £58.5 million raised through a placing of new ordinary shares in April 2017.

§ New 4 year revolving credit facility of £180 million secured commencing in January 2018, with access to a further accordion tranche of £70 million.

§ Strategic agreement signed with a subsidiary of SNC-Lavalin Group Inc. to invest in five operational availability-based PPP assets in Canada for approximately C$189 million (approximately £112 million[6]). The Company completed its investment in the initial four operational PPP Projects in Q3 and the investment in the fifth project is expected to complete in H1 2018.

§ Attractive pipeline of primary and secondary PPP investment opportunities including a pipeline agreement with SNC-Lavalin, which provides a right of first offer for a robust pipeline of Canadian availability-based PPP projects currently under construction.

§ BBGI is committed to good governance, investing responsibly and being a good corporate citizen/long term custodian. Environmental Social and Governance initiatives include reduction of carbon footprint, ecological and environmental management, waste reduction and a strong support of social initiatives.

§ At 31 December 2017, the Group had, on an Investment Basis, a net debt position of £49.1 million consisting of a total cash balance of £21.0 million and total borrowings outstanding of £70.1 million. In addition, the Group had utilised a further £5.6 million of the credit facility to cover outstanding letters of credit.

CHAIRMAN'S STATEMENT

Dear Shareholder,

The Company has delivered another strong set of results. Your Management Board has been equally focused on active management of the portfolio to enhance value and on sourcing significant new investment opportunities which are accretive to shareholders. Cost controls have been rigorous and helped by the internal management structure the ongoing charges remain, once again, below 1%.

Dividends and Shareholder Returns

In April 2018 the Company will declare a second interim dividend of 3.25 pence per share in respect of the six-month period ended 31 December 2017; this will result in a total dividend of 6.50 pence per share for the year, representing an increase of 4.0% on the prior year. With cash flows coming in ahead of the business model and the low risk and predictable nature of the Company's contracted cash flows, we have increased our target dividend by 3.8% to 6.75 pence per share for 2018. The total shareholder return ("TSR") since listing in December 2011 to 31 December 2017 has been 82.8%, equivalent to 10.5% TSR on an annualised basis.

Investment Activity

The Company signed a strategic agreement with SNC-Lavalin Group to invest in five operational availability-based PPP assets in Canada for c. £112 million. An exciting aspect of the transaction with SNC-Lavalin is that BBGI will benefit from a pipeline agreement which provides the Company with a right of first offer for a robust pipeline of another five Canadian availability-based PPP projects currently under construction. This pipeline agreement could result in over £150 million of attractive follow-on investments over the next few years whilst not compromising the quality or focus of the existing portfolio.

In addition, the Company continues to bid selectively for operational projects and pursue primary bidding opportunities where BBGI is well positioned due to its track record, established relationships with contractors and extensive PPP experience.

Our ability to access these types of attractive investment opportunities is testament to the focus and discipline of the management team. BBGI has remained true to its original PPP investment mandate and has stayed "on-piste" and not pursued infrastructure assets with a higher risk profile. The Company remains committed to investing in high quality availability-based infrastructure assets in highly rated investment grade countries and believes this strategy will continue to provide strong uncorrelated returns from secure counterparties.

The Portfolio

Active asset management remains a key priority at BBGI and is a fundamental pillar for our long term success. A variety of active asset management initiatives during the year resulted in over £15 million of value enhancements to the portfolio including the successful refinancing of two projects. As a result of these initiatives, we achieved a net refinancing gain and now only one asset in the portfolio has a re-financing obligation.

Once again, Management has demonstrated their ability to take large projects through the construction phase and into the ramp-up or operational phase. In October, Mersey Gateway Bridge opened to traffic as planned. We were very proud to be involved in this landmark project which was the largest infrastructure project of recent years in England outside London.

Capital Raising and Corporate Credit Facility

During the year the Company raised equity capital of £64.1 million both through a placing which was significantly oversubscribed and through the issuance of scrip dividends in June and October. The Company also negotiated a new revolving credit facility of £180 million, with access to a further accordion tranche of £70 million. The new facility, which has a four year term until January 2022, will provide continued access to credit to fund the Company's strong pipeline of new potential investment opportunities. I am pleased to report that the borrowing margin, arrangement fee and the commitment fee have all decreased.

In light of its attractive pipeline of investment opportunities, the Company is giving consideration to an equity fundraising in the short to medium term in order to reduce leverage and thereby to provide financing flexibility with respect to its investment pipeline. The timing of the fundraise will depend on inter alia, wider market conditions, existing shareholder support and the proximity of current pipeline opportunities. Any fundraise in the short to medium term is likely to be limited to approximately 10% of the issued share capital of the Company.

Corporate Governance

The Supervisory Board and the Management Board value good corporate governance and this is reflected throughout the business. The Boards have put in place a framework for corporate governance which they believe is appropriate for the Company. BBGI is a member of the Association of Investment Companies ("AIC") and as such reports against the AIC Code of Corporate Governance ("AIC Code"), whose principles and recommendations are carefully considered, and follows the AIC Corporate Governance Guide for Investment Companies ("AIC Guide").

The Management Team meets regularly with investors, and the Supervisory Board receives investor feedback at each meeting both directly and from the Company's brokers. Additionally, my fellow board members and I are always available to meet with any investor who wishes to do so.

The Company announced its AGM results in May 2017 noting that two resolutions received over 20% of votes casts against the recommendations of the Board. These were Resolutions 7 and 12 and I would like to discuss each point below.

Resolution 7 concerned the re-election of Howard Myles to the Board. The Board recognizes the concerns which have been expressed regarding potential over-boarding and will continue to ensure that all Board members can devote sufficient time to the Company. Mr. Myles has played an important role on the Board since IPO and his extensive experience brings many benefits to the Company. His time availability and attention have been exemplary and have not been adversely impacted by his other Board appointments. His re-election is unanimously supported by both Boards. On this basis I encourage you to support the re-appointment of Mr. Myles as I believe he continues to be a very positive influence on the Company.

The Board also recognises the level of votes cast against Resolution 12, which provides the Company with authority to make market purchases in its own shares up to 14.99%. While the Company has never used this provision, we note that the 14.99% buyback option has always been fully disclosed to investors including in key marketing materials, will only be used in the event that the Company is trading at a discount to its net asset value per share, and is a standard limit for investment trusts listed in the UK. Having consulted with shareholders over the year we therefore intend to ask for this resolution again this year.

All of the Supervisory Board Directors were appointed at the time of the IPO in December 2011. The Board, in conjunction with the Management Board, has been considering a structured succession plan that will ensure the staggered retirement of each of the current directors and the recruitment of additional independent directors over a timeframe that will enable the knowledge and experience built up over the last 6 years to be both retained and built upon. To that end, we are currently recruiting a new Supervisory Board member and once that is completed and other succession matters concluded I intend to retire from the Board during the course of 2018.

Risks and Uncertainties

While the Management Board manages the risks facing the Company on a day-to-day basis, risk review and mitigation remain key points of discussion at all Supervisory Board meetings. An overview of the principal risks faced by the Company as well as the strategies to mitigate these risks is discussed in the Risk and Risk Management section of this report.

The listed infrastructure sector has experienced a derating in recent months, triggered firstly by concerns that the Labour Party might bring existing UK PFI contracts "back in-house", and then followed by the collapse of Carillion which has focused attention on operational risks.

BBGI is politically neutral and it is too early to have a view on if or when a Labour government may come to power in the UK as the next general election is not scheduled until May 2022. However we have reviewed the mechanics of "nationalisation" and believe that there are significant obstacles in practice. Furthermore our global exposure has demonstrated that governments elsewhere in the world have seen and continue to see significant benefits from PPP/PFI. A move by a UK government to effectively renege on agreements that its predecessors voluntarily entered into would have significant consequences far beyond the infrastructure sector. Given the huge costs involved in compensating both equity and debt providers, a number of practical issues and other priorities of a possible Labour government, we believe that a wholesale nationalisation of PFI contracts is unlikely.

Regarding Carillion, BBGI was well placed in that it did not have any exposure to Carillion as either a constructor of projects or as a service provider and therefore was not affected by that company's recent liquidation. The unfortunate demise of this high-profile builder and service provider highlighted the importance of supply chain monitoring and appropriate risk mitigation policies. While this type of counterparty risk can never be fully eliminated, we believe that it can be mitigated by having a diversified supply chain with no concentrated exposure, being geographically diversified and by having a rigorous supply chain monitoring program in place.

Market Development

While the above noted issues have resulted in some doubts about the near-term pipeline of PPP transactions in the UK, the outlook in other markets where the Company is active remains very strong. Australia, Canada, the US and Europe are all demonstrating strong pipelines with an attractive mix of new and operational PPP projects.

Your Board will continue to monitor events and take actions to ensure that BBGI is as well placed as possible. We expect that your Company's strong cash flows, long-term contracts with sound counterparties and diversified assets which underpin its ability to pay dividends will continue to offer a reassuring degree of certainty. We believe this proposition will continue to be attractive to investors.

David Richardson

Chairman

BBGI SICAV S.A.

28 March 2018

INVESTMENT POLICY AND OBJECTIVES

BBGI is a global infrastructure investor with a prudent, low-risk investment strategy focused on delivering long-term, predictable shareholder returns

INVESTMENT POLICY

BBGI's investment policy is to invest in infrastructure projects that have predominantly been developed under the PFI/PPP or similar procurement models.

The portfolio projects are principally operational, and investment in projects under construction will be limited to 25%.

BBGI will primarily invest in "availability-based" projects such as roads, schools, hospitals and prisons. Projects are characterised as being "availability-based" if, on average, 75% or more of their revenues do not depend on the level of use. Demand-based assets are limited to a maximum of 25% of portfolio value.

BBGI intends to invest predominantly in regions where PFI/PPP is a practised route for delivering infrastructure investment projects, principally in Europe, North America, Australia and New Zealand. However, other markets will be considered should suitable opportunities arise.

In addition, no more than 25% of the portfolio value calculated at the time of investment will be derived from projects whose revenue streams are not public sector or government-backed. In order to ensure a spread of investment risk, any new acquisition will not have an acquisition value greater than 25% of the portfolio value immediately post-acquisition.

BBGI will make prudent use of leverage primarily for working capital purposes and to finance the acquisition of new investments. Outstanding borrowings, excluding intra-group borrowings and the debts of underlying project companies, but including any financial guarantees to support subscription obligations, will be limited to 33 percent of the portfolio value.

The Company's Investment Policy has not changed since IPO and can be found on the website at http://www.bb-gi.com/strategy/investment-policy.aspx 

INVESTMENT OBJECTIVES

Looking forward to 2018 and beyond, the Company will continue to seek to provide investors with a prudent, low-risk investment strategy focused on delivering long-term, predictable shareholder cash flows and returns through actively managing the investment portfolio. The Company has a 2017 dividend target of 6.50 pence per share and aims to increase this distribution progressively over the longer term. Given the low risk and predictable nature of the Company's contracted cash flows, we are confident in providing dividend guidance of 6.75 pence per share for 2018.

The Company targets an internal rate of return (IRR) in the region of 7% to 8% on the £1 IPO issue price, to be achieved over the longer term.

INVESTMENT PORTFOLIO

As at 31 December 2017, BBGI's assets consisted of interests in 43 high-quality, availability-based, PPP/PFI infrastructure assets in the roads & bridges[7], healthcare, education, justice and other services sectors. Located in Australia, Canada, Continental Europe, the UK and the US, 100% of the assets by value are operational.

Portfolio Summary

The concessions granted to project companies in the portfolio are predominantly granted by a variety of public sector clients or entities, which are either government-backed or have strong investment grade ratings (A+ to AAA by S&P). All project companies in the portfolio are located and tax resident in countries that are highly rated: Aa2/AA for the UK; Aaa/AAA for Australia, Canada, Germany and Norway; Aaa/AA+ for the US by Moody's and by Standard & Poor's.

PORTFOLIO OVERVIEW (based on portfolio value at 31 December 2017)

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

Low risk 100% operation portfolio (by value)

Long investment life with 68% of portfolio by value enjoying a duration >20 years; average life of 21.8 years

88% 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

FIVE LARGEST PROJECTS

Golden Ears Bridge, Canada (Availability Road)

The Golden Ears Bridge in Vancouver is a 1 km, six-lane road that spans the Fraser River and connects Maple Ridge and Pitt Meadows to Langley and Surrey. The scheme, which opened in March 2009, also includes more than 3.5 km of structures including ramps, viaducts, minor bridges and underpasses, and more than 13 km of mainline roadway, a large part of which has been landscaped. The project consists of the design, construction upgrade, finance and operation for 32 years.

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

Northern Territory Secure Facilities, Australia (Justice)

The facility, located near Darwin, includes three separate centres:

§ A 1,000 bed multi-classification men and women's correctional centre to replace the existing outdated facilities at Berrimah.

§ A 30 bed secure mental health and behavioural management centre, the first of its kind in the Territory.

§ A 48 bed supported accommodation and program centre for community-based offenders with facilities designed to support the government's goals of enhanced rehabilitation, education and reduced reoffending rates in the Territory.

BBGI acquired its initial interest in this project while it was still in construction and then subsequently acquired the remaining 50% stake in July 2015. The facility became operational in November 2014. The new facility allows Northern Territory Corrections to engage prisoners into structured daily programs in order to foster rehabilitation and stronger re-integration.

Victoria Prisons, Australia (Justice)

The Metropolitan Remand Centre accommodates up to approximately 950 male prisoners and is located approximately 20 km from Melbourne city centre. The second, smaller, facility is the Marngoneet Correctional Centre that houses approximately 550 male prisoners and is located approximately 65 km from Melbourne city centre.

The Marngoneet Correctional Centre is the State's major intensive treatment facility for male prisoners. It offers treatment programs to promote rehabilitation, reduce repeat offending and to prepare prisoners for transition back into the community.

Both prisons started operation in 2006. In 2013 and 2016, significant augmentation orders were undertaken to expand the prisoner capacity.

M80 Motorway, UK (Availability Road)

The section of road between Stepps and Haggs is an all-purpose dual carriageway and was the only non-motorway section of the A80 between Glasgow and the end of the M80 at Dunblane. The project involved construction of 18 km of dual two/three lane motorway with associated slip roads and infrastructure from Stepps in North Lanarkshire to Haggs in Falkirk. Traffic availability was achieved in August 2011, with the work undertaken reducing congestion for road users and improving journey times and reliability.

Women's College Hospital, Canada (Health)

This replacement hospital, in Toronto, Ontario, is a multi-storey building (approximately 430,000 square feet) consisting of ambulatory care, surgical research and educational facilities, as well as administrative, parking and other non-clinical space to support the Hospital's comprehensive and integrated approach to providing quality women's health care to patients with a need for diagnostics, extended treatments and chronic care. The project was delivered in two phases. The first phase became operational in May 2013. The second phase achieved substantial completion in September 2015 and final completion (which involved the integration of phases one and two) occurred in March 2016.

REPORT OF THE MANAGEMENT BOARD

BUSINESS REVIEW

The Management Board is very pleased to present the results for the year ended 31 December 2017. Both the management report for the consolidated financial statements and the Company financial statements have been presented as one single report.

BBGI's goals for 2017 remained consistent with those of previous years, i.e. to pursue a prudent, low-risk investment strategy focused on delivering long-term, predictable shareholder returns.

Highlights and Key Performance Indicators ("KPIs")

Certain key performance indicators for the last four years are highlighted below:

Asset Management

Cash Performance

The Company's portfolio of 43 high quality, availability-based infrastructure investments performed well during the year, with cash flows ahead of the business plan and the underlying financial models.

Availability

The availability level of the Group's assets during 2017 was approximately 99.7%[9] demonstrating the high quality of the services provided. Deductions (if any) are either borne by third-party facility managers and road operators or are part of planned lifecycle expenditures.

Lock-up / Defaults

We are also pleased that none of our assets were reported to be in default or lock-up at year-end 31 December 2017. This is a direct result of our ongoing 'hands-on' approach and the efforts of our asset management team.

De-Risking: Construction

During the year, several assets were further de-risked:

On 14 October 2017, the Mersey Gateway Bridge (Mersey Gateway Project) opened to traffic with celebrations and fireworks. The opening was the culmination of more than three-and-a-half years of construction work. The Mersey Gateway Project covers over nine kilometres of road improvements including the bridge and a series of major new junctions. As the largest infrastructure project in England outside of London, the scale of Mersey Gateway Project is phenomenal. It includes and uses: a 2.2 kilometre elevated route including a 1,000-metre long cable stay bridge, 127.4 million m³ of concrete, 12 new bridges and 7 new or upgraded junctions across a 9.2 kilometre route through Runcorn and Widnes, 810 miles of cables connecting the three pylons to the bridge deck, and the recovery and re-use of 1,423,250 tonnes of previously contaminated materials. BBGI is very proud of its involvement in this landmark project which demonstrates the Company's ability to manage large PPP projects successfully through construction, and validates the benefits of PPP delivery at a time when some are questioning its benefits in the UK.

In addition, Ohio River Bridges in the US moved from construction completion to ramp-up phase.

BBGI has demonstrated its ability successfully to manage projects from the construction phase into the operational phase across three continents. In addition to the Mersey Gateway Project mentioned above, past projects which were successfully transitioned into the operational phase, and in doing so delivered NAV uplift, include Northwest Anthony Henday (Canada), Avon & Somerset Police Headquarters (UK), Finchley Memorial Hospital (UK), M80 Motorway (UK), Mersey Care Mental Health Facility (UK), Northern Territory Secure Facilities (Australia), Ohio River Bridges (USA) and Women's College Hospital (Canada). Collectively transitioning from construction phase to operational phase has contributed to a significant organic NAV growth of approximately 4.6%[10] since listing in December 2011.

De-Risking: Refinancing

BBGI successfully refinanced and de-risked Women's College Hospital in Toronto, Canada and Royal Women's Hospital in Melbourne, Australia. The refinancing process for the Royal Women's Hospital successfully closed on 3 August 2017 with the execution of an AUD 150m senior secured bank debt facility thereby eliminating any future refinancing risk within the structure. On 29 September 2017, C$207 million of Senior Secured Bonds (rated A by DBRS) were issued by Women's College Partnership and the proceeds were used to repay the existing bank facility and associated swap breakage costs. The net result of refinancing in the period is value accretive.

As a result of these re-financings, the Northern Territory Secure Facilities project is the only remaining project in the BBGI portfolio with short-term debt in place. All other PPP/PFI projects have long-term amortising debt in place, which will not require refinancing.

Management will actively seek to refinance projects on an opportunistic basis when there is a possibility that the process will result in an uplift in the project value.

Debt financing at the project level is structured in a way that does not provide any recourse to the Company.

Relationship with public sector clients and partners

The Management Board continues to work hard to build and maintain a good dialogue and relationship with the Group's public sector clients and partners. We believe that having a regular dialogue with public sector clients is important for the partnership relationship and can help prevent issues from escalating. The Company is engaged through its representation at the project level in actively resolving issues, proactively identifying efficiencies and facilitating variations that benefit both shareholders and public sector clients.

We previously reported a dispute between the client and a subcontractor on the Burg prison project (the project itself makes up less than 1% of the total portfolio value). The dispute relates to the interpretation of the indexation mechanism and has resulted in the client making substantial retentions. BBGI did not suffer any losses as the retentions incurred were all passed on to the subcontractor. We are pleased to report that the issue is getting closer to being resolved amicably between the public sector client and the subcontractor. Previously, when the outcome of the discussions was unknown, the Company applied an additional risk premium to the project as part of the valuation process. As the issue is expected to settle in a timely manner, we have reduced the additional risk premium.

Operational and maintenance contractors

Management 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 contract allocation.

The Company did not have any exposure to Carillion as either a constructor of facilities or as a service provider and therefore was not affected by Carillion's recent liquidation. The unfortunate demise of this high-profile builder and service provider highlights the importance of supply chain monitoring and appropriate risk mitigation policies. We believe that by having a diversified supply chain with no concentrated exposure, being geographically diversified and by having a rigorous supply chain monitoring policy in place, we are less exposed to this risk than we otherwise might be.

In addition, the Management Board believes that the Company benefits by having a large exposure to roads and bridges, 46% of portfolio value, where the value of the annual operations and maintenance cost compared to initial capital cost is proportionately lower than for social infrastructure where the operation and maintenance cost are a greater percentage of initial capital costs. In addition, the operation and maintenance services are typically less challenging on roads and bridges.

Building Safety

Before the tragedy at Grenfell Tower in London there was a smaller but similar incident in Australia in a residential project. BBGI had no involvement, but it made us aware of potential fire safety issues associated with exterior cladding. We investigated the exterior cladding on the Royal Woman's Hospital in Melbourne after the above- mentioned incident in Australia in 2015. Extensive material testing was undertaken and an independent building surveyor confirmed the Royal Women's Hospital remains safe to occupy. Nonetheless, the cladding on the hospital is in the process of being replaced. Test panels were installed in May 2017. The cladding makes up c. 10 per cent of the exterior of the building, the rest being glass panels and reinforced concrete. During these works, there will be no impact on patients. The cladding is being replaced at no cost to Australian taxpayers, nor to BBGI.

We also undertook a UK-wide survey to ensure that no Aluminium Composite Material ("ACM") cladding had been used on any buildings in our portfolio, either from the desktop study, or through explicit confirmation by the builder. ACM was identified as being used in only one building. In this particular building a mixture of cladding, which was mainly decorative in nature as opposed to being part of the fire protection system, was used and therefore no further work was required.

As part of our active management program, the Company has undertaken a number of fire inspections over the course of the year, including checks on fire compartmentation and main fire protection systems. The reported shortfalls were typically minor in nature. Findings were shared with the relevant building and/or facilities management contractor with whom rectification programs were agreed and these are either completed or in the process of being completed. There are no immediate areas of concern and no material impact on our portfolio valuation.

Following an incident at an Edinburgh schools project (non-BBGI asset), a brick wall collapsed due to improperly applied wall ties.

A desktop study was undertaken to identify any buildings with brick or blockwork cavity walls similar to the Edinburgh schools construction and then a visual inspection conducted to look for any signs of visible defects in the elevations, e.g. cracking, spalling, bowing, missing mortar joints, signs of corrosion, etc. Where relevant, a qualified structural engineer carried out a more detailed inspection, including some intrusive surveys. No evidence of defects similar to the Edinburgh schools issue were reported and, where we conducted intrusive surveys, they demonstrated compliance with the design and a good level of workmanship.

The Group takes safety seriously, with the asset management team actively monitoring any potential issues either independently or in collaboration with public sector clients.

Growth in the portfolio

Since going public in 2011, the Management Board has been able to grow the Company successfully from 19 assets to 43 assets as at 31 December 2017. During this period, the NAV has grown 200% from £208 million to approximately £623 million. The Company has benefitted from the Management Board's ability to source attractive investment opportunities in different geographies.

BBGI remains confident of its ability to originate investment opportunities and anticipates these will come from a variety of sources:

· The newly established pipeline agreement with SNC-Lavalin which could provide further investment opportunities estimated to be in excess of £150M;

· Soliciting off-market transactions through BBGI's extensive network of PPP market participants in Australia, North America and Europe;

· Participating in primary investment opportunities / bidding on new PPP projects as part of public sector procurement processes;

· Acquiring equity interests from co-shareholders in existing projects;

· Participating selectively in competitive sale processes.

Interest in PPP infrastructure assets remained robust throughout 2017. There was significant investment capital searching for PPP assets which maintained pressure on prices. While this environment has been positive from a portfolio valuation perspective, it has been difficult to identify and acquire projects on terms that are accretive to shareholders. Notwithstanding these challenges, the Company was able to secure PPP investment opportunities on attractive terms which remained consistent with our stated strategy and to avoid style drift or engaging in hotly contested auctions.

2017 New Secondary Acquisitions and access to an attractive pipeline of investment opportunities

In September, the Company completed its investment in four operational PPP projects in Canada. All of these assets, as described below, were developed by SNC-Lavalin and are classified as availability-based under the investment policy of the Company.

SNC-Lavalin, with a market capitalisation of approximately C$10 billion (£5.9 billion), is the largest engineering company in Canada, one of the leading engineering and construction groups in the world and a major player in the ownership of infrastructure. Founded in 1911, it is a leader in the PPP market in Canada and has over the years built up an extensive portfolio of PPP assets.

The William R. Bennett Bridge is a 2 km corridor that straddles Okanagan Lake to connect two communities, Kelowna and West Kelowna, in the interior of British Columbia. The project became operational in 2008 and the concession runs until 2035. Availability payments are received from the Province of BC (AAA rated by S&P). BBGI's interest in the project is 80% of the project equity.

Canada Line is a 19.5 km automated rail-based rapid transit service connecting downtown Vancouver with Richmond and the Vancouver International Airport. The project became operational in 2009 and the concession runs until 2040. Availability payments are received from Translink (Aa2 rated by Moody's). BBGI's interest in the project is 26.7% of the project equity.

Southeast Stoney Trail is a 25 km highway that is part of the Calgary Ring Road network. The project became operational in 2013 and the concession runs until 2043. Availability payments are received from the Province of Alberta (A+ rated by S&P). BBGI's interest in the project is 40% of the project equity.

Restigouche Hospital Centre is a 33,500 m2 hospital with 140 beds located in Campbellton, New Brunswick. The project became operational in 2013 and the concession runs until 2044. Availability payments are received from the Province of New Brunswick (A+ rated by S&P). BBGI's interest in the project is 80% of the project equity.

In addition to the above four assets, the transfer of a fifth asset, the McGill University Health Centre ("MUHC") (Montreal, QC), is currently planned to take place in H1 2018, subject to the satisfaction of certain closing conditions. MUHC is a 214,000 m2 hospital with 500 private patient rooms located in Montreal, Quebec. The project became operational in 2014 and the concession runs until 2044. Availability payments are received from MUHC, which is rated A (high) by DBRS. BBGI's interest in the project will be 40% of the project equity.

The total cash consideration for all five-project interests is expected to amount to approximately C$189 million (approximately GBP 112 million).

Furthermore, as part of the transaction and partnership with SNC-Lavalin, BBGI will benefit from a pipeline agreement that provides a right of first offer with respect to the potential future acquisition of select interests in SNC-Lavalin's robust pipeline of Canadian availability-based PPP projects currently under construction, which is expected to create additional investment opportunities once the assets become operational.

The pipeline agreement with SNC-Lavalin currently covers five assets in construction, as detailed below, 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.

Highway 407 East Phase I - a road outside Toronto, Ontario extending the world-class 407 ETR Highway by 148 new lane-km once Phase II is completed. The project has a 33-year concession life from financial close.

Confederation Line (Ottawa LRT) - a 12.5 km rail line featuring 13 stops that will connect the eastern and western parts of Ottawa with the downtown core. The project has a 35-year concession life from financial close.

John Hart Generating Facility - a hydroelectric facility that will generate 132 MW of power and provide up to 17% of Vancouver Island's electricity needs once complete. The project has a 20-year concession life from financial close.

New Champlain Bridge - a 3.4 km three corridor bridge across the St. Lawrence River from the île-des-Soeurs to Brossard. The project has a 35-year concession life from financial close.

Eglinton Crosstown LRT - projected to be a 19 km light rail line with up to 25 stations. The project has a 36-year concession life from financial close.

Primary Investment Activity - bidding on new PPP projects

As our portfolio grows, and assets in construction move into their operational phase, we will continue to add construction exposure to maintain an appropriate mix. As a number of senior members of our team have experience managing PPP bids and seeing assets through the construction phase, we believe some exposure (less than 25% of portfolio value) can be attractive. We see this as an opportunity to organically grow the NAV of the Company over time and will continue to ensure that the dividend target is not compromised.

The construction completion of the Mersey Gateway Bridge project in the UK once again demonstrated the value that can be generated by successfully taking a project from construction to ramp-up phase.

We are continuing to actively build our pipeline of development opportunities ("primary investments") to replace those projects that have become operational.

Primary investment activities involve sourcing and originating, bidding for and winning new infrastructure development projects, typically as part of a consortium for PPP projects. Often these primary PPP bids are led by construction companies that are keen to secure the opportunity to construct the asset, but may be keen to have a partner like BBGI for a number of reasons: 

· Consortia are attracted to BBGI because of our extensive project credentials 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 project company debt onto the balance sheet of the parent company;

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

· BBGI is a long-term investor which is attractive to government and government-backed counterparties; and

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

2017 was a busy year for the Company in terms of building up a primary development pipeline, which saw BBGI join various consortia formed to pursue major infrastructure projects in North America, Australia and Europe During the course of 2018 we expect to submit bids for a major bridge project and some social infrastructure projects.

These primary investment opportunities are considered attractive to the Management Board because they are typically well priced on a risk-adjusted basis. Nevertheless, each opportunity will be subject to detailed due diligence on a case-by-case basis.

Although there is no certainty that BBGI and its consortia partners will be finally selected on any of the above- mentioned projects, the pipeline is attractive and we aim to continue to develop it further.

Avoiding Style Drift

As the competition to acquire PPP assets at attractive valuations has intensified, BBGI's management team 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 can manifest itself in many ways: investing in more complex transactions with more business risk, accepting greater counterparty risk or going to jurisdictions with lower credit ratings without a commensurate increase in returns, etc.

The Management Board has made the conscious decision to avoid investing in infrastructure transactions where the revenue stream is demand-based, correlated to GDP or subject to regulatory review. We have also avoided PPP transactions in jurisdictions with lower credit ratings. The result is that we remain the only London listed pure-play PPP investment company solely concentrating on availability-based projects.

While this approach may result in periods of lower portfolio growth, we believe the benefits of this continued specialisation and focus on the PPP space will result in dependable and consistent income and returns with low risk and volatility. By staying focused on the availability sector we know well, and by remaining within our sphere of expertise, we believe there will be fewer surprises and the returns to investors will be more consistent.

Construction exposure

The Company's investment policy is to invest principally in projects that are operational and that have completed construction. Accordingly, investment in projects that are under construction will be limited to 25% 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 projects move from a successful construction stage to the operational stage.

As at 31 December 2017, BBGI has one project - North Commuter Parkway (NCP) - that is currently in construction. The present value of the future equity subscription obligation for NCP offsets the present value of forecasted project distributions and as a result, the project accounts for 0% of portfolio value at 31 December 2017 or 0.6% of portfolio value on a pro forma basis[11]. Construction is being carried out by an experienced contractor with a proven track record for delivery. Construction is progressing well and continues to be on schedule with no significant completion delays currently expected. The monitoring and management of this project will continue to be a key focus for the Management Board in 2018.

The Management Board believes that the Company's ability to meet its dividend targets has not been compromised by having some construction exposure and will continue to monitor this closely as the portfolio grows. 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-backed contracts. As a result, the portfolio performance is largely uncorrelated to the many wider economic factors that may cause market volatility in other sectors.

The share price closed the year at £1.41, an increase of 2.2% in 2017 representing an 8.5% premium to the NAV per share at the year-end.

Total Shareholder Return ('TSR') in the calendar year 2017 was 7.1% whilst TSR from IPO to 31 December 2017 was 82.8% or 10.5% on an annualised basis. The Total Accounting Return for the year ended 31 December 2017 was 8.1% on a growth in NAV per share and dividend paid basis[12].

Distribution policy

Distributions on the ordinary shares are planned to be paid twice a year, normally in respect of the six months to 30 June and the year ended 31 December. Subject to market conditions and to the level of the Company's available funds, it is intended that distributions will be paid in June and in October.

Dividends

On 28 June 2017, the Company paid a final dividend of 3.125 pence per share for the year ended 31 December 2016. In August 2017, BBGI announced an increase in its annual dividend target from 6.25 pence per share to 6.50 pence per share, which represents an increase of 4.0% and is in line with the increased inflationary environment as shown by the Retail Price Index in 2017. The 2017 interim dividend of 3.25 pence per share was paid on 25 October 2017. In April 2018 the Company will declare a second interim dividend of 3.25 pence per share in respect of the six-month period ended 31 December 2017; this will result in a total dividend of 6.50 pence per share for the year. Furthermore, the Board is providing 2018 dividend guidance of 6.75 pence per share, which would represent an increase of 3.8%.

Proven progressive dividend policy

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 Boards 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 results to analysts and subsequently conduct 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, Board members 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. 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 479,105,220 ordinary shares of no par value. All of the ordinary shares issued rank pari passu. There are no special voting or other rights attaching to any of the ordinary shares. During the year ended 31 December 2017, the Company issued 46,889,584 shares as a result of shareholder scrip elections and the placing in April 2017.

Share Issue Price Restriction

As previously reported, under the Luxembourg law of 17 December 2010 on undertakings for collective investments, the Company is restricted from issuing shares at a price exceeding the NAV per share plus 5%. At 31 December 2017, the Company's shares were trading at a premium of 8.5% to NAV per share.

A Bill of Law seeking to remove this NAV per share +5% limitation for closed-ended funds was approved by the Council of Government in December 2015 and tabled with the Luxembourg Parliament in January 2016. It was anticipated that the Luxembourg parliament would enact the suggested amendments into law during the course of 2017, however this is still awaited and there is currently no indication as to when this might happen. Whilst the law remains unchanged, the Company will continue to adhere to the current Luxembourg law and UK Listing Rules when setting the price of any future issuance of new ordinary shares.

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 BBGI KID can be found on the Company's website.

Voting rights

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

Discount management

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

Purchases of ordinary shares by the Company in the market

In order to assist in the narrowing of any discount to the 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% p.a. of its issued ordinary shares; and

§ make tender offers for the ordinary shares.

No shares have been bought back during the year ended 31 December 2017. The most recent authority to purchase ordinary shares which may be held in treasury or subsequently cancelled was granted to the Company on 28 April 2017. This authority expires on the date of the next Annual General Meeting ("AGM") to be held on 30 April 2018 at which point the Company proposes 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 AGM in April 2019.

Details of substantial shareholders

As at 12 March 2018, being the latest available information, management are aware of the following shareholders holding more than 5% of the Company's ordinary shares.

VALUATION

The Management Board is responsible for carrying out the fair market valuation of the Company's investments, which it then presents to the Supervisory Board. The valuation is carried out on a six-monthly basis as at 30 June and 31 December each year. An independent professional third party reviews this valuation.

The valuation is determined using the discounted cash flow methodology. The cash flows forecast to be received by the Company or its subsidiaries, generated by each of the underlying assets, and adjusted as appropriate to reflect the risk and opportunities, have been discounted using project-specific discount rates. The valuation methodology remains unchanged from previous reporting periods.

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

1 Basket of four indices

2 80% of ORB indexation factor for revenue is contractual and is not tied to CPI

3 Individual tax rates vary among Provinces

Other key inputs and assumptions include:

§ Any deductions or abatements during the operations period are passed down to subcontractors or are part of the planned lifecycle expenditures.

§ Cash flows to and from the Company's subsidiaries and the portfolio investments are received at the times anticipated.

§ Where the operating costs of the Company or portfolio investments are fixed by contract, such contracts are performed, and where such costs are not fixed, they are in line with the budget.

§ The contracts under which payments are made to the Company and its subsidiaries remain on track and are not terminated before their contractual expiry dates.

Over the 12-month period from 31 December 2016 to 31 December 2017, the Company's NAV increased from £545.0 million to £622.5 million. The increase in NAV per share from 126.1 pence to 129.9 pence or 3.0% is primarily a result of the key drivers in the movement of the portfolio listed below:

1 This includes the net effect of assumed lower deposit rates in Australia, higher Canadian tax rates and lower tax rates in Norway and US.

2 This includes (i) the purchase price paid for the interests in four Canadian assets acquired from SNC-Lavalin, (ii) the Mersey Gateway Bridge equity injection made upon construction completion, (iii) an additional capital injection in the Golden Ears Bridge project to finance the payment of a tax related obligation, and (iv) additional investments in Royal Women's Hospital project and the Northeast Stoney Trail project.

3 While distributions from projects reduce the portfolio value, they do not have an impact on the Company's NAV as the effect of the reduction in the portfolio value (investments at fair value through profit or loss) is offset by the receipt of cash (cash and cash equivalents) at the consolidated Group level. These distributions are shown net of withholding tax and where applicable, shown at their hedged foreign exchange rate.

4 These figures represent the assets and liabilities of the Group; after excluding the portfolio of project investments and include, amongst other items, the Group's consolidated cash balances and borrowings (where applicable).

Key drivers for NAV growth

Growth based on rebased valuation

During the year ended 31 December 2017, the Company recognised £61.1 million, or an 11.2% change in NAV, from the "unwinding of discounts" and value accretive enhancements. As the Company moves closer to forecast project dividend payment dates, the time value of those cash flows increases on a net present value basis as a result. The portfolio value growth from this unwinding of discount during the year was approximately £45.2 million or an 8.3% change in NAV.

The difference, £15.9 million, or a 2.9% change in NAV, above the anticipated growth from unwinding of discounts, represent the net effect of value accretive enhancements across the portfolio through active management, which include amongst others:

§ Net valuation uplift from adjusting risk premium reflected in specific project discount rates (asset specific, asset reaching construction completion, asset moving closer towards the stable operational phase);

§ Lower costs realised and forecast on some projects;

§ Earlier than forecast extraction of cash on some projects;

§ Negative impact of an accelerated settlement of a tax related obligation on the Golden Ears Bridge project;

§ Additional income and return on variation orders;

§ The net result of the gain on the refinancing of the Women's College Hospital project and the loss on the refinancing of the Royal Women's Hospital project.

The net effect of inflation, against the 31 December 2016 modelled Assumptions, on the portfolio value has been positive and is included in the value above.

Discount rates and sensitivity

The discount rates used for individual assets range between 7.20% and 9.50%. The value weighted average rate is approximately 7.45% (7.56% at 31 December 2016). This methodology calculates the weighted average based on the value of each project 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 project companies 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 independently reviewed by an independent professional valuer.

We have differentiated the asset classes with respect to discount rates. For stable operational projects, such as typical schools, hospitals and roads, we have applied discount rates at the lower end of the range mentioned above. Further 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, with the only acute hospital in the BBGI portfolio being the Gloucester Royal Hospital (representing approximately 1% of BBGI's portfolio value, with no similar assets identified in the current pipeline). BBGI continues to apply a modest risk premium for complex prison projects to reflect the higher complexity of such projects, and has also applied a risk premium to a limited number of other projects 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 average discount rate of 7.45%.

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. 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.

Other than the four-year contracted hedge rates, the Company has used the following exchange rates to value the portfolio. In September 2017, BBGI borrowed in CAD in order to finance the acquisition of its interest in the four SNC-Lavalin assets. By doing so BBGI benefits from a natural hedge until these borrowing are repaid through a capital raise. The amounts borrowed remained outstanding at 31 December 2017.

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 2017, the appreciation of Sterling against the AUD, CAD, NOK and USD and the depreciation of Sterling against the EUR accounted for a decrease in the portfolio value of £7.9 million. Since listing in December 2011, the net cumulative effect of foreign exchange movement on the portfolio value has been a decrease of £1.3 million or 0.2% of NAV at 31 December 2017.

The following table shows the sensitivity of the net asset value to a change in foreign exchange rates:

1 Sensitivity in comparison to the foreign exchange rates at 31 December 2017 and taking into account the contractual and natural hedges in place, derived by applying a 10% increase or decrease to the GBP/foreign currency rate.

Inflation sensitivity

The project 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:

1 Compared to the assumptions set out in the Assumptions above.

Deposit rate sensitivity

The project 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:

1Sensitivity in comparison to the assumptions set out in the Assumptions above.

Lifecycle costs sensitivity

Of the 43 projects in the portfolio, 15 project companies retain the lifecycle obligations. The remaining 28 projects 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 15 projects in the portfolio which retain the lifecycle obligation, i.e. the obligation is not passed down to the subcontractor. These projects represent approximately 50% of the total portfolio value as at 31 December 2017.

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:

1Sensitivity in comparison to the Assumptions used in the 31 December 2017 valuation.

GDP sensitivity

The BBGI portfolio is not sensitive to GDP.

FINANCIAL RESULTS

BASIS OF ACCOUNTING

The Company has prepared its consolidated financial statements under International Financial Reporting Standards ("IFRS") as adopted by the European Union. In accordance with IFRS, the Company (an Investment Entity) does not consolidate certain subsidiaries, in a similar manner to the Company's Investment Basis NAV calculation, which continues to be presented in this section of the Report of the Management Board.

As an Investment Entity, the Company does not consolidate on a line-by-line basis its investments in PPP assets that are subsidiaries, but instead recognises them as investments at fair value through profit or loss ("FVPL"). Subsidiaries which are not investments at FVPL, but instead provide investment related services or activities that relate to the investment activities of the Company, are consolidated.

INCOME AND COSTS

Group Level Corporate Cost Analysis

The table below is prepared on an accruals basis.

During the year, the Group increased the available commitment under the corporate credit facility from £110 million to £180 million. The increase in net finance costs is predominantly due to this larger facility.

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

Of the acquisition costs incurred during the year, only £185,000 related to unsuccessful bid costs.

Ongoing Charges

The "Ongoing Charges" ratio was prepared in accordance with the AIC recommended methodology. The ratio represents the reduction in shareholder returns as a result of recurring operational expenses incurred in managing BBGI.

The Company is internally managed and, as such, is not subject to performance fees or acquisition-related fees.

BALANCE SHEET

Pro forma balance sheet

As at 31 December 2017, the Group has 43 projects which are accounted for as FVPL investments (31 December 2016: 39). During September 2017, the Group completed its investment in four operational PPP projects in Canada.

Net borrowings under IFRS include cash and cash equivalents of £20.6 million (31 December 2016: £22.1 million) less amounts borrowed under the Group revolving credit facility of £70.1 million (31 December 2016: £45.2 million). Net borrowings under Investment Basis excludes debt issuance cost and includes other cash balances not included in the consolidation and outside of the project valuation.

The derivative financial liability adjustment reflects the fair value of forward currency contracts that hedge certain future portfolio distributions. Under the Investment Basis, the contracted forward rates are applied to the hedged future distributions with the unhedged distributions converted at the 31 December 2017 closing rate.

Three-year comparative of Investment Basis NAV

The published NAV increased by 14.2% to £622.5 million at 31 December 2017 (2016: £545.0 million). This equates to a growth in NAV per share of 3.0% to 129.9 pence at 31 December 2017 (2016: 126.1 pence).

Going concern basis of accounting

The Management Board has examined significant areas of possible financial risk including cash and cash requirements. It has not identified any material uncertainties which would cast significant doubt on the Company's ability to continue as a going concern for a period of not less than 12 months from the date of approval of the financial statements. The Management Board has satisfied itself that the Company has adequate resources to continue in operational existence for the foreseeable future. After due consideration, the Management Board believes it is appropriate to adopt the going concern basis in preparing the financial statements. Please see Note 2 to the financial statements.

FINANCING

Tap issue

Following its 2017 AGM, the Company has the ability to issue up to 10% of its issued share capital via tap issues in order to finance further acquisitions or repay debt. Under the new EU Prospectus Regulation, which was enacted into law in 2017, regulated market issuers have the ability to conduct private placements of new securities of less than 20 percent of their existing listed securities for a 12-month period and to have those new securities admitted to listing without the need to issue a listing prospectus. The Company intends to ask shareholders to renew its authority at its forthcoming AGM to issue up to 10% of its issued share capital via tap issues.

In April 2017, the Company raised £58.5 million by issuing 43,039,300 new ordinary shares at a price of 136.0 pence each. The Placing was significantly oversubscribed. The proceeds of the placing were used to substantially repay outstanding borrowings and thereby provide financing flexibility with respect to the Company's investment pipeline.

In light of its attractive pipeline of investment opportunities, the Company is giving consideration to an equity fundraising in the short to medium term in order to reduce leverage and thereby to provide financing flexibility with respect to its investment pipeline. The timing of the fundraise will depend on inter alia, wider market conditions, existing shareholder support and the proximity of current pipeline opportunities. Any fundraise in the short to medium term is likely to be limited to approximately 10% of the issued share capital of the Company.

Revolving credit facility

In June 2017, the Company increased the commitment under the multi-currency Revolving Credit Facility ("RCF") with ING Bank ('ING') and KfW IPEX-Bank ('KfW') from £110 million to £180 million by utilising the accordion tranche provision.

The term of the RCF in place during the reporting period was three years, which subsequently expired in January 2018. The borrowing margin under this RCF was 185 bps over LIBOR. At 31 December 2017, the Group had utilised £75.7 million of the £180 million RCF, of which £5.6 million was used to cover letters of credit.

In October 2017 the Group secured a new multi-currency Revolving Credit Facility ('new RCF') of £180 million from ING and KfW. The new RCF replaced the £180 million old RCF with ING and KfW, when it expired in January 2018. DZ Bank AG subsequently acceded as a lender to the new RCF in February 2018.

The tenor of the new RCF is four years, commencing in January 2018. The borrowing margin has decreased to 165 bps over LIBOR. The arrangement fee and the commitment fee have also decreased.

Under the new RCF, BBGI retains the flexibility to consider larger transactions by virtue of having structured a further £70 million incremental accordion tranche, for which no commitment fees will be paid.

The new RCF will be used primarily to fund acquisitions and provide letters of credit for investment obligations, and the intention will be to repay the facility from time to time through equity fundraisings.

Project refinancing

During the period, the Company successfully refinanced and de-risked Women's College Hospital in Toronto, Canada and Royal Women's Hospital in Melbourne, Australia. The refinancing process for the Royal Women's Hospital closed successfully on 3 August with the execution of an A$150 million senior secured bank debt facility thereby eliminating any future refinancing risk within the structure. Furthermore, on 29 September 2017, Women's College Partnership issued C$207 million of Senior Secured Bonds (rated A by DBRS). The proceeds were used to repay the existing bank facility and associated swap breakage costs.

As a result of these re-financings, the Northern Territory Secure Facilities project is the only remaining project in the BBGI portfolio with short-term debt in place. All other PPP/PFI projects have long-term amortising debt in place, which will not require refinancing.

Debt financing at the project level is structured in a way that does not provide any recourse to the Company.

Foreign Exchange

The portfolio suffered a slight foreign exchange loss driven primarily by the strengthening of Sterling against the AUD, CAD, NOK and USD against the reported exchange rates at 31 December 2016. The EUR strengthened over the same period.

BBGI has a global portfolio and benefits from exposure to a diverse and broad set of highly rated counterparties. BBGI endeavours to mitigate the currency risk which results from this international exposure by hedging the expected distributions from the assets on a four-year rolling basis.

It is worth noting that since listing in December 2011, the cumulative net effect of foreign exchange movement on BBGI's portfolio valuation has been a reduction in value of £1.3 million or 0.2% of the NAV at 31 December 2017.

Hedging

The Company's global portfolio of assets brings with it an inevitable exposure to foreign exchange movements on future portfolio distributions denominated in Australian dollars (AUD), Canadian dollars (CAD), euros (EUR), Norwegian kroner (NOK) and US dollars (USD).

Since listing in 2011, the Management Board has maintained a policy of using forward contracts to hedge a portion of its anticipated foreign currency portfolio distributions. The Company seeks to provide protection for Sterling dividends that it aims to pay on the ordinary shares over the next four years, in order to reduce the risk of currency fluctuations and the volatility of returns that may result from such currency exposure. The Company previously hedged 100% of the expected dividend for the coming year and 75%, 50% and 25% respectively of each of the subsequent years. During our annual review of the hedging, the Management Board decided to increase the amount of hedging as the benefits were seen to be greater than the modest additional cost. The Management Board revised its policy to hedge the portfolio's non-GBP cash flows (except EUR, where the exposure is offset by the Company's expenses incurred in euros) with a 4-year rolling hedge strategy: YR1 100%, YR2 100%, YR3 100% and YR4 75%. During the period, the Company entered into a number of additional currency forwards, in accordance with its more conservative hedging policy.

While the Company tries to mitigate the impacts of foreign currency movements on the NAV by hedging a portion of the expected distributions coming from the portfolio over the next four years, it would not be economical to attempt to fully immunise the portfolio against any NAV changes due to foreign exchange movements.

The portfolio suffered from a foreign exchange loss of £7.9 million over the course of 2017.

At 31 December 2017, 63% of the portfolio by value had cash flows denominated in currencies other than Sterling. In September 2017, BBGI borrowed in CAD in order to finance the acquisition of the four SNC-Lavalin assets. By doing so BBGI benefits from a natural hedge until these borrowings are repaid through a capital raise. The amounts borrowed remained outstanding at 31 December 2017.

TAXATION

Status for taxation

As a SICAV, the Company is not subject to taxes on capital gains or income but is subject to an annual subscription tax of 0.05% on its reported NAV. All of the other Group consolidated companies are subject to taxation at the applicable rate in their respective jurisdictions.

The net income of the unconsolidated subsidiaries (i.e. project related special purpose companies) is taxed in their respective jurisdictions. As a consequence of the adoption of IFRS 10, the Company is classified as an Investment Entity (see Note 2 of the Consolidated Financial Statements), meaning the tax expenses of the unconsolidated subsidiaries are not included within the consolidated financial statements but are embedded in the present value of the project itself.

Tax Developments

BBGI continues to assess the impact, if any, of the implementation of various national and global tax initiatives. In this context, the Company and its advisors continue to monitor the potential impact that certain tax measures could have on Group cash flows, most notably:

Base Erosion & Profit Shifting ("BEPS"): The Company and its advisors have continued to monitor developments closely in those countries where BBGI invests. Some areas of key focus for the Board during the year were the following:

Interest Deduction Limitation (BEPS 4): Based on the advice received to date and the published information available BBGI does not expect the implementation of BEPS 4 to have a material adverse impact on the Group's cash flows although we continue to closely monitor the situation.

Specifically, BBGI's UK assets are eligible for the Public Infrastructure Exemption which provides an exclusion from calculations for interest on third party loan financing costs and under certain conditions, related party financing costs under a grandfathering regime. An election for this exemption may be made in very limited situations where it is expected that the net interest expense will exceed the GBP 2 million group de-minimis threshold in any given year.

We continue to monitor the situation in Norway but to date there has been little update in terms of new regulation on interest restrictions.

The advice received to date from the other relevant jurisdictions where BBGI invests is that the assets are either exempt from interest limitation rules or the respective governments believe that their existing rules, most notably thin capitalisation rules, continue to be an effective means to limit the scope for BEPS and, as such, no significant changes are expected as a result of BEPS 4.

Change in Luxembourg transfer pricing requirements: During the year, the Company worked with its advisors to implement the necessary steps to ensure full compliance with the new legislation. This legislation, which was enacted into law in December 2016, aims to incorporate the concept of the arm's length principle, based on the OECD principles as revised by Actions 8-10 of the OECD Base Erosion and Profit Shifting Action Plan, into the local legislation in December 2016.

Neutralising the effect of hybrid mismatch arrangements (BEPS 2): The Company took the necessary steps during the year to avoid any potential hybrid mismatch, thereby mitigating any potential risk of BEPS 2 on the Group's cash flows.

Treaty benefit eligibility: The Company continues to monitor cross border tax rules and the impact any changes may have on Group's cash flows.

BBGI and its advisors will continue to review these developments and others to assess whether any structural changes are required in order to minimise the impact, if any, on Group's cash flows.

MARKET DEVELOPMENT

BBGI's growth strategy in the current market

The Management Board believes that the geographic and political diversification offered by participation in numerous PPP markets is attractive to the Company, provided new investments have the appropriate balance of risk and return. BBGI has significant investment expertise in key infrastructure markets internationally, and its global portfolio provides an excellent platform to access opportunities and build relationships with potential vendors.

PPP procurement and levels of competition vary from market to market. In most markets, infrastructure under-investment persists and budget constraints often necessitate the involvement of the private sector to finance and deliver much-needed infrastructure projects. Below is a review of BBGI's key markets.

UK

For several years, the UK greenfield market has provided limited opportunities for infrastructure investors. The lack of pipeline was particularly noticeable given that the UK has one of the world's most mature PPP markets with over 700 PFI projects signed since 1992 delivering investments of over £60 billion. The outlook for the UK greenfield market is expected to improve moderately in 2018, with some social and transport transactions expected to progress during the year:

The Welsh government is due to issue a tender for its A465 dual motorway project in the southern part of the country. In England, the £1.5 billion Lower Thames Crossing DBFM PF2, involving the building of a new Thames River Crossing at Tilbury, is expected to launch in the second half of 2018. Another potential project in England is the £1.3 billion A303 Stonehenge road improvement and tunnel project.

The Ministry of Justice plans to progress four major prisons, and expectations are that some or all of these projects are likely to be delivered under the PF2 model.

The UK market also continues to be a source of secondary market transactions. There has been a reduction in secondary market PPP/PFI deal flow, reflecting 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 - more equity investors are chasing a similar or reduced number of transactions. This has resulted in a trend of lower discount rates for stable, mature secondary projects over a number of years.

BBGI will continue to participate cautiously and selectively in auctions but also actively look for negotiated transactions. Our focus will be on more opportunistic investments where the competition is less intense. BBGI will also continue to consider primary development opportunities in the UK.

Canada

Canada is among the world's most prolific PPP markets, and is one of the most mature and stable. To date, 272 deals have reached financial close, of which nine were in 2017. Half a dozen provinces, numerous municipalities and the federal government are the major drivers in this market.

Provincial agencies such as Infrastructure Ontario, Partnerships BC, SaskBuilds, Alberta Infrastructure, Partnerships New Brunswick, and Société Québécoise des Infrastructures are at the heart of Canada's P3 program. These independent entities are responsible for the majority of projects in procurement.

As at December 2017, there is a well-defined pipeline of over 40 PPP transactions with a value in excess of C$ 26 billion. Notable projects include various light rail transit ("LRT") projects in BC, Alberta and Ontario, several road/bridge projects and various smaller social infrastructure projects.

With a dozen projects in Canada, BBGI is well positioned to participate in the attractive primary pipeline, either on its own, or in conjunction with the newly established strategic partnership with SNC-Lavalin, the largest engineering company in Canada and a leader in the Canadian PPP market.

The Canadian secondary market is expected to be active in 2018 as projects developed over the last several years come into operation and may be offered for sale.

In addition, the pipeline agreement with SNC-Lavalin 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.

USA

The US PPP market remains one of great potential, but with nascent deal flow. Conservative estimates suggest the US will have to spend roughly US$3.6 trillion by 2020 in order to maintain its existing infrastructure, so the need for increased infrastructure spending seems apparent.

In his State of the Union speech in January 2018, President Trump referenced an upcoming US$1.5 trillion infrastructure plan that intends to "tap into private investment to fix infrastructure".

While there were limited details in the President's address, leaked details on the upcoming bill suggest the proposed legislation will include an incentive program that could be a boon to the PPP market as the federal government is only offering to subsidise 20% of the projects that apply. The rest of the funding would essentially be accomplished through some form of private and public initiatives. Another proposal called for the establishment of a federal capital-financing program to finance purchases of "federally owned civilian real property".

The US PPP market is certainly in need of a lift as only five greenfield deals reached financial close in 2017, valued at US$4.77 billion. This was a fall off compared to 2016, which saw nine deals close with US$ 10.14 billion of value.

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

Continental Europe

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

The German federal government attitude to the use of PPP is generally positive, and the identified needs across roads are large, so the scope for a healthy German pipeline is there. A program, dubbed the "Neuen Generation ÖPP" involved the launch of 11 road PPPs, with expectations of two to three new road procurements each year until the end of the decade. With six existing assets in Germany, strong credentials and German language skills within our team, BBGI is well positioned to consider these upcoming opportunities.

The Norwegian highway PPP programme is providing investors with a pipeline of deal flow for 2018 and 2019. The Rv555 and the E10/RV85 projects are expected to start procurement in 2018 and 2019 respectively. BBGI is in a consortia bidding to deliver these new projects.

The Company is also actively considering opportunities in the Netherlands where a mix of transportation and social infrastructure opportunities are being considered.

The Belgian PPP market had experienced a slowdown in recent years in the wake of cancelled projects, permitting issues and changes relating to public debt accounting regulations. However, with many of these issues now resolved, we expect 2018 to be more active with a number of prison, transportation and social infrastructure projects on the horizon.

The French greenfield pipeline for 2018 will involve only a few social and transport projects. France has a stable legal and political environment, making it an attractive destination for investors. However, its greenfield PPP pipeline has been shrinking, meaning brownfield trades will represent the bulk of potential investment opportunities for the foreseeable future. 

The Irish PPP market has experienced a dramatic resurgence following the country's emergence from the global financial crisis. Ireland's government has embraced infrastructure development as a means to boost jobs and economic growth and has put PPPs at the centre of its project delivery strategy. Ireland recently released their National Development Plan 2018 -2027. Looking to the future and given the significant increase in planned Exchequer capital investment over the coming years, which will see public investment in Ireland as a share of national income moving to among the highest in the EU, the PPP review concludes that PPPs can play a very important role in the delivery of public capital investment projects contained in the National Development Plan.

The pipeline in Central and Eastern Europe will be modest in 2018 with D4 Expressway being one of the few projects on the horizon which is of interest to the Company.

In Spain, the PPP Plan Extraordinaria de Inversion en Carreteras is a EUR 5bn investment over the next four years to improve and expand the national motorway network, using private investment and availability payments. While this program is attractive in terms of its size and the availability-style nature of the projects, the credit rating of the counter parties and certain risk transfer expectations make the investment opportunities unattractive to the company. BBGI has not focused much attention on these and other opportunities in Southern Europe given the weaker credit ratings of these countries.

Australia

The country is turning towards infrastructure investments as tool for economic growth. Inexpensive capital and high demand for infrastructure assets is fuelling brownfield and greenfield transactions. A strong pipeline of greenfield PPP projects and state asset sales is on the horizon.

In the PPP space, the pipeline of public private partnerships is building, particularly in the transport sector. The State of Victoria will procure the AUD 16.5bn North East Link toll road as an availability PPP. The 26km project is likely to be Australia's biggest ever PPP. In addition, there are a number of rail PPP projects expected or currently underway.

Elsewhere, the social infrastructure sector is expected to provide deal flow into the future. South Australia is expecting two schools PPPs and Victoria is understood to be considering another big program of school building. In addition, all states as well as the federal government are looking for ways to get private operators and investors into social housing. 

BBGI has three large operational assets in Australia and is widely viewed as one of the more active secondary investors in the market. We will continue to monitor the market and are hopeful that some select opportunities may emerge in 2018.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

Responsible Investment ("RI") and Environmental, Social and Governance ("ESG") are core values of the Company

BBGI is committed to good governance, investing responsibly and being a good corporate citizen/long term custodian. As companies' influence on global economic activity increases, the resultant effect on the environment and society in general is much greater than before. ESG is therefore inextricably linked to both, so good corporate governance practices are essential to ensure that the impact a company can have in these areas is positive.

Responsible Investment

Our aim is to invest responsibly. The Company's philosophy on responsible investment can be summarised as follows:

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

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

· Remain mindful of RI/ESG concerns throughout the management of any investment;

· 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; and

· Monitor and report on RI/ESG initiatives

The effective assessment and management of RI and ESG matters can have a positive effect on the value of portfolio companies, and hence on BBGI.

Commitment to the Environment

BBGI's vision is to promote the conservation, protection and improvement of the physical and natural environments surrounding its projects through careful monitoring, local engagement and management. During the year, many of the Group's portfolio companies have undertaken initiatives to advance the Company's environmental objectives. Below is just a sample of some of the more recent initiatives:

· The Victorian Correctional Infrastructure Project (VCIP) has initiatives in place to reduce future greenhouse gas emissions. At both the Marngoneet Correctional Centre (MCC) and Metropolitan Remand Centre (MRC), VCIP has, through its subcontractors, engaged a waste diversion company to divert waste from landfill. This includes recovering materials which can be recycled, removing medical waste and providing secure paper destruction. Monthly, these waste reduction initiatives typically see a reduction over 2 tonnes of CO2 emissions being emitted into the atmosphere at MCC, and a reduction of over 4 tonnes of CO2 emissions being emitted into the atmosphere at MRC. This reduction of CO2 equates to approximately 25 trees planted each month.

· At the Royal Women's Hospital facility, BBGI with the support of our project partners have, through the design and the operational phase of the hospital, taken a very proactive approach to utilities conservation and management, the two primary drivers being to ensure that our client's operational funds can be better directed to their core business of caring for the sick, and also our broader responsibility to reduce where possible our overall carbon footprint. Aside from this, the ProjectCo is contributing A$50,000, a substantial amount of the overall capital required to undertake the works of replacing and upgrading the existing carpark lighting at the Royal Women's Hospital. This initiative will allow the Hospital to substantially reduce energy costs and benefit from close to A$1 million in energy savings over the next 10-15 years and will reduce CO2 emissions by approximately 5,300 tonnes over the same period. BBGI is delighted to have been at the forefront of this initiative and this active pursuit, together with its partners, has been welcomed by the Department of Human and Health Services, Victoria.

· In 2017, the Mersey Gateway project received a prestigious accolade that recognises excellence in ecology and environmental management. The project team came first in the stakeholder engagement category at the Chartered Institute of Ecology and Environmental Management Best Practice Awards. The awards highlight outstanding examples of environmental management on large-scale projects. One of the key achievements was the work done to ensure the haul roads on the salt marsh did not interfere with bird nesting.

· In Canada, BBGI has invested over C$2 million to upgrade its existing highway operations from high-pressure sodium lamps to highly efficient LED lights on the Northeast Stoney Trail project in Calgary. This initiative will help to reduce the carbon footprint of the project significantly by reducing the electricity consumption by more than 50%. The energy savings are estimated at over 30 million kilowatt hours over the remaining life of the concession or enough energy for 3,400 homes for a year. The reduction in greenhouse gas emissions is equivalent to CO2 produced by 4,800 passenger vehicles driven for a year. BBGI's client on the project, Alberta Transportation, has been extremely pleased with BBGI's voluntary initiative and has asked BBGI to upgrade Alberta Transportation's part of the ring road with the same lights.

Commitment to the Community and Social Initiatives

An infrastructure project can have an immense impact on the local communities and the local social environment. Accordingly, the Company requires that its representatives within the various project companies strive to ensure that the project companies develop and maintain positive relationships with the communities affected by their particular project. Below are some examples of these community initiatives:

· During the construction of the Mersey Gateway Bridge in the UK, BBGI's project team established a volunteer scheme including a four-week training programme where people could learn a range of skills including presentation skills and customer service. They also found out details about the ecology, environment and the local history and heritage of the Mersey Gateway project. After completion of the course, the volunteers were offered the opportunity to support the project's visitor centres and help to tell the story of the project to local schools and community groups.

Studies show that the economic benefits Mersey Gateway will bring to Halton and the surrounding area are almost four times greater than its costs. The projected long-term economic benefits are expected to include 4,640 permanent new jobs as a result of the operation of the Mersey Gateway, regeneration activity and inward investment and over £61 million a year in Gross Value Added from new jobs by 2030. Other social benefits include reductions in journey times of up to 10 minutes, increase in journey time reliability and less congestion, and 80% less traffic using the Silver Jubilee Bridge, freeing it up for use as a local bridge.

· Across our Liverpool & Sefton Clinics (LSHP) Project buildings there were over 70 community events. These were hosted at the buildings after hours and saw over 10,000 individuals engaged in a variety of community events. The events included a variety of topics from health care, nutrition, mental health, entrepreneurial empowerment and other topics important to the community. The events also raised in excess of £5,000 for local charities.

Governance

Good corporate governance is fundamental to BBGI and its activities.

In terms of employment, the Company is an Equal Opportunities Employer, 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 a project entity, it then, through its representatives on the Board of the project company, undertakes regular reviews of the environmental, social governance and ethical policies that the project 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 also monitored across the Company's portfolio and any serious breaches or incidents are reported to the Management Board, which in turn reports to the Supervisory Board. Each year a number of 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 ccorruption 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 receivedfrom 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 in order to help them meet its requirements.

RISK AND RISK MANAGEMENT

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

Below is a list of principal risks and mitigants: The Management Board set out the material risks relating to the Company's portfolio in the Company's IPO prospectus dated 6 December 2011 and updated them in the two prospectuses that followed dated 26 June 2013 and 19 November 2013 respectively; each prospectus is available on the Company's website.

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.

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; project 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 and Risk Management". In order to maintain its viability, 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 project 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. Once complete, each valuation is independently reviewed by a professional valuer and is also subject to the audit/review of 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 Report of the Management Board.

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.

Donations

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

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 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.

Regulatory Environment

Since its IPO in December 2011, the regulatory environment in which the Company operates has become increasingly complex for both it and its stakeholders. New regulations have added to the Company's costs, and continue to present new challenges to the complexity of oversight and management of the business. Promoting good corporate governance will therefore continue to be fundamental to everything we do at BBGI. Indeed, it lies at the heart of the Company's success, supporting better access to external finance and investment, and sending a message to the stakeholders that the Company is being well run so that they can have confidence in its long-term success. Accordingly, the Company recognises the importance of effective engagement with its stakeholders viewing it as a key part of its long-term success and sustainability.

Governance Code

During the year under review, the Company has followed the discussions and developments arising out of the UK Government's Corporate Governance Green Paper closely. In particular it notes the Financial Reporting Council proposal for a completely reworked Corporate Governance Code (with proposed publication of the final version in early summer 2018, and application for financial years beginning on or after 1 January 2019), and the recently published IA-ICSA guidance "The Stakeholder Voice in Board Decision Making", and it notes the intention to strengthen the stakeholder voice at Board level through the development of a new Corporate Governance Code principle in this regard.

The Boards have put in place a framework for corporate governance which they believe is appropriate for the Company. BBGI is a member of the Association of Investment Companies ("AIC") and as such reports against the AIC Code of Corporate Governance ("AIC Code"), which principles and recommendations are carefully considered, and follows the AIC Corporate Governance Guide for Investment Companies ("AIC Guide").

Revised versions of both the UK Corporate Governance Code ("UK Code") and subsequently the AIC Code (to reflect the various changes to the UK Code) were published in early and mid-2016 respectively, applying to reporting periods beginning on or after 17 June 2016. The Company has followed the revised AIC Code dated July 2016 for the 2017 reporting period; it has worked throughout the year to ensure it complies with the AIC Code and, in the event that it does not, to explain why. 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

The Company is authorised by the CSSF to act as an Alternative Investment Fund Manager ("AIFM"). Being so authorised, the Company is subject to increased regulatory supervision from the CSSF. The recurring cost of such regulatory supervision costs the Company in the region of £100,000 per annum.

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

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, who are experts in their respective fields, have been appointed to these roles:

§ Compliance: 99 Advisory Luxembourg - ICE S.A.

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

§ Internal Audit: Grant Thornton Advisory (previously Grant Thornton ABAX

Consulting: name change only on 7 December 2017)

§ Risk Management: SGG Fund Management S.A.

Notwithstanding these appointments, the Company's Management Board retains overall responsibility for the correct and effective operation of the delegated functions. Accordingly, the members of the Management Board have been appointed as Designated Board Members ("DBMs") with oversight and control responsibilities for their respective functions.

Internal controls - general

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

In addition to the above, at each quarterly meeting the Supervisory Board monitors the Company's investment performance against its stated objective, and reviews its activities to ensure that the Management Board is adhering to the investment policy and guidelines. During these meetings, the Management Board (which has agreed on clearly defined investment criteria, returns targets and risk appetite) reports in detail on these issues including, but not limited 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.

THE BOARD OF DIRECTORS as at 31 December 2017

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.

Biographies

Supervisory Board

David Richardson: Independent Chairman of the Supervisory Board

David Richardson currently holds a number of non-executive directorships, including Senior Independent Director of Assura plc, and non-executive director of The Edrington Group Ltd. Mr Richardson's executive career has focused on financial roles, including over 20 years with Whitbread plc where he was Strategic Planning Director and, subsequently, Finance Director. He was instrumental in transforming Whitbread from a brewing and pubs company into a market leader in hotels, restaurants and leisure clubs.

Mr Richardson has previously served as Chairman of the London Stock Exchange Primary Markets Group, Corporate Governance Committee of the Institute of Chartered Accountants in England and Wales, Four Pillars Hotels Ltd., Forth Ports plc and De Vere Group plc, and has also held non-executive directorships at Serco Group plc, Tomkins plc, Dairy Crest plc, World Hotels AG and The Restaurant Group plc.

Mr Richardson graduated from the University of Bristol with a degree in Economics and Accounting, and qualified as a Chartered Accountant in 1975.

Colin Maltby: Senior Independent Director

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 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: Independent Director and Chairman of the Audit Committee

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 subsequently a partner in Ernst & Young LLP from 2001 to 2007, where he was responsible for the Investment Funds Corporate Advisory team.

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.

Management Board

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

Along with Frank Schramm, 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 43 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.

Prior to his current role with BBGI, he worked at Bilfinger Project Investments ("BPI") where he was responsible for arranging and managing all project finance activities related to the Company's public-private partnerships developments in North America.

Prior to joining BPI, Mr Ball was a senior member of the North American infrastructure team at Babcock & Brown and was instrumental in helping establish the company's infrastructure business in Canada. Before joining Babcock & Brown, Mr Ball was Managing Director and Co-Head of Infrastructure for North America for ABN AMRO Bank.

Mr Ball worked at Macquarie Bank where he helped establish Macquarie's infrastructure practice in Western Canada. Mr Ball worked within the investment-banking group at both RBC Capital Markets and CIBC World Markets prior to working at Macquarie's.

Mr Ball studied at Harvard Business School after obtaining a Bachelor of Commerce Degree from Queen's University in Canada. He is also a CFA charter holder and is a graduate of the Rotman School of Business Directors Education Programme at the University of Toronto.

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 43 assets currently.

Mr Schramm has worked in the infrastructure sector, investment banking and advisory business for over 22 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.

Prior to his current role with BBGI, he worked at BPI where, as Co-Managing Director, he led the European infrastructure operations with over 60 staff. In this role he was responsible for all European development activities and the asset management of over 20 infrastructure investments.

Prior to that role, Mr Schramm was Finance Director of BPI's infrastructure operations in Continental Europe, responsible for all project finance activities including all divestment activities.

Before joining BPI in November 2003, Mr Schramm worked at Macquarie Bank in the investment banking group from 2000 until 2003, with responsibility for structured finance transactions. Prior to that he was employed at Deutsche Anlagen Leasing from 1998 to 2000, and Bilfinger Berger BOT GmbH from 1995 to 1998.

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

Originally from Ireland but living in Luxembourg since 2003, Mr Denny has over 17 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.

Prior to joining BBGI, Mr Denny spent five years heading up the Luxembourg office of the Lehman Brothers Real Estate portfolio, a Group which consisted of three Lehman Brothers sponsored real estate funds with US$2.4 billion of invested equity and approximately US$6 billion of assets under management. In this role, Mr Denny managed a team of 15 staff and was directly involved in the legal and tax structuring of the funds, holding directorships on a number of regulated vehicles. He was directly responsible for all corporate financial aspects of the Luxembourg platform.

Mr Denny obtained a Degree in Economics and Finance from the Waterford Institute of Technology, Ireland, and holds an Advanced Diploma in Management Accounting from the Chartered Institute of Management Accounting (CIMA).

Board members and other interests

Mr Ball, Mr Denny and Mr Schramm, the members of the Management Board, are also BBGI Management HoldCo managers. Apart from Mr Ball and Mr Schramm, who both hold service contracts, and Mr Denny, who holds a management contract, 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 Richardson, Mr Maltby and Mr Myles 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

Board diversity and tenure

Following the publications in October 2017 of the Parker Review "Beyond One by '21" Report, and a second Hampton-Alexander "FTSE Women Leaders" Report in November 2017, the Boards have considered both their diversity and ethnicity. They concur that Board appointments must always be made on merit, that boards should have a balance of relevant skills, experience, length of service and knowledge of the Company, and that Independent Directors should take the lead in the appointment of new Directors.

The Company has been established for six years, with no new appointments made to the Supervisory Board in the year under review, or since listing and admission to trading on the London Stock Exchange in December 2011. One appointment has been made on the Management Board over the same period where Michael Denny replaced Arne Speer as a member of the Board with effect from 30 April 2013.

The Supervisory Board, acting as the Nominations Committee, in conjunction with the Management Board has reviewed the succession plans for the Company. They recognise that there is potential for an issue as all the current Supervisory Board directors were appointed at the time of the IPO in December 2011. The Boards have, therefore, put in place a structured succession plan with the aim of staggering the retirement of each of the current non-executive directors and recruiting additional independent directors over a timeframe that will enable the knowledge and experience built up over the last 6 years to be both retained and built upon. In recruiting new directors the Nominations Committee will actively seek 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 value for shareholders.

Management Board

General

The Management Board is responsible for the day-to-day management of the Company, including administration, preparation of semi-annual valuations, the statutory financial statements, the management accounts, business plans, presenting results and information to shareholders, coordinating all service providers to the Group, and giving the Supervisory Board general advice and feedback. The Management Board is responsible, inter alia, for undertaking the discretionary investment management of the Company's assets and those of the rest of the Group; it therefore carries out the function of investment manager. Accordingly, the Company has not engaged an external investment manager.

The Management Board comprises three members, each contractually engaged by BBGI Management HoldCo, a direct 100% subsidiary of the Company, therefore none of them is deemed independent by 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 envisaged 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, not by shareholders; in itself therefore, 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.

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 (renewable). Mr Ball and Mr Schramm were both originally appointed on 5 October 2011 with Mr Denny originally appointed on 30 April 2013.

The Supervisory Board evaluates the performance of the Management Board and its Directors annually to ensure that the Management Board collectively, and its Directors individually, 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 as a whole. The Supervisory Board, satisfied with the evaluations carried out in 2016 and latterly in 2017, resolved to renew Mr Denny's appointment for a further term of one year with effect from 30 April 2017, and those of Mr Ball and Mr Schramm for a further term of one year with effect from 5 October 2017.

Attendance at Management Board meetings during the financial year ended 31 December 2017

* From time to time there are unscheduled meetings of the Management 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; however, this has not been the case for the year under review. 

Supervisory Board

General

The Supervisory Board consists of three members who are all Non-Executive Directors, each of whom is considered independent.

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

The Supervisory Board believes that its members have 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 brokers. The members of the Supervisory Board are kept fully informed of investment and financial controls, and other matters relevant to their remit. Both Supervisory and Management Board members also have access, where necessary in the furtherance of their duties, to independent professional advice at the expense of the Company. In the period under review, the Supervisory Board met seven times. Attendance of individual Supervisory Board members is outlined in the table below.

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

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

Annual performance evaluation

The Supervisory Board evaluates its performance and considers the term and independence of each member on an annual basis; for the year ended 31 December 2017, this process has been completed. The evaluation performed comprised completion of a questionnaire followed by collation of all comments into a summary. The Supervisory Board considered the results of this evaluation process 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 had been effective and appropriate. For the evaluation of the Chairman, the Senior Independent Director discussed the results of the questionnaire with the Chairman personally prior to further distribution to, and discussion with, the remaining member.

As the Company is not a FTSE 350 company, an externally facilitated evaluation of the Supervisory Board every three years (as proposed by AIC Code Principle 7) was not conducted. In addition, no independent third party has been appointed to manage the exercise as the Board considers the current process to be appropriate.

* 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. However, this has not been the case for the year under review.

Other listed company directorships

As part of its annual performance evaluation process it was concluded that, throughout the reporting period, each member of the Supervisory Board 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.

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. 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 described above, the Supervisory Board recommends the re-election of each.

Review/monitoring obligations/delegation of responsibilities of Supervisory Board

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

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 Brokers and shareholders. The Company's investment strategy is reviewed regularly in conjunction with the Management Board.

COMMITTEES OF THE SUPERVISORY BOARD

There is only one constituted Committee of the Supervisory Board; that is, the Audit Committee. It operates under clearly defined terms of reference, and these are available from the company secretary upon request.

Audit Committee

The Audit Committee (the "Committee") has 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 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: Howard Myles is Chairman of the Committee, with Colin Maltby and David Richardson the other members. Biographical details of each member can be found in the Governance section of this report.

The Committee is required to report its findings to the Supervisory Board, identifying any matters on which it considers that action or improvement is needed, and make recommendations on the steps to be taken. In the event of any conflict between the provisions of the AIC Code and the provisions of the law on the Audit Profession, the Company will comply with the provisions of the law on the Audit Profession and will disclose any such conflict.

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

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

 From time to time there are unscheduled meetings of the Audit Committee, most of which are called at short notice meetings 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. However, no unscheduled meetings were called during 2017.

- AGM

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

There are no other constituted Committees as the Supervisory Board considers its size to be such that it would be unnecessarily burdensome to establish them. The Board as a whole 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 Richardson, the Independent Chairman of the Supervisory Board.

Other Committee functions

§ Remuneration Committee

Acting as Remuneration Committee, the Supervisory Board met three times during the financial year to review the levels and structure of the remuneration, compensation, and other benefits and entitlements of the Management Board of the Company and its subsidiaries. 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 financial year, the Supervisory Board met four times as 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.

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 Extraordinary General Meeting of the Company's shareholders held at the registered office of the Company on 28 April 2017.

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

REMUNERATION

Supervisory Board remuneration

The Supervisory Board members are the Company's Non-Executive Directors and are paid a fixed quarterly fee. These fees are considered annually by the Supervisory Board, acting as the Remuneration Committee, based on the advice and recommendations of the Management Board. No member of the Supervisory Board is entitled to vote on his 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 annual fee entitlement of each member of the Supervisory Board was reviewed during the year. With effect from 1 May 2017, the annual fee entitlement of the Chairman increased to £65,000 (previously £55,000) and the annual fee entitlement of both the Senior Independent Director and the Chairman of the Audit Committee increased to £50,000 (previously £42,500).

During the year under review, the annual fee paid to the Chairman of the Supervisory Board was £61,667 (2016: £55,000) and the annual fees paid to both the Senior Independent Director and the Chairman of the Audit Committee were £47,500 (2016: £42,500).

The aggregate fee paid to the members of the Supervisory Board during 2017 was £156,667 (2016: £140,000). No additional fees were paid during the year.

Management and staff remuneration

The Company believes that an appropriate remuneration programme for each Manager 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.

The Supervisory Board acting as the Company's Remuneration Committee reviews the level and structure of the remuneration to which the Management Board members and employees of the Group are entitled on an annual basis. Appropriate benchmarking with comparable listed businesses 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 Management and employees with a history of proven success;

§ align the interests of the Group's Management 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 long-term incentive plan ("LTIP"). In addition, each member participates in a short-term incentive plan ("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 EUR. Mr Ball receives all cash entitlements in CAD. Payments in currencies other than Sterling, the reporting currency of the Group, can result in both positive and negative foreign exchange movements.

Service/management 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%, 100% and 125% of the total base fee paid in the year respectively;

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

§ LTIPs granted with return periods commencing from December 2014 onwards will be settled in shares;

§ an expected shareholding of 150% of salary 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 2017 STIP target performance objectives entitle him to a maximum €135,000 payment. LTIPs issued to Mr Denny each have a maximum value at their respective award dates of €100,000.

Notice periods to/from the Company of 12 months from May 2016 (previously 24 months' notice) apply in respect of Mr Ball and Mr Schramm. With respect to Mr Denny, a notice period to/from the Company of 6 months applies.

Fixed remuneration

The combined annual base fee received by the members of the Management Board during the year ended 31 December 2017 was £924,717 (2016: £783,185). Approximately £55,000 of this increase is directly attributable to the change in the foreign exchange rates used over the period.

In addition to their base fees, both Mr Schramm and Mr Ball received a monthly car allowance during the year amounting to £27,878 (2016: £26,053) and a supplementary annual payment to provide pension, retirement or similar benefits equating to 15% of their annual base fee (increased from 5% to 15% as part of the 2017 remuneration review).

Variable remuneration

Short-term incentive plan ("STIP")

The Supervisory Board is responsible for determining both whether the relevant performance objectives (which may be financial and non-financial) have been satisfied and the level of 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 2017, the combined amount expensed in respect of the 2017 STIP amounted to £863,171 (2016: £709,459). Payments under the STIP are made in CAD and EUR.

Long-term incentive plan ("LTIP")

During the year under review a combined amount of £459,000 (2016: £262,612) was expensed against those LTIPs which have been awarded but had not vested.

As of 31 December 2017, the total amount accrued in respect to all LTIPs which have been awarded but have not vested amounted to £766,000 (2016: £834,114). Further details on the individual awards are set out below.

- Cash-based LTIP awards

In January 2017, Mr Ball and Mr Schramm each received the maximum amount payable under the 2013 award of C$366,123 and €259,375 respectively in full settlement of the Company's obligations. In July 2017, Mr Denny received the maximum amount payable under the May 2014 award of €100,000 in full settlement of the Company's obligations.

At 31 December 2017, there were no outstanding cash-based LTIP awards.

- 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 2017 award was issued in December 2017. No expense was accrued for this particular award during the reporting period.

No loan has been granted to, nor any guarantee provided for the benefit of, any manager by the Company. There are no family relationships between Mr Ball, Mr Denny and Mr Schramm.

At no time will Mr Ball, Mr Denny and Mr Schramm acquire or have options over any shares in BBGI Management HoldCo S.à r.l., which is and is intended to be wholly owned by the Company.

As at the date of this Annual Report, there are no amounts set aside, 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 2017 was £2.07 million (2016: £1.77 million). The total variable remuneration accrued, but not yet paid, for the financial year ending 31 December 2017 was £1.71 million. The total variable remuneration paid in 2017 relating to the financial year ended 31 December 2016 was £1.21 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.

General Meetings

2017

Two shareholder meetings were held during 2017, the AGM and an Extraordinary General Meeting ("EGM"), each on 28 April. The notices of these meetings (and associated documents) may be found on the Company's website at http://www.bb-gi.com/investor-relations/publications/agm-egm/2017.aspx, and the results of each meeting at http://www.bb-gi.com/investor-relations/regulatory-news.aspx.

2018

The next Annual General Meeting ("AGM") of the Company will be held on Monday 30 April 2018 at the registered office. 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 at www.bb-gi.com.

AUDIT COMMITTEE REPORT

I am pleased to present the Committee's report to shareholders on its activities in respect of the year ended 31 December 2017. The Audit Committee has been operating throughout the year within clearly defined terms of reference.

Composition of the Audit Committee

Each of the three Non-Executive Directors is a member of the Committee, which is chaired by me, and our biographies can be found in the Governance section of this report. The 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, the Chairman, David Richardson, is also a member of the Committee, and this has enabled him to not only bring his extensive accounting knowledge to the table but also keeps him fully informed of any issues that may arise.

Responsibilities

The Audit 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 annually by the Audit Committee and are then referred to the Board for approval. A copy of the terms of reference is available upon request from the Company Secretary.

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 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.

2017: the year under review

The Audit Committee met twice in the year to 31 December 2017 and member attendance can be found within the Governance section of this Annual Report, under the heading "Committees of the Supervisory Board". At these meetings, the Committee considered, inter alia:

§ the 2016 Annual and 2017 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/approval of the external Auditor's plan for the following financial year;

§ the appropriateness of the Group's accounting policies;

§ new IFRS reporting standards and the impact, if any, they might have on Group financial reporting;

§ the risk register of the Company;

§ the adequacy of the internal control systems and standards;

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

§ the implications on the governance of the Company resulting from the General Data Protection Regulation, which was agreed upon by the European Parliament and Council in April 2016, and will replace the Data Protection Directive 95/46/ec in May 2018 as the primary law regulating how companies protect EU citizens' personal data..

Significant risks considered

During the year under review, the Audit 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 108.5% of the Company's net asset value. Particular attention was given to the discount rates applied and the key Assumptions used when valuing these investments. This risk of material misstatement is carefully considered when the Committee reviews the Company's annual and interim financial statements. The Management Board carry 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 Management Board members were available during the Audit Committee review process to provide detailed explanations of the rationale used for the valuation of investments. The external Auditor was also invited to attend the Audit 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.

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 2017 had been properly carried out and the investments fairly valued.

Non-Audit Services

The Audit Committee considered the extent of non-audit services ("NAS") provided by the external Auditor. The Audit Committee will continue to approve all NAS to be performed by the external Auditor that are not prohibited before the firm is engaged and the NAS are carried out.

Appointment of external Auditors

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. During the year there was a rotation of audit partner on the Group audit engagement. The outgoing audit partner, Ms Frauke Oddone who had lead the engagement since the Company's listing in December 2011 was replaced by Ms Emmanuelle Ramponi. Ms Ramponi presided over both the 2017 interim review and the 2017 year end audit process.

As a result of its work during the period, the Audit 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 Audit Committee has recommended to the Board to re-appoint KPMG Luxembourg, Société coopérative as the Group's external Auditor.

Conclusion

In conclusion, the Audit 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

Howard Myles

Chairman of the Audit Committee

28 March 2018

MANAGEMENT BOARD RESPONSIBILITIES STATEMENT

The Management Board of the Company is responsible for ensuring proper preparation of the annual report and financial statements of the Company for each financial period in accordance with applicable laws and regulations, which require 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 them 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 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, 28 March 2018

Signatures

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

To the Shareholders ofBBGI SICAV S.A.

6E, route de Trèves

L-2633 Senningerberg

REPORT OF THE REVISEUR D'ENTREPRISES AGREE

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 2017, 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 2017, 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 and loss" and to Note 10 in the consolidated financial statements. 97% of the Group's total assets (in value) 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 the infrastructure investment portfolio 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 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 key 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:

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

Ø 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;

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

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

Ø 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, sub- ordinated debt interest and principal repayment and directors fees) from the underlying project model to the Company'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;

- We reviewed the Valuation Report prepared by the Management Board and assessed whether the valuation inputs and results are consistent with our other audit procedures performed as part of our audit of the consolidated financial statements.

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 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 "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 "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 "Réviseur d'Entreprises Agréé" by the General Meeting of the shareholders on 28 April 2017 and the duration of our uninterrupted engagement, including previous renewals and reappointments, is seven 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, 28 March 2018 KPMG Luxembourg, Société coopérative

Cabinet de révision agréé

Emmanuelle Ramponi

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

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

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

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

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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2017

1. Reporting entity

BBGI SICAV S.A. ("BBGI", or the "Company" or, together with its consolidated subsidiaries, the "Group") is an investment company incorporated in Luxembourg in the form of a public limited company (société anonyme) with variable share capital (société d'investissement à capital variable, or "SICAV") and regulated by the Commission de Surveillance du Secteur Financier ("CSSF") under Part II of the amended Luxembourg law of 17 December 2010 on undertakings for collective investments with an indefinite life. The Company qualifies as an alternative investment fund within the meaning of Article 1 (39) of the amended law of 12 July 2013 on alternative investment fund managers ("2013 Law") implementing Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 and is authorised as an internal alternative investment fund manager in accordance with Chapter 2 of the 2013 Law. The Company was admitted to the official list of the UK Listing Authority (premium listing, closed-ended investment fund) and to trading on the main market of the London Stock Exchange on 21 December 2011.

The Company's registered office is EBBC, 6E, route de Trèves, L-2633 Senningerberg, Luxembourg.

The Company is a closed-ended investment company that invests principally in a diversified portfolio of Public Private Partnership ("PPP")/Private Finance Initiative ("PFI") infrastructure or similar assets. The Company has limited investment in projects that are under construction.

As at 31 December 2017, the Group employed 18 staff (31 December 2016: 18 staff).

Reporting period

The Company's reporting period runs from 1 January to 31 December each year. The Company's consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows include comparative figures as at 31 December 2016.

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

These consolidated financial statements were approved by the Board on 28 March 2018 .

2. Basis of preparation

Statement of compliance

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

All items presented in the consolidated income statement and consolidated statement of comprehensive income respectively are considered "capital" in nature.

Changes in accounting policy

The accounting policies, measurement and valuation principles applied by the Group in these consolidated financial statements are the same as those applied by the Group in its annual consolidated financial statements as of and for the year ended 31 December 2016 with the following exceptions:

· In January 2016, the IASB published amendments to IAS 12 (Income Taxes) under the title "Recognition of Deferred Tax Assets for Unrealised Losses". These amendments clarify the accounting for deferred tax assets related to debt instruments measured at fair value. The amendments are to be applied for annual periods beginning on or after 1 January 2017. The Group did not have any deferred tax assets as at 31 December 2017 and as such the amendment had no impact in the Group's consolidated financial statements during the year.

· In January 2016, the IASB published amendments to IAS 7 (Statement of Cash Flows) under its Disclosure Initiative. Under the amendments, the following changes in liabilities arising from financing activities are required to be disclosed: (i) changes from financing cash flows; (ii) changes arising from obtaining or losing control of subsidiaries or other businesses; (iii) the effect of changes in foreign exchange rates; (iv) changes in fair values; (v) other changes. The amendments are to be applied for annual periods beginning on or after 1 January 2017. The impact of change in foreign exchange in the Group's cash flows from financing activities is disclosed as a non-cash transaction in Note 15.

Basis of measurement

These consolidated financial statements have been prepared on the historical cost basis, except for derivative financial instruments and investments at fair value through profit or loss ("FVPL investments") which are reflected at fair value.

Functional and presentation currency

These consolidated financial statements are presented in Pounds Sterling, the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise stated.

Use of estimates and judgements

The preparation of consolidated financial statements in conformity with IFRS requires the Management Board to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In the process of applying the Group's accounting policies, the Management Board has made the following judgements that have the most significant effect on the amounts recognised in the consolidated financial statements.

The Company as an Investment Entity

The Management Board has assessed that the Company is an Investment Entity in accordance with the provisions of IFRS 10. The Company meets the following criteria to qualify as an Investment Entity:

a) Obtains funds from one or more investors for the purpose of providing those investors with investment management services:

The Group is internally managed with management focused solely on managing those funds received from its shareholders in order to maximise investment income/returns.

b) Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both:

The investment objectives of the Company are to:

- Provide investors with secure and highly predictable long-term cash flows whilst actively managing the investment portfolio with the intention of maximising the capital value over the long term.

- Target an annual dividend payment with the aim to increase this distribution progressively over the longer term.

- Target an IRR in the region of 7% to 8% on the £1 IPO issue price of its ordinary shares, to be achieved over the longer term via active management, to enhance the value of existing investments.

The above-mentioned objectives support the fact that the main business purpose of the Company is to seek to maximise investment income for the benefit of its shareholders.

c) Measures and evaluates performance of substantially all of its investments on a fair value basis:

The investment policy of the Company is to invest in equity, subordinated debt or similar interests issued in respect of infrastructure projects that have been developed predominantly under the PPP/PFI or similar procurement models. Each of these PPP/PFI projects is valued at fair value. The valuation is carried out on a six-monthly basis as at 30 June and 31 December each year.

Based on the Management Board's assessment, the Company also meets the typical characteristics of an Investment Entity as follows:

a) it has more than one investment - as at 31 December 2017, the Company has 43 PPP/PFI investments;

b) it has more than one investor - the Company is listed on the London Stock Exchange with its shares held by a broad pool of investors;

c) it has investors that are not related parties of the entity - other than those shares held by the Supervisory Board and Management Board directors, and certain other employees, all remaining shares in issue (more than 99%) are held by non-related parties of the Company; and

d) it has ownership interests in the form of equity or similar interests - the Group holds interests in PPP/PFI projects in the form of equity interests, subordinated debt and similar instruments.

Fair valuation of financial assets and financial liabilities

The Group accounts for its investments in PPP/PFI entities ("Project Companies") as FVPL investments.

The valuation is determined using the discounted cash flow methodology. The cash flows forecasted to be received by the Company or its consolidated subsidiaries, generated by each of the underlying assets, and adjusted as appropriate to reflect the risk and opportunities, have been discounted using project specific discount rates. The valuation methodology is the same one used in previous reporting periods.

The fair value of other financial assets and liabilities, other than current assets and liabilities, is determined by discounting future cash flows at an appropriate discount rate and with reference to recent market transactions, where appropriate. Further information on assumptions and estimation uncertainties are disclosed in Note 18.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs in the valuation methodology, as follows:

§ Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.

§ Level 2: inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

§ Level 3: inputs for the asset or liability that are not based on observable market data ("unobservable inputs").

If the inputs to measure fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety at the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of fair value hierarchy at the end of the reporting period in which the change has occurred.

Going concern basis of accounting

The Management Board has examined significant areas of possible financial risk including cash and cash requirements. It has not identified any material uncertainties which would cast significant doubt on the Company's ability to continue as a going concern for a period of less than 12 months from the date of approval of the consolidated financial statements. The Management Board has satisfied itself that the Company has adequate resources to continue in operational existence for the foreseeable future. After due consideration, the Management Board believes it is appropriate to adopt the going concern basis of accounting in preparing the consolidated financial statements.

3. Significant accounting policies

The accounting policies set out below have been applied consistently by the Company and its subsidiaries.

Basis of consolidation

Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to direct the relevant activities, i.e. the activities that significantly affect the investee's returns and to obtain those returns. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

The Group measures goodwill at the acquisition date as:

- the fair value of the consideration transferred; plus

- the recognised amount of any non-controlling interests in the acquiree; plus

- if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less

- the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When there is an excess of value over consideration, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes in fair value of the contingent consideration are recognised in profit or loss.

Subsidiaries

Subsidiaries are investees controlled by the Company (directly or indirectly). The Company controls an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The Company is an Investment Entity and measures investments in certain subsidiaries at fair value through profit or loss. In determining whether the Company meets the definition of an Investment Entity, the management considered the Group structure as a whole (see also Note 2).

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

Acquisition of non-controlling interests (consolidated subsidiaries)

Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. Adjustments to non-controlling interest arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.

Loss of control (consolidated subsidiaries)

For subsidiaries which are consolidated on a line by line basis, upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an investment at fair value through profit or loss or as an available-for-sale financial asset depending on the level of influence retained.

Transactions eliminated on consolidation (consolidated subsidiaries)

Intra-group receivables, liabilities, revenue and expenses are eliminated in their entirety when preparing the consolidated financial statements. Gains that arise from intra-group transactions and that are unrealised from the standpoint of the Group on the balance sheet date are eliminated in their entirety. Unrealised losses on intra-group transactions are also eliminated in the same way as unrealised gains, to the extent that the loss does not correspond to an impairment loss.

Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated into Pounds Sterling at the exchange rate at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into Pounds Sterling at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into Pounds Sterling at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on translation are recognised in profit or loss as a gain or loss on currency translation.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Pounds Sterling at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Pounds Sterling at the average exchange rates during the year, if such does not significantly deviate from the exchange rates at the date on which the transaction is entered into. If significant deviations arise then the exchange rate at the date of transaction is used.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve in equity except for exchange differences from intragroup monetary items which are reflected in the profit and loss. However, if the foreign operation is a non-wholly owned consolidated subsidiary, then the relevant portion of the translations difference is allocated to non-controlling interest. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a consolidated subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency gains and losses arising from such an item are considered to form part of a net investment in the foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.

Financial instruments

Non-derivative financial assets

The Group initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the date that the Group becomes a party to the contractual provisions of the instrument and when the significant risk and rewards of ownership are transferred to the Group.

In general, the Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is created or retained by the Group is recognised as a separate financial asset or liability.