Subject to final determination of the financial accounts, Keybridge’s total investments at 30 June 2008 were approximately $421 million.
The split of investments by asset class was as follows:
| |
31 March
2008
($m) |
30 June
2008
($m) |
% of Total |
| Property |
108 |
100 |
24% |
| Aviation |
124 |
119 |
28% |
Shipping
|
73 |
74 |
18% |
Infrastructure
|
40 |
54 |
13% |
| Natural Resources |
29 |
23 |
5% |
| Other |
49 |
51 |
12% |
| |
423 |
421 |
100% |
There have been the following notable changes in investment levels in the past three months:
- Keybridge’s infrastructure investments are focussed primarily on solar and wind projects in Europe and the increase in this asset class is a result of a new solar transaction in Spain.
- The reduction in investments in the natural resources sector follows the repayment in full of one loan.
- The reduction in property investments is due to a partial repayment of a loan that Keybridge previously flagged was under close attention. Further repayments of this loan are expected over the next six to nine months, with no material loss anticipated.
The Company has 31 individual investments for an average investment size of $14 million. These investments are diversified across industries, locations and counterparties in accordance with Keybridge’s transactional risk management policy.
Current average returns across the Company’s investments are in line with expectations and the overall portfolio continues to perform soundly. In aviation, some reductions in aircraft values are anticipated due to the rise in oil prices and a downturn in the broader economic environment. However, Keybridge is a mezzanine financier rather than an equity investor in aircraft and this provides coverage against a softening in the market.
Capital Management
The Company has extended the maturity date of its committed debt facility to June 2011 and increased the amount from $210 million to $215 million. The debt facility continues to be provided by Commonwealth Bank, BankWest, St.George Bank and National Australia Bank. Pricing for the facility has increased to a margin over the bank bill rate of 2% per annum.
The key covenants within the facility are unchanged. Those covenants comprise minimum tests for interest cover and shareholders funds and a maximum test for debt as a proportion of assets. There is no market capitalisation covenant.
As at 30 June 2008, the Company had cash and undrawn debt of $69 million.
The Company has locked-in the bank bill cost on approximately 75% of its drawn debt at an average rate of 7.19% pa for an average remaining term of 3.5 years. In addition, the principal and income of all foreign currency denominated investments continue to be hedged back to Australian Dollars.
Funds Management
The Company has been granted an Australian Financial Services Licence for unlisted wholesale managed funds. Initiatives are being advanced for the development of managed funds in one or more of the Company’s core asset classes.
Outlook
Consistent with previous guidance, the Company expects its net profit after tax for the full 2008 financial year to be least $20 million. This equates to earnings per share of just over 11 cents.
The Company’s dividend policy is to fully distribute after tax earnings to shareholders. The Company presently has no plans to change this policy and it is anticipated that the upcoming final dividend will reflect a full payout of profits for the six months to June 2008.
The Company expects that the disruption to global debt and equity markets will continue for at least the next six to twelve months. This has the potential to open up attractive investment opportunities for Keybridge. Over the first half of the 2009 financial year, the Company expects to realise in excess of $30 million in investment repayments. Together with the $69 million of available liquidity currently held in cash and undrawn debt, this will provide the Company with good capacity to take advantage of these new investment opportunities.
In terms of profitability, we remain confident of growing the Company’s earnings per share over the next two to three years.
The Company will release its 2008 full year results on Thursday, 7 August 2008.
Keybridge Capital is a financial services company that invests in, or lends to, transactions backed by real assets, financial assets or cashflow. Its core asset classes are property, infrastructure, shipping and aviation. The Company’s objective is to build a diversified portfolio of investments that delivers high returns to shareholders. |
