Keybridge Capital Limited today announced a net profit after tax of $7.16 million for the six months ended 31 December 2007, an increase of 80% on the previous half year.
The proposed interim dividend is 4.0 cents per share, fully franked. This dividend is consistent with the Company’s policy of fully distributing net profit to shareholders. The ex-dividend date will be 28 February 2008, with the dividend being paid on 19 March 2008.
Mark Phillips, Managing Director of Keybridge Capital, said: “The Company’s core earnings were very pleasing with an average return on investments of 17% per annum. In addition, profit shares on our investments, as well as a lower tax rate on some income, partly offset the final provisions on our securitisation investments. Looking forward, we can now focus on the robust underlying profitability of the business.”
Investment Portfolio
As at 31 December 2007, Keybridge Capital had total investments of $375 million, up 42% from the level at 30 June 2007.
The split of investments by asset class was as follows:
| |
30 June
($m ) |
31 December ($m) |
% of Total |
| Property |
36 |
92 |
25% |
| Infrastructure |
23 |
39 |
10% |
Shipping
|
57 |
53 |
14% |
Aviation
|
51 |
107 |
29% |
| Natural Resources |
32 |
39 |
10% |
| Other |
65 |
45 |
12% |
| |
264 |
376 |
100% |
Investment levels have increased further to $393 million as at 13 February 2008.
The growth in investments has been spread principally across three of the Company’s core asset classes: Property, infrastructure and aviation.
The investment portfolio is well diversified by asset class, counterparty, location and maturity with an average investment size of $13 million. The returns from the Company’s current investments are at or above expectation and the outlook remains sound. Underlying supply and demand conditions in the various asset classes continue to support the Company’s investment returns.
The Company manages all its investments actively. At the present time, there is one investment which is requiring closer than normal attention. It is a $15 million first ranking secured loan with a low loan to value ratio of less than 50%. We do not anticipate any loss of capital or return for Keybridge.
The Company has foreign currency investments denominated in US Dollars and Euro. The Company’s policy is to hedge the principal and return of all foreign currency investments back to Australian dollars.
Many of the transactions in which Keybridge invests have debt which is non-recourse to the Company. The average maturity of this debt is approximately five years. Most of the debt matures in periods longer than two years from now. None of it matures in the next six months.
Capital Management
The Company currently has $474 million of available capital. This comprises equity of $264 million and committed debt facilities of $210 million provided by Commonwealth Bank, St.George Bank, BankWest and National Australia Bank. The debt facilities mature in December 2009.
At 31 December 2007, the Company had cash and undrawn debt of $92 million. There is capacity over time for the Company to raise additional equity and debt.
We do not consider it optimal to raise equity at the present time. Over the medium term, the Company will be looking at increasing its debt facilities to be approximately equal to its shareholders’ funds. This would lead to additional funding capacity of around $50 million.
In addition, the Company is advancing a range of unlisted funds management initiatives. The intention is to begin with funds of approximately $50 million raised from private, high net worth investors. It is anticipated that these funds will be focused on the Company’s core asset classes.
Outlook
The Company expects to report NPAT for the full 2008 financial year of at least $20 million. This equates to earnings per share of just over 11 cents and is unchanged from previous guidance.
In terms of investment levels, there are approximately $35 million of possible repayments from current transactions during this half year. With this in mind, the Company expects investments to reach $440 million by June 2008.
The Company remains confident of growing earnings per share. In the shorter term this growth will come from an increase in investments and the removal of the impact of the securitisation provisions.
Over the medium to longer term, growth in earnings per share will also come from the building up of fee income from funds management and from the Company selectively internalising the origination and asset management activities associated with its investments.
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. |
