As at 31 December 2007, Keybridge Capital had total investments of $376 million. This compares with $317 million at the time of the last update to the market at the end of September 2007.
The split of investments by asset class was as follows:
| |
25 September 2007 ($m ) |
31 December 2007 ($m) |
% of Total |
| Property |
43 |
91 |
24 |
| Infrastructure |
38 |
37 |
10 |
Leasing
- Shipping
- Aviation
- Office Equipment |
57
80
8 |
52
111
8 |
14
30
2 |
Fixed Income
- US Securitisations |
11 |
0 |
0 |
| - Natural Resources |
44 |
39 |
10 |
| - Other |
36 |
38 |
10 |
| |
317 |
376 |
100 |
Investment Activity
Significant changes in investment levels have been:
- A writedown in the book value of the Company’s investments in the US securitisation market to nil. This compares with a book value of $11 million in September 2007. This decision was taken in the light of a continuing negative outlook for the US home loan market and for the US capital markets in general. It reflects a desire by the Company to remove the uncertainty of these investments from the ongoing performance of the business.
- Growth in property investments, which is spread across eight different loans and supported by a spread of high quality residential and commercial properties in Australia.
- A reduction in shipping investments following the profitable sale of four vessels, partly offset by new investments in the sector.
- An increase in aviation investments, supported by a diverse range of aircraft assets.
Investment Performance
The Company has 35 individual investments, diversified across industries, locations and counterparties.
All investments are managed actively. In the normal course, the Company can have investments on a watchlist for more active management. Despite the current volatility in global financial markets, the Company has only a small number of transactions on its watchlist. Other than the US securitisations, the investment portfolio is performing soundly with a strong average earnings yield.
Investment Outlook
The Company currently has outstanding Board approvals for potential new investments totalling approximately $100 million spread across the different asset classes. Whilst not all these transactions are likely to proceed to completion, the Company is confident of its ability to continue growing investments and, consequently, earnings per share.
At present, global credit markets are experiencing a tightening of lending standards and increased pricing for risk. On balance, this should be a positive for the Company by increasing the flow of available transactions and enhancing the capacity to earn higher returns.
Capital Management
The Company’s debt facilities total $210 million. They mature in December 2009. As at 31 December 2007, net drawings under these facilities were $119 million, with $91 million available to fund further investment growth. With repayments occurring in the portfolio, this amount of funding is expected to be sufficient to finance the Company’s growth in investments for the remainder of this financial year.
Over the medium term, the Company has a range of options for financing ongoing investment growth, all of which are likely to be pursued at different times:
- Developing co-investment and/or funds management activities;
- Increasing the size of its debt facilities;
- Raising additional equity, should the timing and pricing be optimal; and
- Bringing forward the realisation of selected existing investments.
Profitability Outlook
The Company is releasing its half year profit results on Thursday, 14 February 2008.
In September 2007, the Company provided the following guidance: “The Company’s net profit after tax (NPAT) in the current half year is expected to be materially higher than the previous half year. It is also expected that NPAT for the full 2008 year would fall within the current range of analyst forecasts of $20 million to $25 million, albeit towards the lower end of this range.”
The Company reconfirms this guidance.
Keybridge Capital is a financial services company that invests in structured finance transactions. The Company 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. |
