Keybridge profit surprises

In late 2006 Keybridge Capital Limited changed its business focus to become an investor in transactions of asset classes that include property, aviation, shipping and infrastructure.
At the time the market applauded the move, pushing the share price above $2 in late 2006, with a further strong rally in early 2007 lifting the shares to $2.80 - but the company did not escape the finance company price correction of the last twelve months, which subsequently pushed the share price to below 80 cents earlier this week.

Yesterday the shares rallied 23 per cent on the announcement of a net profit for financial year 2008 of $20.8 million, with revenues of $42 million, as the company announced a continuation of the policy to return all profits to shareholders and declared a 7.6 cent dividend, to bring the yearly total to 11.6 cents. The shares closed at 94.5 cents, on heavy volume.

Comparisons against the previous financial year are difficult due to 2008 being the first year the company has traded under the new strategic focus, but Karen Penrose, chief financial officer, confirms the double digit return on investment aspirations.

"It is still the company's objective that we aim for at least a 15 per cent return on investment. If you look at the investments we have made this year (financial), we have averaged in fact just over 19 per cent.

"In this financial year our shipping investments have definitely performed stronger than some of the other asset classes - but in fact the returns have been across the board."

Shipping currently accounts for 18 per cent of the $418 million in investments at June, with the 25 ships spread across five different investments, with an average value of $15 million and an average charter term of four years.

"We continue to have a very positive outlook for the shipping sector," Penrose adds.

The Keybridge transactional risk management policy does not allow asset classes to exceed 30 per cent, with the 28 per cent in aviation investments closing in on this benchmark.

The aviation investment covers 60 aircraft through five different investments averaging $24 million, with the average lease term five years.

Property investments make up 23 per cent of the portfolio, with infrastructure 13 per cent and 'other' 18 per cent - which covers major industries such as equipment leasing, financial services, mining and retail, with the seven investments having an average size of $11 million and an average duration of 18 months.

"In our outlook we have provided some EPS guidance between 15 and 16 cents for the 2009 financial year, and that translates back to a return of over 16 per cent", said Penrose.

The Board and management hold approximately five per cent of the Keybridge equity.