GCP Infrastructure has published its half-year results, covering the six months ended 31 March 2022. As flagged previously, the NAV has jumped to 112.75p from 103.92p at end September 2021. The company is reporting a total shareholder return for the period of 13.7%. The profit for the period of £108.9m reflects the impact on valuations of increases to electricity price forecasts, higher OBR inflation forecasts and a number of discount rate reductions applied by the independent valuation agent.
Renewable investments have benefited from higher electricity market prices, resulting in increasing cash generation by these projects. An electricity price hedging arrangement put in place to mitigate NAV volatility and to lock in attractive prices matured on 31 March 2022 and was paid shortly afterwards in April 2022.
The company has revised its long-term assessment of the availability of a biomass project it enforced against during 2021, resulting in a negative valuation adjustment equivalent to 0.5p per share. However, it says that it remains positive about the long-term value in this project.
Mizuho Bank is a new lender under the existing revolving credit facility and this has been expanded from £165.0m to £190.0m. £156m was drawn down at 31 March 2022.
Investment activity
During the period, the company made 16 advances totalling £72.8m; £58.0m under two new facilities and £14.8m under existing facilities. The company received 22 repayments totalling £109.7m; £21.9m of scheduled repayments and two unscheduled (full) repayments of £87.8m, which along with a further loan disposed of as part of the Race Bank transaction disclosed below, reduced the number of investments to 48.
- The company restructured a loan secured against a waste wood power station in Northern Ireland, advancing a new loan of £52.1m against the project with net new investment of £23.1m. This restructure has moved the company from a subordinated to a senior position and has increased its exposure to “an attractive, performing, operational asset“.
- The company sold loan notes issued in respect of its Race Bank offshore wind farm investment, realising a valuation at about a 12% premium to the fair valuation at the year end.
- The company also invested £5.9m in a senior loan to finance the acquisition of three operational anaerobic digestion projects by representatives of the original developer of those projects and landowners.
- A further £1.0m was invested in the existing investment portfolio as part of drawdowns under rooftop solar loans.
- The company reached a settlement agreement for litigation in respect of one PPP/PFI asset that has been ongoing since 2018. There was no material impact to the valuation of this investment because of such settlement.
- The board remains actively involved in the ongoing Ofgem audit process relating to a portfolio of commercial solar projects and continues to monitor and support the investment adviser’s progress with this matter.
- Post period end, the company completed the restructure of a portfolio of loans exposed to supported social housing investments. As a result, exposure to this sector has reduced from 13.9% to 10.0% of total assets. The expected rate of return has increased by 14.5% for the restructured portfolio. This is as a result of subordinating the company’s position to new third-party debt that is supported by a bespoke rental protection insurance arrangement.
GCP Infrastructure confirms big jump in NAV