GCP Infrastructure’s results for the 12 month period ended 30 September reflect some long-running themes. The NAV slipped from 109.79p to 105.22p and the NAV total return for the period was 2.2%. However, a narrowing discount from 38.3% to 25.0% meant that the return to shareholders was a welcome 28.4%. The dividend was maintained at 7p and the board’s target is to maintain it again for the new financial year.
Part of the impetus for the narrower discount was last year’s announcement of the capital recycling programme. The revolving credit facility has been refinanced and reduced, Blackcraig wind farm was sold, and since the end of September there have been further disposals – £6.8m from the recent sale of solar rooftop assets. Total leverage fell to £57m from £104m, and the target is still to reduce the outstanding balance to zero.
The company made one new loan of £2.6m to an existing borrower. Portfolio follow-on investments of £24.7m were focused on restructuring and management to preserve value and potential future profitability. This was offset by repayments of £39.2m, giving a net repayment from the existing portfolio of £11.9m.
Today, GCP Infrastructure announced that it expects to complete, subject to contract, on the disposal of a portfolio of onshore wind farms, generating proceeds of c.£20m, and has a pipeline of additional disposals in excess of £150m [which we hope will materialise in H1 2025, enabling it to exceed the disposal target announced last year].
Part of the programme was to return at least £50m to shareholders and, to that end, share buybacks will recommence “imminently” [perhaps today]. 3.4m shares were repurchased over the 12 months ended 30 September 2024.
As and when it makes sense to make new investments, the adviser is optimistic about the breadth of opportunity that the company will have, saying “The new government’s ambitious infrastructure targets, spanning decarbonisation, energy security, and the digital economy, are supported by innovative revenue models like contracts-for-difference, which offer potential opportunities for future investments. The focus on streamlining planning, grid connections, and the National Wealth Fund by the new government is also particularly encouraging.”
The chairman observes that the current yield on 15-year gilts is similar to where it was at the company’s IPO, when it traded at a premium.
GCP : GCP Infrastructure restarts buybacks as it eyes more disposals
