GCP Infrastructure maintains first-half dividend payout

(Sharecast News) - GCP Infrastructure Investments maintained its dividend payout for the first half of its financial year on Thursday, despite a sharp fall in profit and net asset value, reflecting continued pressure across parts of its renewable energy portfolio. The London-listed infrastructure debt investor reported a profit of £0.4m for the six months ended 31 March, down from £9.9m a year earlier.

It put the decline down to lower loan interest income from solar assets with equity-like exposure.

Net assets fell to £871.7m from £933.9m in the prior period, while net asset value (NAV) per share dropped to 102.28p from 107.62p.

The share price slipped to 71.3p, from 72.3p a year earlier, contributing to a total shareholder return of -5.3% for the period.

Total NAV return was 0.5%.

Despite the weaker performance, the company declared an interim dividend of 3.5p per share, unchanged from the year before and in line with its full-year target of 7p.

No new loans were issued during the period, but £13.1m was advanced to existing borrowers under existing agreements.

Repayments totalled £44.4m, largely from renewables, PFI/PPP and supported living sectors, including proceeds from two asset disposal processes.

Post-period, GCP advanced a further £1.8m and received £3.2m in repayments.

The independent valuation of the investment portfolio stood at £902.9m at period-end, down from £1bn, with the company continuing to prioritise capital preservation and long-term income generation amid sector headwinds.

"The company's shares continued to trade at a discount to NAV in the period - this issue is not individual to the company, with other companies in the listed alternatives sector facing similar share price pressure," said chairman Andrew Didham.

"This remains a function of an elevated interest rate environment, a challenging macroeconomic backdrop, and continued outflows from UK-focused equity funds.

"Although, as a result, the dividend yield on share price at 31 March was 9.8%, which the board believes represents an attractive entry point for investors."

Didham said the board and the investment adviser remained committed to reducing the discount at which the company's shares were trading.

"The company has proactively explored consolidation opportunities, raised capital through disposals of assets, and applied this capital to reducing fund level leverage and returning capital to shareholders through buybacks.

"These have been proactive measures to address the discount, with a net repayment of leverage of £63m and £13.7m returned to shareholders.

"Disposals of £57.1m have been completed so far, and the company is focused on delivering its commitment to realise £150m, facilitating the return of £50m to shareholders, and repayment of drawn balances under the revolving credit facility."

Andrew Didham said the board and investment adviser were focused on the firm's capital allocation policy as a route to reducing the share price discount to NAV, adding that further realisations at NAV demonstrated it was "the most appropriate valuation" for shares.

The NAV at 31 March was 102.28p per share, with the company having generated a NAV total return for the period of 0.5% and total NAV return since IPO of 178%.

"During the period, two disposal processes relating to underlying renewable energy assets were completed, facilitating the repayment of £23m across three of the company's loan positions."

At 1209 BST, shares in GCP Infrastructure Investments were down 2.05% at 71.5p.

Reporting by Josh White for Sharecast.com.