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GCP Infrastructure results reflect lower electricity prices

GCP Infrastructure Investments

GCP Infrastructure results reflect lower electricity prices – For the year ended 30 September 2020, the company is reporting a fall in its NAV from 111.66p to 103.99p and a return to shareholders of -2.0%.

Highlights are:

  • Dividends of 7.6 pence per share for the year to 30 September 2020 (30 September 2019: 7.6 pence). A new dividend target of 7.0 pence per share (see our last note for the background to this).
  • Total shareholder return for the year of -2.0% (30 September 2019: 8.0%) and total shareholder return since IPO in 2010 of 119.6%
  • Loss for the year of £0.7 million (30 September 2019: profit of £59.1 million) primarily due to downward revaluations in respect of lower long-term electricity price forecasts.
  • Loans advanced totalling £116.5 million, secured against UK renewable energy, social housing and PFI projects
  • NAV of 103.99 pence (30 September 2019: 111.66 pence)
  • Third party independent valuation of the company’s partially inflation-protected investment portfolio at 30 September 2020 of £1.0 billion (30 September 2019: £1.1 billion)
  • The most significant impacts from Covid-19 have been reduced short‑term electricity prices resulting from a fall in demand of about 15%, and the short‑term reduction in the availability of waste wood on the company’s biomass exposures, which has since been resolved.

Post year end, the company made its first investment exposed to the deep geothermal sector, in support of a project to supply heat to the Eden Project in Cornwall, for the amount of £8.0 million, of which £4.0 million has been advanced to date. The company also made further advances of £5.6 million and received repayments of £3.6 million.

GCP Infrastructure is 10

GCP infrastructure is now 10 years’ old and, although COVID-19 has weighed on this year’s results, since launch it has delivered attractive returns to shareholders. The board is optimistic saying “Looking forward to the medium to long term, infrastructure investment is likely to be a key fiscal tool that is used by the UK Government to support the economic recovery. The UK recently published its first Infrastructure Strategy, setting out ambitious plans to support economic recovery, levelling up regions of the UK and achieving net zero. These plans are likely to support future opportunities for private sector capital and the company is well placed to benefit from these opportunities.”

The report goes into great detail on the backdrop to the results and the various areas that the company is financing which we will not reproduce here but will cover in a forthcoming note.

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