GCP Infrastructure maintains dividends amid market turbulence

GCP Infrastructure Investments posted its annual results for the year to 30 September on Thursday, confirming dividends of 7.6p per share had been paid for the year, in line with that paid in 2016.

The FTSE 250 firm said total shareholder return for the year was 2.6%, and total return since IPO in 2010 stood at 97.8%.

Profit for the year was £46.7m, down from £54.4m in 2016.

The board said the reduction from prior year was due to a lower net unrealised revaluation movement across the investment portfolio, and lower prepayment fees.

Earnings per share were also negatively impacted by having a material cash balance for a significant part of the year in anticipation of the delayed GIB transaction.

GCP noted that £160m was successfully raised through two “significantly oversubscribed” share issues.

Loans were also advanced totalling £227.1m, secured against UK renewable energy, social housing and PFI projects, with a further £65.9m of investments made since year-end.

Transactions completed during the year included a “significant commitment” to acquire loans with a value of up to £140m over a two-year period from August 2017, as part of the acquisition of the GIB by a Macquarie-led consortium, with £91m advanced to 30 September and a further £0.5m advanced post period end.

A third-party professional valuation of the company's partially inflation protected investment portfolio put it at £899.3m, the board said, with the company net asset value per ordinary share at 30 September standing at 110.57p, up from 109.67p a year earlier.

Post year-end, the company entered into an agreement with RBSI to increase its revolving credit facility by £15m to £90m, further to the £25m increase negotiated during the year.

“The sustained period of low interest rates in the UK continues to drive demand for infrastructure assets from investors seeking dependable and predictable income,” said chairman Ian Reeves on GCP’s outlook.

“Despite the scarcity of new infrastructure projects within the company's target markets and the ongoing competition for existing assets, the board is encouraged by the success enjoyed by the company in securing £227.1m of new investments during the year.”

Reeves said the investment adviser had enjoyed “considerable success” over the years, targeting opportunities with smaller funding requirements that are typically off-radar for large-scale institutional lenders.

“This has now been supplemented by its success in securing a substantial investment in the GIB portfolio of renewable energy projects noted above.

“In social housing, the emergence of several specialist investors almost exclusively focusing on supported living will place a greater emphasis on utilising relationships with existing counterparties, which are expected to deliver a continued, albeit reduced, pipeline of activity.”

Reeves added that, while competition for infrastructure assets could present challenges for portfolio growth, continued demand for those assets remained positive for their capital values.

“The company continues to deliver on its objectives of providing regular, sustained distributions and preserving capital value for its shareholders through a period of market and political turbulence, an encouraging endorsement of its long-term strategy.”