GCP Infra Reports FY 2025 Results, Reaffirms 7p Dividend and Details Capital Allocation Progress

GCP Infra FY 2025: steady dividend, slimmer balance sheet, and a plan to reset

GCP Infrastructure Investments (GCP Infra) has posted full-year results to 30 September 2025. The picture is mixed: the dividend holds firm, leverage is markedly lower, and asset sales are broadly at or around carrying value. Against that, NAV slipped, earnings under IFRS did not fully cover the dividend, and the share price discount remains deep.

Key numbers investors should know

Metric	FY 2025	FY 2024
Portfolio valuation	£858.9 million	£960.0 million
NAV per share	101.40p	105.22p
Dividend per share	7.0p	7.0p
NAV total return (year)	3.1%	2.2%
Total profit	£18.4 million	£19.5 million
LTV (leverage)	2.4%	6.0%
Cash interest received	£64.0 million	£65.1 million
Operating costs	£11.1 million	£11.3 million
Share buybacks (year)	£22.8 million	£2.2 million
Disposals and cash proceeds (year)	£46.4 million	£31.4 million

Dividend held at 7.0p and target reaffirmed

The Board paid 7.0p per share for the year and has reaffirmed the same target for the forthcoming financial year. Coverage varies depending on the lens:

• Earnings cover (IFRS): 0.31x.
• Adjusted earnings cover: 0.96x.
• Cash earnings cover: 1.04x.

Translation: on cash generated after costs and finance, the dividend was covered; on pure IFRS earnings (which include non‑cash valuation movements), it was not. I see the cash cover as the more relevant guide for an income fund, but it still leaves little headroom if asset cash flows disappoint.

NAV dipped, but buybacks were accretive

NAV per share fell 3.6% to 101.40p, driven by £49.9 million net valuation losses after hedging, mainly from lower wind output and grid curtailment in Northern Ireland, and weaker expectations at certain anaerobic digestion assets. Share buybacks added 1.04p per share of NAV accretion.

The share price was 78.90p at year end, a 28.5% discount to NAV (average discount 29.3% during the year). That is punchy. In my view, continued buybacks at this discount are highly accretive; the company repurchased £22.8 million in the year and has returned £35.6 million via buybacks since March 2023.

Capital allocation: deleveraging and disposals on track, if slower than hoped

GCP Infra’s December 2023 plan aims to realise £150 million of assets, cut leverage, and return capital while keeping the dividend stable.

• Leverage: Revolving credit facility drawn balance cut to £20 million (from £104 million at policy launch) with LTV down to 2.4%. Finance costs fell to £4.2 million (from £7.5 million).
• Disposals/proceeds: £46.4 million in the year; around £80 million since the plan began. Sales and proceeds have been “materially in line” with prior NAVs on average.
• Pipeline: c.£250 million targeted next, including a material exit from supported living and further reduction of exposure to merchant power.

Management acknowledges progress has been slower than hoped. The Board plans to engage with shareholders in early 2026 on the future strategy once the programme is largely complete.

What’s inside the portfolio

• 47 investments with a weighted average annualised yield of 8.0% and an average life of 11 years.
• Sector mix: 57% renewables, 28% PPP/PFI and 15% supported living.
• Inflation linkage: 49% of portfolio value has some form of inflation protection.
• Security: 53% of principal value ranks senior in the capital structure.

Headwinds were concentrated in two places: lower wind resource plus significant curtailment in the Irish market (affecting two Northern Irish wind farms), and continued underperformance at gas‑to‑grid anaerobic digestion assets in Scotland. Together these drove net unrealised losses of £47.2 million.

Balance sheet and hedging

• RCF: £150 million facility (SONIA + 2.0%) maturing February 2027; £20 million drawn at year end.
• Cash generation: £140.2 million of debt service received (cash interest £64.0 million; principal £76.2 million); dividends paid £59.9 million.
• Hedging: c.75% of GB market exposure hedged for summer 2025 at £81.91/MWh and for winter 2025/26 at £80.75/MWh; two swaps for Northern Irish wind at £76.51/MWh to September 2026. Mark‑to‑market liability at year end: £0.2 million.

Regulatory overhang: RO/FiT indexation consultation

The UK Government consulted in late 2025 on moving RO and FiT indexation from RPI to CPI from April 2026. The Board has responded, arguing against retrospective changes. This is a live risk to sentiment across legacy renewables. The company also flags broader political noise around support mechanisms and net zero policy. It bears watching.

Potential shape after disposals

GCP Infra indicates an “indicative portfolio” post the planned exits: weighted average life of around 8 years and a weighted average annualised yield of 8.3%, with reduced social housing and merchant power exposure and a higher tilt to PPP‑style cash flows. If executed, that should mean a neater, simpler risk profile with somewhat higher yield.

Why this matters for shareholders

• Income remained intact: 7.0p delivered and targeted again. Cash coverage clears 1.0x, but the buffer is slim, so asset cash flows need to keep behaving.
• Discount is your friend (if buybacks continue): repurchasing at a ~30% discount is highly accretive to NAV per share. The programme is active.
• Lower risk balance sheet: debt is now modest. With LTV at 2.4%, higher rates are less of a drag than a year ago.
• Execution needed: progress on the c.£250 million disposal pipeline and the supported living exit is the key near‑term catalyst, in my view.
• Policy watch: the RO/FiT indexation outcome is a genuine swing factor for sentiment on legacy renewables.

What to watch in 2026

• Further disposals and pricing versus NAV, especially supported living and merchant power assets.
• Dividend coverage updates (cash cover staying at or above 1.0x).
• Any narrowing of the discount as rates fall or the portfolio is “reset”.
• Outcome of the RO/FiT indexation consultation.
• Shareholder engagement on the future strategy once the capital allocation plan is mostly complete.

Josh’s take

For me, this is a cautious but constructive update. The portfolio had some specific drags, yet the fund did the unglamorous but important work: cut leverage, sell assets broadly around book, protect income with hedges, and buy back stock at a chunky discount. The NAV drop of 3.6% is not ideal, and the persistent ~29% discount shows the market still wants more proof.

If GCP Infra completes the planned disposals, simplifies the book, and keeps cash dividend cover around or above 1.0x, I think the discount has room to tighten. The biggest external risk is any retrospective change to legacy subsidy indexation – worth monitoring closely. Overall, income seekers comfortable with infrastructure debt and the associated policy backdrop may see value here, particularly while buybacks keep compounding NAV for remaining holders.