GCP Asset Backed Income Fund Ltd. · LSE:GABI
GCP Asset Backed Income Fund — GCP Infrastructure Investments — H1 2024 Earnings Presentation
31 slides from GCP Asset Backed Income Fund's earnings presentation, June 2024
Slide 1: Interim Results 31 March 2024
en, %, oe . if ii ; ABehall Ae Interim Results 31 March 2024 — ee ed and regulated by the Financial Conduct Authority,
Slide 2: Important Notice
IMPORTANT NOTICE Warning This presentation (the "Presentation") has been prepared by Gravis Capital Management Limited (the "Investment Adviser" or “Gravis") andis for information purposes only. This Presentation is not intended for distribution to, or use by, any person or entity in any jurisdictio
Slide 3: Presenters
PRESENTERS Philip Kent Director, CEO Phil joined Gravis in 2015 and serves as the CEO. Phil is actively involved in the management of Gravis’ direct infrastructure and real asset investments. Phil has 20-years of experience in the energy and environmental sectors having joined Gravis from Foresight
Slide 4: Agenda
AGENDA ® Introduction ®@ Capital allocation ® Portfolio ® Financial update ® Conclusion GCP INFRA
Slide 5: Introduction
Introduction Gravis
Slide 6: GCP Infrastructure Investments Limited
GCP INFRASTRUCTURE INVESTMENTS LIMITED Invests in UK infrastructure that benefits from lic-: r ki h flows, with a focus on debt. GCP INFRA f Income Pays an attractive risk- adjusted income and has done for 14 years Diversification Diversified across a range of different infrastructure sectors Capita
Slide 7: Upcoming UK General Election — Green Policies
UPCOMING UK GENERAL ELECTION — GREEN POLICIES Britain’s political parties have in recent weeks published their manifestos ahead of the UK General Election on July 4. =| a =] “ | Note: *SMR: Small Modular Reactors GCP INFRA Conservative Party Deliver on climate (net zero by 2050) without “unaffordabl
Slide 8: Capital Allocation
Capital Allocation Gravis
Slide 9: Capital Allocation — Targets
CAPITAL ALLOCATION — TARGETS The Company announced its intended capital allocation policy for the year in December, laying out three key priorities. Capital Allocation Targets + Refinance of RCF completed in March Reduce leverage * Reducing total commitments (£190m to £150m) Undrawn by end of 2024 *
Slide 10: Portfolio
PORTFOLIO Gravis
Slide 11: Portfolio Overview
PORTFOLIO OVERVIEW A mature, diverse and operational portfolio of UK infrastructure projects that is well positioned to benefit from the macro trends of population dynamics, decarbonisation and energy security. Supported Living Healthcare Biomass (domestic) Geothermai Education Gas peaking Electricv
Slide 12: Portfolio Overview (cont.)
PORTFOLIO OVERVIEW (CONT.) A mature, diverse and operational portfolio of UK infrastructure projects that is well positioned to benefit from the macro trends of population dynamics, decarbonisation and energy security. Portfolio by income type ( Portfolio by annualised yield Portfolio concentration
Slide 13: Loan Payments
LOAN PAYMENTS The Company expects c. £270m to be repaid over the next c. 4 years on a scheduled basis, the Capital Allocation Policy will accelerate the return of capital above this. Gravis has historically been able to turn over capital ahead of natural amortisation when necessary. Forecast loan ca
Slide 14: NAV Bridge - March 2024
NAV BRIDGE - MARCH 2024 Primary driver of movements in the quarter was a result of updates to the OBR inflation forecast following the Spring budget 2024. Long-term power price forecasts and electricity price hedging served to offset some of the downward movement seen in electricity price futures in
Slide 15: Inflation
INFLATION While the Company benefitted from an uplift following the release of the Autumn Budget forecasts in November 2023, the Spring Budget forecast was significantly softer in the short-term as inflation expectations cooled. Office for Budget Responsibility (OBR) Inflation Forecasts 6.0% eee RPI
Slide 16: Electricity Price Backdrop
ELECTRICITY PRICE BACKDROP Gas storage levels in Europe remain robust, helping to soften rises as a result of LNG capacity fluctuations. UK political policy divergences around carbon prices are likely to have a near term impact. Monthly UK Baseload Electricity forward curve = 400 g = = 3112/2023 = =
Slide 17: Financial Update
Financial Update Gravis
Slide 18: Highlights of the Period
HIGHLIGHTS OF THE PERIOD + Post period end, the Company disposed of its interest in loan notes secured against Blackcraig Wind Farm, a 52.9MW onshore wind farm located outside Dumfries and Galloway in Scotland, at a 6.4% premium to its valuation at 31 March 2024; + No new investments in the period.
Slide 19: Portfolio Update — March 2024
PORTFOLIO UPDATE — MARCH 2024 Net revaluations downwards of (£25.3m) in the 6 months ending 31 March 2024. Downward revaluations: (£28.0m) Upward revaluations: £2.7m Solar Biomass Renewables Anaerobic Digestion Power Prices / EGL: (£13.5m) Discount rates: (£5.4m) Hydro Inflation forecast: (£3.4m) PF
Slide 20: Financial Update
FINANCIAL UPDATE Results Summary Balance Sheet: as at 31 March 2024 (£ 00! Assets Cash and cash equivalents 17,749 Other receivables and prepayments 165 Derivative financial instruments at fair value through profit or loss 167 Financial asset at fair value through profit and loss 1,013,414 Total ass
Slide 21: Financial Update: Income Breakdown
FINANCIAL UPDATE Income Breakdown — six months ending 31 March 2024 Income (€'000) 75,000 50,000 44,961 25,000 ° 25,000 Interest paid Unrealised gains Unrealisedlosses Netgainson Otherincome —Totalincome —Operatingcosts Finance expenses _Profit and Dividends Net contribution and capitalised derivati
Slide 22: Financial Update: Income Breakdown
FINANCIAL UPDATE Income Breakdown — six months ending 31 March 2024 Income (€'000) 75,000 50,000 44,961 (38,635) 25,000 709 240 -25,000 Interest paid and capitalised Unrealised gains Unrealised losses Net gains on derivatives Other income Total income Operating costs Finance expenses Income (€’000)
Slide 23: Dividend Coverage
DIVIDEND COVERAGE Dividend coverage — six months to 31 March 2024 Dividend coverage (£m) Highlights 02 * 1.0x covered in period; : * Removes pull to par and impact of (10.0) revaluations; 31.5 * Based on interest accruals and does not ~ veces BO Aeon factor in capital repayment from portfolio; Inter
Slide 24: Conclusion
Conclusion Gravis
Slide 25: Regular, Sustained, Long-Term Income
REGULAR, SUSTAINED, LONG-TERM INCOME GCP Infra has consistently paid a strong dividend to shareholders since IPO, regardless of market conditions, with availability-based infrastructure not as sensitive to GDP or wider macro-environment. At current trading levels this represents a c. 10% dividend yi
Slide 26: Attractive Valuation Levels
ATTRACTIVE VALUATION LEVELS GCP Infra continues to trade at a significant discount to prevailing NAV, representing an attractive entry point. Steadily performing portfolio benefitting from subsidy-backed cashflows and a significant element of inflation protection. GCPIIL Share Price / NAV - Since IP
Slide 27: What the Current Discount Implies
WHAT THE CURRENT DISCOUNT IMPLIES Highly unlikely cash flow or discount rate adjustments need to be made to reconcile the current discount to net asset value = 20 5 w = 8 @% Valuation (£bn) 1.013 0.748 (27%) 8 15 & js ‘9 [ey 9, fey 3 + Cumulative (adjusted) Discount rate (%) 7.8% 14.4% 86% 5 5 Cash
Slide 28: Capital Allocation Policy
CAPITAL ALLOCATION POLICY The near-term priority for the Company remains executing on the capital allocation policy. £150m Target set by the Company for release to fund the Capital Allocation Policy before the end of 2024. GCP INFRA ON * Material reduction of drawn balances * Refinance completed red
Slide 29: Portfolio continues to operate well, while diversification has served to mitigate risks
Portfolio continues to operate well, while diversification has served to mitigate risks. Continued focus on capital reallocation strategy - reducing leverage, buying back shares and rebalancing risk. Rebalancing of portfolio in near-term to reduce risk and decrease exposure to certain sectors, with
Slide 30: Contact Information
Gravis Capital Management Limited 24 Savile Row London WIS 2ES www.graviscapital.com CONTACT INFORMATION Philip Kent philip.kent@graviscapital.com 020 3405 8512 Robyn MacHugh robyn.machugh@graviscapital.com 020 3405 8519 Max Gilbert max.gilbert@graviscapital.com 020 3405 8515 Cameron Gardner cameron
Slide 31: Gravis: Investment Ideas for the Long Run
Gravis INVESTMENT IDEAS FOR THE LONG RUN
GCP Infrastructure Investments — H1 2024 Earnings Presentation on 6ix