Greencoat UK Wind Plc · LSE:UKW
Greencoat UK Wind — FY2019 Earnings Presentation
38 slides from Greencoat UK Wind's earnings presentation, February 2020
Slide 1: Annual Results
Annual Results February 2020
Slide 2: 2019 Highlights
2019 Highlights 2,385GWh Power generation 11% below budget due to low wind resource Power generation £127.7m Strong cash generation Net cash generation £100.4m / 6.94p per share Dividend in line with target Dividends declared with respect to the period 979MW 3 investments (£598m), including first CF
Slide 3: Simple Model
Simple Model 6-35 wind Generating capacity increased farms from 127 to 979MW since IPO Total reinvestment Equity 8.4TWh Total power produced Debt £476.4m Total cash generated £136.5m £339.9m Total dividends paid or declared “6p dividend, increasing with RPI inflation and real NAV preservation’’ 3 No
Slide 4: Wind Resource and Production
Wind Resource and Production UK average wind speed (m/s)(1) Annual average 10 year average 7 6 5 4 3 2 1 0 July July July July July July July January January January January January January May November January May May May March March November May March November March November May March November May
Slide 5: Track Record of Consistent Delivery
Track Record of Consistent Delivery Period Production Cash Generation Dividend(1) Dividend Cover(2) RPI NAV Growth 2013(3) 292GWh £21.6m £14.2m (4.50p) 1.8x 1.9% 2.5% 2014 565GWh £32.4m £24.8m (6.16p) 1.6x 1.6% 2.5% 2015 799GWh £48.3m £29.6m (6.26p) 1.7x 1.2% 0.5% 2016 978GWh £49.0m £38.8m (6.34p) 1
Slide 6: Operational and Financial Performance
Operational and Financial Performance
Slide 7: Operational Performance
Operational Performance Notable issues affecting portfolio availability were: ▪ Clyde South – offline due to cable fault on transmission grid (completed) ▪ Stroupster – offline due to circuit breaker fault at substation (completed) ▪ Yelvertoft and Earl’s Hall Farm – lower availability resulting fro
Slide 8: Financial Performance (1)
For the year ended 341 December 2019 Group and wind farm SPV cashflows £'000 Net cash generation 127,662 Dividends paid (93,206) Acquisitions!” (609,670) Acquisition costs’? (3,057) Equity issuance 505,742 Equity issuance costs (7,374) Net drawdown under debt facilities 120,000 Upfront finance costs
Slide 9: Financial Performance (2)
For the year ended 31 December 2019 Net Cash Generation - Breakdown £000 Revenue 230,366 Operating expenses (60,840) Tax (10,319) Other (371) Wind farm cashflow 158,836 Management fee (15,159) Operating expenses (1,489) Ongoing finance costs (17,944) Other 3,585 Group cashflow (31,007) VAT (Group an
Slide 10: Net Asset Value
Net Asset Value Decrease in portfolio valuation of £74.4m (5p per share): -2p depreciation -2p modelled corporation tax rate of 19% (was 17%) -5p significant reduction in long term power price forecast and other assumption changes +4p reduction in blended discount rate of 0.4% to reflect market valu
Slide 11: Net Asset Value Since IPO
Net Asset Value Since IPO 22.1% growth(1) since listing v RPI growth of 17.4% “6p dividend, increasing with RPI inflation and real NAV preservation’’ Note: (1) per share and adjusted for accrued dividends 11
Slide 12: Investment Performance
Investment Performance TSR since IPO of 115.1%(1) Strong, consistent return with correlation to inflation Note: (1) from IPO to 31 December 2019 12
Slide 13: Portfolio and Asset Management
Portfolio and Asset Management
Slide 14: Portfolio Overview
Portfolio Overview Generating sufficient electricity to power 940,000 homes 14
Slide 15: Portfolio Overview
Portfolio Overview Well-diversified generating portfolio of 979MW - third largest owner of UK onshore wind 15 Note: breakdown by value as at 31 December 2019
Slide 16: Asset Management and Performance Enhancement
Asset Management and Performance Enhancement ▪ Extended cut-out and power performance optimisation ▪ Installation of blade serrations and blade cleaning Generation ▪ Performance analysis Optimisation ▪ Whole wind farm control to maximise wind farm return over individual turbine return ▪ PPA renegoti
Slide 17: Acquisitions
Aly, GREENCOAT — Diz — Acquisitions
Slide 18: Acquisitions Overview
Acquisitions Overview Acquisition strategy delivers only high quality assets for investors When these are not available or are over-priced, we don’t buy assets ▪ UKW not linked to a specific developer so can buy from the whole market ▪ Acquisitions selected from 15(1) sellers (many assets in the mar
Slide 19: Selecting the Best Value Investments
Selecting the Best Value Investments £60bn Market Asset Identification and Target Selection Age, capacity, load factor, seller price expectation 2013 2014 2015 2016 2017 2018 2019 Initial Diligence and Pricing 47 37 48 40 41 63 40 UKW structural advantages, negotiation Detailed Due Diligence Board i
Slide 20: Acquisitions
Acquisitions Month of Wind Farm Seller Net MW Investment Comment Acquisition Stronelairg 80.9 Second large co-investment with SSE and March 2019 SSE £452m Dunmaglass 33.4 minority pension fund alongside Tom nan Clach July 2019 Belltown Power 29.3 £145m First CFD project 114.3 £598m Scheduled to beco
Slide 21: Stronelairg, Dunmaglass and Slieve Divena II
Stronelairg, Dunmaglass and Slieve Divena II Stronelairg Dunmaglass ▪ UKW’s second large SSE co-investment with minority pension fund alongside ▪ Acquired 49.9% from SSE (£452m/35.5% UKW and £183m/14.4% GC managed account) ▪ 228MW capacity SSE is seller, PPA offtaker ▪ 94MW capacity ▪ 13 x Vestas V1
Slide 22: CFD and Subsidy Free Investments
CFD and Subsidy Free Investments Douglas West (100%) ▪ Acquired from Blue Energy ▪ 45MW capacity ▪ Tom nan Clach (75%) ▪ July 2021 target operations commencement PPA - TBD Glen Kyllachy (100%) ▪ Acquired from Innogy ▪ 48.5MW capacity ▪ Oct 2021 target operations commencement ▪ PPA – TBD ▪ Acquired f
Slide 23: Strategy and Ongoing Market Development
Strategy and Ongoing Market Development ROC projects UKW cashflows Subsidy free and CFD projects Wholesale power price Wholesale cashflow Wholesale power power price Wholesale price cashflow power cashflow price cashflow CFD cashflow ROC Fixed and cashflow indexed cashflow CFD cashflow ▪ As with 201
Slide 24: Secondary Market - Continued Opportunities to Grow
Secondary Market - Continued Opportunities to Grow 1000 979MW 900 UKW net generating capacity (MW) 800 700 600 500 400 300 200 127MW 100 0 30,000 £60bn market 25,000 20,000 15,000 £20bn market 10,000 UK offshore capacity (MW) 5,000 UK onshore capacity (MW) 0 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Slide 25: ESG
WH, GREENCOAT. (& Diz — ESG
Slide 26: Environmental, Social and Governance
Environmental, Social and Governance ▪ Portfolio produces enough renewable electricity to power 940,000 homes ▪ Recycling of capital enabling more renewable generation capacity to be built out Environmental ▪ Over 1.2m tonnes of CO2 per annum will be avoided compared to thermal generation ▪ Co-exist
Slide 27: Summary
GREENCOAT — UK pas a Summary
Slide 28: 2019 Highlights
2019 Highlights 2,385GWh Power generation 11% below budget due to low wind resource Power generation £127.7m Strong cash generation Net cash generation £100.4m / 6.94p per share Dividend in line with target Dividends declared with respect to the period 979MW 3 investments (£598m), including first CF
Slide 29: Appendix
ll, GREENCOAT. (& Diz — Appendix
Slide 30: Greencoat UK Wind
Greencoat UK Wind ▪ Greencoat UK Wind acquires and operates UK wind farms. The cash generated by these assets is used primarily to pay a robust, premium dividend to shareholders. The Simple remainder is reinvested to ensure capital is preserved in real terms. ▪ Simple structure, UK domiciled with a
Slide 31: Diversified Asset Portfolio (1)
Diversified Asset Portfolio (1) Group Acquisition Total Commercial ROCs / Forecast Net Load Wind Farm Country Turbines PPA Ownership Net MW(1) MW Operations Date Date MWh Factor(2) Stake Bicker Fen England Senvion EDF 26.7 80% 21.3 Sep-08 Oct-17 1.0 24.0% Bin Mountain N Ireland GE SSE 9.0 100% 9.0 J
Slide 32: Diversified Asset Portfolio (2)
Diversified Asset Portfolio (2) Group Acquisition Total Commercial ROCs / Forecast Net Load Wind Farm Country Turbines PPA Ownership Net MW(1) MW Operations Date Date MWh Factor(2) Stake Cotton Farm England Senvion Sainsbury’s 16.4 100% 16.4 Mar-13 Oct-13 1.0 36.3% Crighshane N Ireland Enercon Energ
Slide 33: Diversified Asset Portfolio (3)
Diversified Asset Portfolio (3) Group Acquisition Total Commercial ROCs / Forecast Net Load Wind Farm Country Turbines PPA Ownership Net MW(1) MW Operations Date Date MWh Factor(2) Stake Lindhurst England Vestas RWE 9.0 49% 4.4 Oct-10 Nov-13 1.0 30.1% Little Cheyne England Nordex RWE 59.8 41% 24.5 M
Slide 34: Diversified Asset Portfolio (4)
Diversified Asset Portfolio (4) Group Acquisition Total Commercial ROCs / Forecast Net Load Wind Farm Country Turbines PPA Ownership Net MW(1) MW Operations Date Date MWh Factor(2) Stake Screggagh N Ireland Nordex Energia 20.0 100% 20.0 May-11 Jun-16 1.0 27.2% Sixpenny Wood England Senvion Statkraft
Slide 35: Power Price
Power Price Demand Supply Energy efficiency Gas is the marginal generator: Electric vehicles Demand in China and India 40p/th = £25/MWh Electrification of heat Gas Cost of extraction Absolute level of demand not £40/t = £15/MWh important in the long term Carbon Focus on climate change Generation mix
Slide 36: NAV Sensitivities
Discount rate (+/- 0.5%) Inflation rate (-/+ 0.5%) Energy yield (10 year P90/P10) Power price (-/+ 10%) Asset life (-/+ 5 years) -20p -15p Impact on NAV -5p Op 5p pence per share 36
Slide 37: Simple Capital Structure
Simple Capital Structure 2.77% average cost of debt Revolving Credit Facility currently undrawn 37
Slide 38: Disclaimer
Disclaimer Important Information This presentation and its contents are confidential. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES (OR TO ANY US PERSON), AUSTRALIA, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, CANADA, JAPAN, ANY MEMBER STATE OF TH