Greencoat UK Wind Plc · LSE:UKW
Greencoat UK Wind — FY2018 Earnings Presentation
40 slides from Greencoat UK Wind's earnings presentation, February 2019
Slide 1: Annual Results February 2019
Annual Results February 2019
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Slide 3: Simple Low Risk Proven
▪ 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 remainder is reinvested to ensure Simple capital is preserved in real terms. ▪ Simple structure, UK domiciled with a strong board, wind
Slide 4: 2018 Highlights
2018 Highlights ▪ Power generation of 2.0TWh; 6% below budget due to low wind resource ▪ Net cash generation of £117.3m; on budget due to higher than budgeted power prices ▪ Dividends of £74.8m (6.76p per share) declared with respect to the year; 6.94p target for 2019 (increasing by RPI) ▪ 4 investm
Slide 5: Post Balance Sheet Events
Post Balance Sheet Events ▪ Revolving Credit Facility increased to £525m ▪ 2 new investments (114MW) executed in January with completion targeted for end March 2019 (£452m) ▪ Portfolio will increase to 34 investments ▪ Generating capacity will increase to 950MW ▪ GAV will increase to £2.3bn ▪ £131m
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Slide 7: Simple Model
Simple Model 6-32 wind Generating capacity increased farms from 127 to 836MW since IPO Total reinvestment Equity 6.0TWh Total power produced Debt £348.7m Total cash generated £109.2m £239.5m Total dividends paid or declared “6p dividend, increasing with RPI inflation and real NAV preservation’’ 7 No
Slide 8: Wind Resource and Production
0 1 2 3 4 5 6 7 January February March April May June July August Production: + 8% Wind Speed: + 3% 2013(2) September October November December Annual average January February March April May June July August 2014 - 3% - 2% September October November December January February March 10 year average A
Slide 9: Track Record of Consistent Delivery
Track Record of Consistent Delivery Period Production Cash Generation Dividend(1) Dividend Cover(2) RPI NAV Growth 2013(3) 291.5GWh £21.6m £14.2m (4.50p) 1.8x 1.9% 2.5% 2014 564.6GWh £32.4m £24.8m (6.16p) 1.6x 1.6% 2.5% 2015 799.3GWh £48.3m £29.6m (6.26p) 1.7x 1.2% 0.5% 2016 978.1GWh £49.0m £38.8m (
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Slide 11: Operational and Financial Performance
Operational and Financial Performance
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Slide 13: Operational Performance
Operational Performance Notable issues affecting portfolio availability were: ▪ Maerdy – blade repairs as a result of a Siemens worldwide serial defect ▪ Cotton Farm – background noise monitoring (completed) ▪ Little Cheyne – ongoing blade bolt replacements Portfolio generation of 2,003GWh (6% below
Slide 14: Financial Performance (1)
Financial Performance (1) 14
Slide 15: Financial Performance (2)
Financial Performance (2) 15
Slide 16: Discount Rate
Discount Rate ▪ Portfolio IRR of 7.7% (over 25 years) remains unchanged from 2017, but one (lower) discount rate is now applied to fixed cashflows and another (higher) discount rate is applied to variable cashflows ▪ No change in GAV (over 25 years), and hence no change in NAV ▪ Older assets slightl
Slide 17: Net Asset Value
Net Asset Value ▪ Portfolio DCF valuation increased by £89.1m ▪ 8p per share ▪ +7p asset life ▪ +2p RPI ▪ +1p other (*) ▪ -2p depreciation ▪ Long term power price: no change in PV terms * O&M contracts renewed at lower cost + revenue from grid services and Balancing Mechanism ▪ Asset life assumption
Slide 18: Net Asset Value Since IPO
Net Asset Value Since IPO 10.8% growth(1) in 2018 v RPI growth of 2.7% 25.8% growth(1) since listing v RPI growth of 14.8% “6p dividend, increasing with RPI inflation and real NAV preservation’’ 18 Note: (1) per share and adjusted for accrued dividends
Slide 19: Investment Performance
Investment Performance TSR in 2018 of 8.3% TSR since IPO of 71.5% Strong, consistent return with correlation to inflation 19
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Slide 21: Acquisitions and Portfolio
GREENCOAT - UK WIND ~ Acquisitions and Portfolio
Slide 22: Acquisitions Overview
Acquisitions Overview Acquisition strategy delivers only high quality assets for investors When these are not available or over-priced, we don’t buy assets ▪ UKW not linked to a specific developer so can buy from the whole market ▪ Acquisitions selected from 14(1) sellers (many assets in the market)
Slide 23: Acquisitions
Acquisitions Month of Net Investment Wind Farm Seller Comment Acquisition MW Brockaghboy March 2018 ERG 47.5 £164m Second largest wind farm in NI Clyde May 2018 SSE 44.0 £113m Exercise of option (19.775% to 28.2%) Church Hill Irish Infra Fund 18.4 December 2018 £87m Fund exit Crighshane and Energia
Slide 24: Ongoing Market Development
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 ▪ Given the size of the op
Slide 25: Secondary Market - Continued Opportunities to Grow
Secondary Market - Continued Opportunities to Grow 1000 950MW 900 800 UKW net generating capacity (MW) 700 600 500 400 300 200 127MW 100 0 30,000 £75bn market 25,000 £50bn market 20,000 15,000 £20bn market UK offshore capacity (MW) 10,000 5,000 UK onshore capacity (MW) 0 Mar-13 Mar-14 Mar-15 Mar-16
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Slide 27: Portfolio Overview
Portfolio Overview Power for 750,000 homes (900,000 including Stronelairg and Dunmaglass) 27
Slide 28: Portfolio Overview
Portfolio Overview Well-diversified portfolio 28 Note: breakdown by value as at 31 December 2018
Slide 29: Summary
GREENCOAT - UK WIND ~ Summary
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Slide 31: Summary
Summary ▪ Net cash generation on budget at £117.3m; lower wind resource but higher power prices than budget ▪ Dividends of £74.8m (6.76p per share) declared with respect to the year; 6.94p target for 2019 (increasing by RPI) ▪ 4 investments (£364.4m) taking generation capacity to 836MW ▪ £171m commi
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Slide 33: Appendix
GREENCOAT - UK WIND ~ Appendix
Slide 34: 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 23.6% Bin Mountain N Ireland GE SSE 9.0 100% 9.0 J
Slide 35: 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 36.0% Crighshane N Ireland Enercon Energ
Slide 36: 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 37: 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 28.7% Sixpenny Wood England Senvion Statkraft
Slide 38: Capital Structure
Capital Structure ▪ Pari passu debt governed by intercreditor deed ▪ £525m Revolving Credit Facility ▪ £300m 3 year ▪ £225m 1 year ▪ 6 tranches of long term debt with bullet maturities Longer term fixed rate debt with multiple maturities to manage refinancing risk 38
Slide 39: NAV Sensitivities
NAV Sensitivities The base case portfolio discount rate is 8.1% (unlevered). The base case long term RPI assumption is 3.0% (1.0% above the long term 2.0% CPI target). Base case energy yield assumptions are P50 (50% probability of exceedance) forecasts produced by expert consultants based on long te
Slide 40: Important Information
[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