Greencoat UK Wind Plc · LSE:UKW
Greencoat UK Wind — H1 2023 Earnings Presentation
40 slides from Greencoat UK Wind's earnings presentation, July 2023
Slide 1: Half Year Results
Half Year Results July 2023 For Professional Investors Only
Slide 2: H1 2023 Headlines
H1 2023 Headlines H1 2023 ▪ UKW H1 2023 NAV resilient at 165.8p/share (vs 167.1p/share at Dec 2022) financial ▪ £204m net cash generation with elevated power prices helping offset low wind resource highlights ▪ H1 dividend cover of 2.1x ▪ £640m new term loan facilities ▪ £150m pre-payment of 2023 ma
Slide 3: Simple Business Model
Simple Business Model 6-46 wind Generating capacity UKW generates a net 10% farms increased from 127 to 1,652MW(1) since IPO Total reinvestment return to investors Equity ▪ Dividend increases with RPI Total renewable 20.8TWh (10 consecutive annual electricity produced increases since IPO) Debt ▪ Rei
Slide 4: Track Record of Consistent Delivery
Track Record of Consistent Delivery Period Net Cash Generation Cash Dividend Reinvestment Dividend Cover 2013(1) £21.6m £3.9m £17.7m 2014 £32.4m £20.8m £11.6m 1.6x 2015 £48.3m £35.9m £12.4m 1.3x 2016 £49.0m £35.1m £13.9m 1.4x 2017 £80.1m £52.3m £27.8m 1.5x 2018 £117.3m £72.3m £45.0m 1.6x 2019 £127.7
Slide 5: Financial Performance
GREENCOAT UK WIND Financial Performance
Slide 6: Cash Flow
Cash Flow Robust dividend cover of 2.1x in H1 2023 6
Slide 7: Net Asset Value
Net Asset Value ▪ Cash generation in period of 8.8p/share covered dividend payments of 4.1p/share by 2.1x ▪ Power prices updated to reflect lower forward curves over 2023-2026 with a -6.8p/share impact on NAV ▪ Increase in 2023 RPI inflation assumptions, adding 8.1p/share to NAV ▪ 1% higher discount
Slide 8: Key Themes
GREENCOAT UK WIND Key Themes
Slide 9: Stable Debt Structure
Stable Debt Structure ▪ £640m of new term loans drawn from existing and new lenders to: ▪ Prepay £150m term loans maturing in Nov and Dec 2023 ▪ Repay £200m drawn RCF ▪ No further refinancing requirements until late 2024, with maturities on corporate debt running to 2031 ▪ Gearing was 34% of GAV ▪ 4
Slide 10: Conservative Power Prices Assumed
Conservative Power Prices Assumed Modelled power price ▪ Modelled conservative 20% discount(2) applied to all forecast periods (forward curve and long term forecasts) ▪ Short term power prices updated to reflect forward curve (as at 3 July) for 2023-26 ▪ Long term power prices provided by leading ma
Slide 11: Inflation Protection
Inflation Protection UKW year end inflation assumptions Inflation impacts on UKW revenue 2031 Revenue April 2023 April 2024 Index 2023 2024-2030 Inflation linkage onwards stack impact assumption Power price Implicit inflation link RPI 7% 3.5% 2.5% Explicitly increases annually on ROC 1 April based o
Slide 12: Portfolio Returns
Portfolio Returns ▪ Discount rates across the rest of the sector must increase materially for the higher UK interest rate environment ▪ UKW discount rate has been increased by a further 1% in 30 June 2023 NAV assumptions ▪ UKW discount rates now up 2% in last 12 months and 1% above IPO levels ▪ The
Slide 13: Portfolio and Acquisitions
GREENCOAT UK WIND Portfolio and Acquisitions
Slide 14: Acquisitions Overview
Acquisitions Overview ▪ UKW not linked to a specific developer so can buy from the whole market Independence ▪ Transacted with 21(1) sellers to date and Execution Credibility ▪ Repeat business without competition in a number of cases: 22 of 49(1) assets acquired/announced have been bilateral deals ▪
Slide 15: London Array
London Array Seller ▪ Ørsted Capacity ▪ 630MW Turbines ▪ 175 x Siemens SWT 120 3.6MW Commercial Operations Date ▪ May 2013 PPA ▪ Ørsted until Dec 2025 Turbine O&M ▪ RWE (10yr contract from Feb 2023) O&M Management ▪ RWE (10yr contract from Feb 2023) ▪ Located in the Thames Estuary, 12 miles off the
Slide 16: Other Acquisitions and Commitments
Other Acquisitions and Commitments Dalquhandy South Kyle Kype Muir Extension Seller ▪ BayWa Seller ▪ Vattenfall Seller ▪ Banks Renewables Capacity ▪ 42MW Capacity ▪ 235MW Capacity ▪ 67MW Turbines ▪ Vestas V136 4.2MW Turbines ▪ Nordex N133 4.8MW Turbines ▪ Nordex 3.6MW & 4.8MW Commercial Operations C
Slide 17: Investment Portfolio
Investment Portfolio(1) Generating sufficient electricity to power 2.2(1) million homes Note: (1) includes London Array, South Kyle and Kype Muir Extension 17
Slide 18: ESG
GREENCOAT UK WIND ESG
Slide 19: Environmental, Social and Governance
Environmental, Social and Governance ▪ Portfolio produces enough renewable electricity to power 2.2 million(1) homes ▪ Recycling of capital enabling more renewable generation capacity to be built out ▪ 2.5 million(1) tonnes of CO2 per annum will be avoided vs thermal generation Environmental ▪ Co-ex
Slide 20: Summary
GREENCOAT UK WIND Summary
Slide 21: H1 2023 Headlines
H1 2023 Headlines H1 2023 ▪ UKW H1 2023 NAV resilient at 165.8p/share (vs 167.1p/share at Dec 2022) financial ▪ £204m net cash generation with elevated power prices helping offset low wind resource highlights ▪ H1 dividend cover of 2.1x ▪ £640m new term loan facilities ▪ £150m pre-payment of 2023 ma
Slide 22: Appendix A Introduction to UKW
Appendix A Introduction to UKW
Slide 23: 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 remainder is reinvested to ensure capital is preserved in real terms, providing a net Simple return to investors of 1
Slide 24: UKW – over 10 years of delivery
UKW – over 10 years of delivery ▪ 20.8TWh of renewable electricity generated ▪ 8.3m tonnes of CO2 avoided ▪ £1,642m of cash generated ▪ £836m of dividends paid or declared ▪ £806m of excess cash generation reinvested ▪ 10 successive years of RPI increasing dividends ▪ 49 investments made from over 4
Slide 25: Strategy and Ongoing Market Development
Strategy and Ongoing Market Development ▪ UKW expects to continue to make ROC investments ROC Subsidy free UKW cash flows ▪ There will be further opportunities projects and CFD projects Merchant to invest in complementary CFD power price cash and subsidy free investments Merchant power Merchant powe
Slide 26: Secondary Market - Continued Opportunities to Grow
Secondary Market - Continued Opportunities to Grow UKW net generating capacity (MW) ▪ Government policy has 1800 1,652MW become increasingly 1600 supportive in a drive for 1400 energy security and low 1200 carbon power 1000 800 ▪ Offshore wind – further 600 drive to accelerate 400 utilisation of UK’
Slide 27: ESG Developments and Reporting
ESG Developments and Reporting ▪ Scope 1-3 reporting TCFD ▪ Scenario analysis reporting for the second time ▪ Article 9 fund SFDR ▪ Annexes 1, 3 and 5 published ▪ Schroders Greencoat signatory since 2016 UN PRI ▪ A score in Strategy and Governance and A+ in Infrastructure in 2020 Net Zero ▪ Schroder
Slide 28: Highly Experienced Investment Management Team
Highly Experienced Investment Management Team Stephen Lilley – 26 years of investment experience in Laurence Fumagalli – 26 years of investment and the infrastructure, utility and renewables sectors in financing experience, with a focus on UK wind addition to 6 years in the nuclear industry Javier S
Slide 29: Independent UK Board
Independent UK Board Lucinda Riches – Chairman Ex-Head of Equity Capital Markets at UBS ECM experience Nick Winser – Senior Independent Director Ex-CEO of National Grid UK Policy and network operations experience Caoimhe Giblin – Director, Audit Committee Chairman Commercial Director at ElectroRoute
Slide 30: Net Asset Value since IPO
Net Asset Value since IPO 67% growth(1) since listing vs RPI growth of 51% Annual dividend increasing with RPI inflation and real NAV preservation Note: (1) per share and adjusted for accrued dividends 30
Slide 31: Investment Performance
Investment Performance Outperformed the FTSE 250 since listing Note: (1) from IPO to 30 June 2023 31
Slide 32: Investment Performance
Investment Performance Outperformed the sector Note: (1) from IPO to 30 June 2023 32
Slide 33: Appendix B Wind Farm Economics
Appendix B Wind Farm Economics
Slide 34: Wind Energy Value Chain
Wind Energy Value Chain Wind farm owners sell electricity and green benefits to offtakers under Power Purchase Agreements Offtakers supply electricity to end consumers Wind Farm Owner Offtaker Cash paid for green benefits and power ▪ Electricity and green ▪ Wind turbine benefits are sold to ▪ Offtak
Slide 35: Power Curve
Power Curve Cut-in wind Average Rated wind Storm protection speed wind speed speed shut-down 2,500 -o—o—_ o_o 0-0 000 2,000 > 1,500 z 2 S £ S ° 1,000 500 ty) T 1} 3 4 ~°5 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Wind Speed (m/s) 35
Slide 36: Illustrative Onshore Wind Farm Economics (1)
Illustrative Onshore Wind Farm Economics (1) Simple and Transparent £/MWh Revenue 100 Turbine O&M 10 Rent 5 Grid 5 Other 5 Total O&M 25 Free Cash Flow 75 High EBITDA margin means revenue drivers are key Volume x Price Notes: All numbers are purely illustrative and do not reflect the operation or per
Slide 37: Illustrative Onshore Wind Farm Economics (2)
Illustrative Onshore Wind Farm Economics (2) Volume Price ▪ Operational history removes wind-to-energy conversion Indicative Price: £130/MWh Revenue Element risk leaving wind speed as the key variable ▪ Standard deviation of wind speed (single year) = 6%(1) ▪ Standard deviation of wind energy (singl
Slide 38: Stable RPI Linked Dividend with Real NAV Preservation
Stable RPI Linked Dividend with Real NAV Preservation Individual Wind Farm – Dividend Cover Protects Against Downsides UKW – Reinvestment Preserves Real NAV Notes: All charts are purely illustrative and do not reflect the operation or performance of UKW. Chart assumptions: no further equity raise; i
Slide 39: Disclaimer (1)
Disclaimer (1) 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 O
Slide 40: Disclaimer (2)
Disclaimer (2) Any subsequent offer may only be made in Jersey where the offer is valid in the United Kingdom or Guernsey and is circulated in Jersey only to persons similar to those to whom, and in a manner similar to that in which, it is for the time being circulated in the United Kingdom or Guern