Greencoat UK Wind Plc · LSE:UKW
Greencoat UK Wind — Investor Day (May 2024)
34 slides from Greencoat UK Wind's investor day presentation, May 1, 2024
Slide 1: Capital Markets Event
SCHRODERS GREENCOAT Capital Markets Event 1 May 2024
Slide 2: Welcoming Remarks
SCHRODERS GREENCOAT Welcoming Remarks 1 May 2024 Stephen Lilley
Slide 3: Highly experienced team
Highly experienced team Investment Managers Stephen Lilley – nearly 30 years of investment experience in the Matt Ridley – 22 years of investment management experience, infrastructure, utility and renewables sectors in addition to 6 years in including 16 years focused on UK wind the nuclear industry
Slide 4: Purity, Performance & Prospects
SCHRODERS GREENCOAT Purity, Performance & Prospects 1 May 2024 Matt Ridley Faheem Sheikh
Slide 5: UKW – addressing a convergence of needs
UKW – addressing a convergence of needs Designed to deliver RPI linked dividend and real Addressing the growing need for asset recycling NAV growth as the market scaled Providing long term growth and inflation Investors Industry Allowing utilities to free-up capital to build protection new p
Slide 6: The UK’s journey to net zero
The UK’s journey to net zero First decarbonise the grid, then everything else Electricity supply 11% Buildings and product uses 20% Agriculture 12% Fuel supply, waste and Domestic transport other 29% 14% Industry 14% Total 100% Transport 27% Business17% Multiple sources of emissions must all be net
Slide 7: UKW’s role in the journey to net zero
UKW’s role in the journey to net zero Carbon intensity in the balanced net zero pathway1 600 2,500 500 2,000 400 gCO2 per kWh 1,500 MW 300 1,000 200 500 100 0 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 UKW Capacity (right axis) Historical carbon intensity Balanced pathway Decarbonise the grid an
Slide 8: Simple model
Simple model 6-49 wind farms Generating capacity increased from 127 to 2,007MW since IPO Equity Total reinvestment 25.0TWh Total renewable electricity produced Debt £1,971m Total cash generated £954m £1,017m Total dividends paid £1bn dividends paid and £1bn reinvestment Note: from IPO to 31 March 20
Slide 9: Sustainable growth since IPO
Sustainable growth since IPO 2013 2017 2020 2023 Operating capacity 127MW 694MW 1,173MW 2,007MW Scaling the business Gross Asset Value £255m £1,409m £3,330m £6,169m Avoided carbon 0.1m tCO2 0.8m tCO2 1.5m tCO2 2.5m tCO2 A growing contribution emissions per annum to decarbonisation No. homes powered
Slide 10: Resilience of the business model
Resilience of the business model 2,000 3.5 Dividend cover (x) £m 3.2 1,800 3.0 1,600 £906m 1,400 reinvestment (1) 2.5 2.1 1,200 1.9 2.0 1,000 1.6 1.6 1.5 1.3 1.4 1.4 1.5 800 1.3 600 1.0 400 0.5 200 0 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Dividend cover Cumulative net cash generati
Slide 11: Track record of delivery
Pence 98 104 110 116 122 128 134 140 146 152 158 164 170 Mar-13 NAV vs RPI Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Track record of delivery Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 NAV per share (ex dividend) Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 RPI (rebased to 98
Slide 12: Portfolio returns
Portfolio returns 12.0% 10% net return to investors 10.0% RPI inflation linked 8.0% Almost 6% ahead of the 10-year gilt at 4.2%(1) 6.0% The 10% net total return to investors is split between: 4.0% a 6% dividend yield on NAV 2.0% and real NAV preservation from excess cash flow reinvestmen
Slide 13: Power prices
Power prices Modelled power price (1) Dividend cover is robust in extreme downside power price scenarios Note: (1) power prices and sensitivities are 2022 real, post 10-20% discount and pre PPA discount. 13
Slide 14: Overview of debt
Overview of debt Weighted average Total debt £2.35bn 4.6% cost of debt Key considerations Predominantly term date of varying Annual amortising maturities Amortising debt £580m £50m payments Offers flexibility Self-imposed cap of 40% 2023 successful Drawn RCF £400m £640m Strong demand from le
Slide 15: Term debt refinancing
Term debt refinancing £m 400 350 300 250 200 150 100 50 0 2024 2025 2026 2027 2028 2029 2030 2031 Excess dividend cover Maturing term debt Self funding model mitigates refinancing risk of maturing term debt 15
Slide 16: Capital allocation
Capital allocation Over £1bn of excess cashflow before potential disposal proceeds in next 5 years Acquisitions, investments Dividends Share buybacks Repay debt and disposals Pay down debt with free Enhanced Q4 2023 £100m buyback Graded against accretion cash flow or disposal dividend programme from
Slide 17: Greencoat UK Wind delivering as designed
Greencoat UK Wind delivering as designed Simple business model designed from first principles Purity Remains relevant to investors, industry and society 10-year track record of delivery Performance £1bn of dividends, £956m reinvested The leader in its peer group – 152%(1) TSR since launch
Slide 18: Delivering Value from our Assets
SCHRODERS GREENCOAT Delivering Value from our Assets 1 May 2024 Pablo Hernandez Javier Serrano Stephen Lilley
Slide 19: Life management objectives
Life management objectives Substantiate life Asset assumptions including asset life, assumptions in energy yield, availability, revenue asset valuations streams and Opex Manage asset Maximising reliability and extending integrity and asset life while mitigating risks and operational risks ensuri
Slide 20: Asset life assumptions
Asset life assumptions Climatic conditions at a project site (wind speed and turbulence intensity) are typically less severe than those specified by design classification Extreme loading events are typically not expected to be the key lifetime driver of cumulative loading Turbine selection for
Slide 21: Asset life assumptions
Asset life assumptions We undertook an analysis looking at turbine locations, material properties and site specific conditions This chart represents a specific UKW asset. Based on actual site conditions and condition of key components and their material properties, a more accurate failure rate p
Slide 22: Asset integrity – safe longer term operations
Asset integrity – safe longer term operations We developed with DNV a system that identifies and quantifies the risks associated to the extension of life for a series of components, providing inspection and test instructions to monitor and mitigate such risks The risk register details the ad-hoc
Slide 23: Asset integrity – operational risk management
Asset integrity – operational risk management Risk ratings are updated after asset interventions Measuring turbine component risks to prioritise maintenance interventions 23
Slide 24: End of life - blade recyclability
End of life - blade recyclability We have assessed the recyclability of a typical turbine - more than 80% is currently recyclable We have partnered with two leading research institutions to improve recyclability practices The University of Edinburgh project aims to turn decommissioned blade ma
Slide 25: Active management driving shareholder value
Active management driving shareholder value Total value added Key considerations Generation - increasing output Revenue - being paid more (for output) Opex - paying less (for input) Assumptions - asset-level changes to expectations Total value added to date £140m (to the end of last year) No
Slide 26: Asset enhancement and optimisation
Asset enhancement and optimisation Walney turbine controllers upgrade, 2% AEP increase Energy yield Clyde power curve upgrades, 2.8% increase optimisation Andershaw power performance optimisation and extended cut-out, 0.6% AEP increase Additional Ancillary services in NI (DS3), £4m NAV uplif
Slide 27: Monitoring and reporting
Monitoring and reporting Performance and downtime analysis Health and safety reporting Quarterly board reporting Annual report and ESG Hands-on performance monitoring for short term decision-making 27
Slide 28: Safety culture - health and safety is paramount
Safety culture - health and safety is paramount Strong governance – Greencoat asset managers are directors of the SPVs, qualified in-house team (NEBOSH, IOSH), HSE policies in place with H&S directors appointed, independent H&S advisers Membership of H&S organisations SafetyOn, G+ and the Energy
Slide 29: Prioritisation using AI
Prioritisation using AI We were looking to classify H&S incidents on site into different risk categories, without the need for historical data Large volume of reports and data, some unstructured Our approach was to use a large language model (LLM) due to the lack of historical data The outcome
Slide 30: Generation analysis – variation to budget
Generation analysis – variation to budget Generation vs Wind speed 15% 10% 5% 0% -5% -10% -15% -20% -25% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 UK weighted average wind speed (variation to long term mean) Expected generation UKW generation (variation to budget) Short term variability
Slide 31: Generation analysis – variation to budget
Generation analysis – variation to budget Generation vs Wind speed 15% 10% 5% 0% -5% -10% -15% -20% -25% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 UK weighted average wind speed (variation to long term mean) Expected generation UKW generation (variation to budget) UKW generation vs Expe
Slide 32: Active asset management driving shareholder value
Active asset management driving shareholder value Extending asset Improving Optimising Robust Opex life safely energy yields revenue streams management Running for Generating Getting paid Paying less longer more more 32
Slide 33: 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 34: 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