Greencoat UK Wind Plc · LSE:UKW
Greencoat UK Wind — FY2020 Earnings Presentation
44 slides from Greencoat UK Wind's earnings presentation, February 2021
Slide 1: Annual Results
Annual Results February 2021
Slide 2: 2020 Highlights
2020 Highlights 2,952GWh Power generation 3% below budget Power generation £145.2m Strong cash generation Net cash generation £118.7m / 7.1p per share Dividend in line with target Dividends declared with respect to the period 1,173MW £914m invested in Slieve Divena II, Walney, Humber Gateway and inv
Slide 3: Simple Model
Simple Model 6-38 wind Generating capacity increased farms from 127 to 1,173MW since IPO Total reinvestment Equity 11.3TWh Total power produced Debt £621.6m Total cash generated £163.1m £458.5m Total dividends paid or declared “6p dividend, increasing with RPI inflation and real NAV preservation’’ N
Slide 4: Wind Resource and Generation
Wind Resource and Generation 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 July May May May May May May May May September November September November September November September November September November September November Septemb
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: ▪ Stroupster – various unplanned grid outages ▪ Dunmaglass – delay in remediation of turbine faults due to O&M staff shortage ▪ Tom nan Clach – H&S incident causing site to be de-energised ▪ Stronelairg – planned 3 month g
Slide 8: Financial Performance (1)
Financial Performance (1) 8 Note: (1) The operating cash flow of the Group and wind farms SPVs
Slide 9: Financial Performance (2)
For the year ended 31 December 2020 Net Cash Generation — Breakdown £'000 Revenue 280,813 Operating expenses (92,673) Tax (11,993) Other 6,791 Wind farm cashflow 182,938 Management fee (17,112) Operating expenses (2,180) Ongoing finance costs (19,611) Other 329 Group cashflow (38,574) VAT (Group and
Slide 10: Net Asset Value
Net Asset Value Decrease in portfolio valuation of £31.9m (2p per share): -1p changes in macroeconomic assumptions -5p reduction in long term power price forecasts +4p reduction in portfolio discount rate +1p portfolio optimisation initiatives -1p other Blended portfolio discount rate now 6.9% unlev
Slide 11: Net Asset Value Since IPO
Net Asset Value Since IPO 22.9% growth(1) since IPO vs RPI growth of 18.8% “6p dividend, increasing with RPI inflation and real NAV preservation’’ 11 Note: (1) per share and adjusted for accrued dividends
Slide 12: Investment Performance
Investment Performance TSR since IPO of 101.8%(1) Strong, consistent return with correlation to inflation 12 Note: (1) from IPO to 31 December 2020
Slide 13: Portfolio and Asset Management
Portfolio and Asset Management
Slide 14: Portfolio Overview
Portfolio Overview Generating sufficient electricity to power 1.2 million homes 14
Slide 15: Portfolio Overview
Portfolio Overview Well-diversified generating portfolio of 1,173MW – 5% market share Note: breakdown by value as at 31 December 2020 15
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
GREENCOAT | UK WIND. 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 ▪ Transacted with 18(1) sellers to date Independence ▪ UKW is not
Slide 19: Selecting the Best Value Investments
Selecting the Best Value Investments £70bn Market Asset Identification and Target Selection 2013 2014 2015 2016 2017 2018 2019 2020 Age, capacity, load factor, seller price expectation Initial Diligence and Pricing(1) 47 37 48 40 41 63 40 20 UKW structural advantages, negotiation Detailed Due Dilige
Slide 20: Acquisitions and Commitments Made in 2020
Acquisitions and Commitments Made in 2020 Month of Wind Farm Acquisition / Seller Net MW Investment Comment Commitment Acquisitions Slieve Divena II March 2020 SSE 18.8 £51m “Extension of Slieve Divena’ Walney September 2020 SSE 92.2 £350m Co-investment with Orsted Humber Gateway December 2020 RWE 8
Slide 21: Slieve Divena II
Slieve Divena II Previous Ownership ▪ SSE Capacity ▪ 18.8MW Turbines ▪ 8 x Enercon E-92 2.35MW Commercial Operations Date ▪ June 2017 PPA ▪ SSE until 2037 Turbine O&M ▪ Enercon O&M Management ▪ SSE ▪ Bilateral transaction – non-strategic asset sale ▪ “Extension” of the Slieve Divena wind farm that U
Slide 22: Walney
Walney Seller ▪ SSE Capacity ▪ 367.2MW Turbines ▪ 102 x Siemens 3.6MW ▪ Julv 2011 (phase 1) and June 2012 Commercial Operations Date (phase 2) PPA ▪ SSE until June 2021 Turbine O&M ▪ Orsted to October 2031 O&M Management ▪ Orsted ▪ Bilateral transaction for SSE’s 25.1% stake – non-strategic asset sa
Slide 23: Humber Gateway
Humber Gateway Seller ▪ RWE Capacity ▪ 219MW Turbines ▪ 73 x Vestas V112 3MW Commercial Operations Date ▪ June 2015 PPA ▪ EoN until March 2035 Turbine O&M ▪ RWE O&M Management ▪ RWE ▪ 49% of Humber Gateway acquired (UKW 38% and private funds managed by Greencoat Capital 11%) ▪ RWE will maintain 51%
Slide 24: South Kyle
South Kyle Seller ▪ Vattenfall Capacity ▪ 235MW Turbines ▪ 50 x Nordex N133 4.8MW Commercial Operations Date ▪ Target Q1 2023 PPA ▪ Vattenfall Turbine O&M ▪ Nordex O&M Management ▪ Vattenfall ▪ Bilateral acquisition from 16th seller ▪ South Kyle will be one of the UK’s largest subsidy free projects
Slide 25: Kype Muir Extension
Kype Muir Extension Seller ▪ Banks Renewables Capacity ▪ 67.2MW Kype Muir Ext ▪ 4 x Nordex N117 3.6MW Turbines ▪ 11 x Nordex N133 4.8MW Commercial Operations Date ▪ Target Q4 2022 ▪ Fixed power price agreement with PPA utility Turbine O&M ▪ Nordex O&M Management ▪ Banks Renewables ▪ Bilateral transa
Slide 26: Acquisitions and Commitments for 2021
Acquisitions and Commitments for 2021 Month of Wind Farm Seller Net MW Investment Comment Acquisition Acquisitions Braes of Doune March 2021 Hermes 36 £48m Bilateral purchase of remaining 50% Commitments £22m from Douglas West Blue Energy 45 Target completion in July 2021 cashflow Windy Rig Statkraf
Slide 27: Braes of Doune
Braes of Doune Seller ▪ Hermes Capacity ▪ 72MW Turbines ▪ 36 x Vestas V80 2MW Commercial Operations Date ▪ June 2007 PPA ▪ Centrica to June 2022 Turbine O&M ▪ Vestas O&M Management ▪ DNV-GL ▪ Part of IPO seed portfolio ▪ Restricted from purchasing Centrica’s 50% due to single investment limits at th
Slide 28: 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 202
Slide 29: Secondary Market - Continued Opportunities to Grow
Secondary Market - Continued Opportunities to Grow 1200 1,173MW UKW net generating capacity (MW) 1000 800 600 400 200 127MW 0 30000 £70bn market 25000 20000 15000 UK offshore capacity (MW) £20bn market 10000 5000 UK onshore capacity (MW) 0 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-
Slide 30: ESG
GREENCOAT | UK WIND. ESG
Slide 31: Environmental, Social and Governance
Environmental, Social and Governance ▪ Portfolio produces enough renewable electricity to power 1.2 million homes ▪ Recycling of capital enabling more renewable generation capacity to be built out Environmental ▪ Over 1.5m tonnes of CO2 per annum will be avoided compared to thermal generation ▪ Co-e
Slide 32: Summary
GREENCOAT | UK WIND. Summary
Slide 33: 2020 Highlights
2020 Highlights 2,952GWh Power generation 3% below budget Power generation £145.2m Strong cash generation Net cash generation £118.7m / 7.1p per share Dividend in line with target Dividends declared with respect to the period 1,173MW £914m invested in Slieve Divena II, Walney, Humber Gateway and inv
Slide 34: Appendix
GREENCOAT | UK WIND. Appendix
Slide 35: 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 36: 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 23.8% Bin Mountain N Ireland GE SSE 9.0 100% 9.0 J
Slide 37: 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 Crighshane N Ireland Enercon Energia 32.2 100% 32.2 Jul-12 Dec-18 1.0 22.6% Deeping St England Senvion EDF 16.4 8
Slide 38: 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 Little Cheyne England Nordex RWE 59.8 41% 24.5 Mar-09 Mar-13 1.0 28.7% Court Maerdy Wales Siemens Statkraft 24.0
Slide 39: 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 Slieve Divena N Ireland Nordex SSE 30 100% 30 Mar-09 Aug-17 1.0 22.1% Slieve Divena II N Ireland Enercon SSE 18.8
Slide 40: Power Price
Power Price Demand Supply Energy efficiency Demand in China and India Gas 45p/th = £30/MWh Electric vehicles Cost of extraction Electrification of heat Carbon Focus on climate change £40/t = £15/MWh Absolute level of demand not important in the long term Generation mix will be the same Network charg
Slide 41: 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 Pe -10p -5p Op 5p 10p pence per share 20p 41
Slide 42: Simple Capital Structure
Simple Capital Structure 2.51% average cost of long term debt £400m RCF fully drawn as at 31 December 2020 - to be reduced to £240m following February 2021 equity raise and acquisition of Braes of Doune 42
Slide 43: 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 44: 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