Greencoat UK Wind Plc · LSE:UKW

Greencoat UK Wind — FY2023 Earnings Presentation

40 slides from Greencoat UK Wind's earnings presentation, February 2024

  1. Slide 1: Annual Results

    Annual Results February 2024 For Professional Investors Only

  2. Slide 2: 2023 Highlights

    2023 Highlights £405.5m / 2.1x Strong cash generation and high dividend cover Net cash generation / dividend cover £3,794.0m / 164.1p Financials NAV robust with increased discount rates and lower power prices NAV per share down 1.8% in 2023 38% gross debt to GAV Total debt of £2,375m of which £600m

  3. Slide 3: Simple Model

    Simple Model 6-49 wind Generating capacity increased farms from 127 to 2,007MW since IPO Total reinvestment Equity 23.5TWh Total renewable electricity produced Debt £1,844m Total cash generated £906m £938m Total dividends paid “Annual dividend increasing with RPI inflation and real NAV preservation’

  4. 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(2) £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 £12

  5. Slide 5: Operational and Financial Performance

    Operational and Financial Performance

  6. Slide 6: Financial Performance (1)

    For the year ended 31 December 2023 Group and wind farm SPV cash flows £'000 Net cash generation 405,510 Dividends paid (197,043) Acquisitions (820,925) Acquisition costs (2,742) Share buybacks (9,439) Share buyback costs (56) Net amounts drawn under debt facilities 690,000 Upfront finance costs (4,

  7. Slide 7: Financial Performance (2)

    For the year ended 31 December 2023 Net Cash Generation - Breakdown £'000 Revenue 785,608 Operating expenses (198,611) Tax (62,661) SPV level debt interest (20,044) SPV level debt amortisation (47,129) Other 28,133 Wind farm cash flow 485,296 Management fee (24,993) Operating expenses (2,564) Ongoin

  8. Slide 8: Net Asset Value

    Net Asset Value  Power price impact on NAV largely a result of mechanical year-end update of forward curves for 2024-2026  Inflation was a positive to NAV over the course of 2023 £m 2.1x dividend cover NAV-accretive capital investment Movements in portfolio valuation and assumptions  CPI assumed

  9. Slide 9: Power Prices

    Power Prices Modelled power price (1)  Short term power prices updated to reflect forward curve (as at 29 December 2023) for 2024-26  A discount of 10-20% applied to power price assumptions in all years to reflect wind capture pricing  Portfolio achieved a price of £89.03/MWh in 2023 versus the £

  10. Slide 10: Portfolio Returns

    Portfolio Returns  UKW levered portfolio IRR increased 1% 12.0% for H1 2023 NAV. Levered portfolio IRR increased 2% in last two years and is 1% 10.0% above IPO levels  Return vs risk free rate is important, not 8.0% only market pricing  The 11% levered portfolio IRR results in 6.0% a 10% return t

  11. Slide 11: Investment Performance (1)

    Investment Performance (1) NAV vs RPI 64% growth(1) since listing vs RPI growth of 52% “Annual dividend increasing with RPI inflation and real NAV preservation’’ Note: (1) per share and adjusted for accrued dividends 11

  12. Slide 12: Investment Performance (2)

    Investment Performance (2) Significantly outperformed the FTSE 250 since listing Note: total return from IPO to 31 December 2023 12

  13. Slide 13: 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  Invest £290m in London Array  Gearing at 38% of GAV  4.6% weighted average cost of debt  Term debt maturities staggered to 2031

  14. Slide 14: Portfolio, Acquisitions and Capital Allocation

    Portfolio, Acquisitions and Capital Allocation

  15. Slide 15: Investment Portfolio

    Investment Portfolio Generating sufficient electricity to power 2.3(1) million homes Note: (1) homes powered based on average annual household energy consumption (2.7MWh p.a. (Ofgem)), and reflects the portfolio’s annual electricity generation 15

  16. Slide 16: Portfolio Overview

    Portfolio Overview Well diversified generating portfolio of 2,007MW – 7% market share Note: breakdown by value as at 31 December 2023 16

  17. Slide 17: Acquisitions Overview

    Acquisitions Overview  UKW not linked to a specific developer so Investments in 2023 Independence can buy from the whole market Dalquhandy £51.5m and Execution  Transacted with 21 sellers to date London Array £443.6m Credibility  22 of 49 assets acquired have been bilateral deals South Kyle £315.

  18. Slide 18: Acquisitions in 2023

    Acquisitions in 2023 London Array Dalquhandy South Kyle Kype Muir Extension Seller  Orsted Seller  BayWa Seller  Vattenfall Seller  Banks Renewables Capacity  630MW Capacity  42MW Capacity  235MW Capacity  67MW  Nordex 3.6MW & Turbines  Siemens SWT 120 3.6MW Turbines  Vestas V136 4.2MW Tu

  19. Slide 19: Capital Allocation

    Capital Allocation Over £1bn of excess cashflow before potential disposal proceeds 5 year dividend cover of >2x Acquisitions, Dividends Share buybacks investments and Repay debt disposals Enhanced Q4 2023 Paying down debt from UKW buyback programme Acquisitions measured dividend increased annual exc

  20. Slide 20: ESG

    GREENCOAT UK WIND ESG

  21. Slide 21: ESG Developments and Reporting

    ESG Developments and Reporting  Scope 1-3 GHG emissions reporting TCFD  Climate-related risks reported for the third time  Article 9 fund SFDR  Annexes 1 and 5 published in the Annual Report UN PRI  Schroders Greencoat signatory 2016 (via Schroders plc since 2023)  UKW rating of B+ Prime with

  22. Slide 22: Environmental

    Environmental  Portfolio produces renewable electricity to power 2.3 million homes(1)  Recycling third party capital enables more renewable generation capacity to be built out  2.5m tonnes of CO2 per annum(2) will be avoided through the displacement of thermal generation  Co-existence of energy

  23. Slide 23: Social and Health & Safety

    Social and Health & Safety Social  £4.4m of local community funding in 2023  Significant number of jobs in rural communities. The portfolio is estimated to have created 984 direct and indirect jobs from operational assets(1)  Local school and other educational visits  Require contractors to have

  24. Slide 24: Governance - Independent UK Board

    Governance - Independent UK Board Lucinda Riches – Chairman Ex-Head of Equity Capital Markets at UBS ECM and financial markets experience  During the year Lucinda Riches C.B.E. was appointed as Nick Winser – Senior Independent Director Chairman with Nick Winser Ex-CEO of National Grid UK C.B.E. suc

  25. Slide 25: Highly Experienced Greencoat UK Wind Team

    Highly Experienced Greencoat UK Wind Team Investment Managers Stephen Lilley – nearly 30 years Laurence Fumagalli (until 1 Matt Ridley (from 1 March of investment experience in the March 2024) – nearly 30 years of 2024) – 22 years of investment infrastructure, utility and investment and financing ma

  26. Slide 26: Summary

    GREENCOAT UK WIND Summary

  27. Slide 27: 2023 Highlights

    2023 Highlights £405.5m / 2.1x Strong cash generation and high dividend cover Net cash generation / dividend cover £3,794.0m / 164.1p Financials NAV robust with increased discount rates and lower power prices NAV per share down 1.8% in 2023 38% gross debt to GAV Total debt of £2,375m of which £600m

  28. Slide 28: Appendix

    GREENCOAT UK WIND Appendix

  29. Slide 29: Greencoat UK Wind Delivering as Designed

    Greencoat UK Wind Delivering as Designed  UKW 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 Simple preserved in real terms  Simple structure, UK domiciled

  30. Slide 30: 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 Andershaw Scotland Vestas Statkraft 35.0 100% 35.0 Feb-17 Sep-21 0.9 34.5% Bicker Fen England Senvion EDF 26.7 80

  31. Slide 31: 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 Corriegarth Scotland Enercon Centrica 69.5 100% 69.5 Apr-17 Aug-17 0.9 35.5% Cotton Farm England Senvion Sainsbur

  32. Slide 32: 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 Hornsea 1 England Siemens CFD 1200.0 12.5% 150.0 Dec-19 Aug-22 CFD 50.8% Humber Gateway England Vestas RWE 219.0

  33. Slide 33: 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 North Rhins Scotland Vestas E.ON 22.0 51.6% 11.4 Dec-09 Aug-14 1.0 38.0% Red House England Senvion EDF 12.3 80% 9

  34. Slide 34: Diversified Asset Portfolio (5)

    Diversified Asset Portfolio (5) 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 Tappaghan N Ireland GE SSE 28.5 100% 28.5 Jan-05/Jun-09 Mar-13 1.0 27.5% 75% plus Tom nan Clach Scotland Vestas C

  35. Slide 35: Selecting the Best Value Investments

    Selecting the Best Value Investments £100bn Market Year Assets priced Investments Asset Identification and Target Selection 2013 47 10 Age, capacity, load factor, seller price expectation 2014 37 6 2015 48 1 Initial Diligence and Pricing(1) 2016 40 2 UKW structural advantages, negotiation 2017 41 11

  36. Slide 36: Strategy and Ongoing Market Development

    Strategy and Ongoing Market Development  Within the parameters of a broader capital allocation policy UKW may continue to make accretive investments ROC UKW cash flows Subsidy free into assets projects and CFD projects Merchant  ROC investments remain available in the power price cash market Merch

  37. Slide 37: Secondary Market

    Secondary Market UKW net generating capacity (MW) 2,007MW  Government policy 2000 remains supportive in a drive for energy security 1500 and low carbon power  Offshore wind – increased 1000 strike prices for AR6 to accelerate deployment of 500 UK’s offshore wind 127MW resource 0 2013 2014 2015 201

  38. Slide 38: NAV Sensitivities

    Change in Change in fair value of NAV Change investments per share Input Base case in input £'000 pence Discount rate 11 per cent levered + 0.5 per cent (170,310) (7.4) portfolio IRR - 0.5 per cent 179,963 7.8 Long term inflation rate RPI: 3.5 per cent to 2030, - 0.5 per cent (162,604) (7.0) 2.5 per

  39. 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

  40. 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

Greencoat UK Wind — FY2023 Earnings Presentation on 6ix