Greencoat UK Wind has announced its annual results for the year ended 31 December 2015. During the period, the company’s NAV per share grew by 0.48% to 104.5p but, including dividend (6.26p) the company has provided an NAV total return of 6.6%. During the year, portfolio power generation was 8% above budget at 799.3GWh (the company says that this was due to high wind resource.) However, the average power price during the year was below budget (due to lower gas prices and 40% of revenues are subject to floating power prices) with the result that the two offset so the net cash generated was in line with budget at £48.3m (2014: £32.4m). Dividend cover was 1.7x (adjusted to reflect quarterly dividends). The company says that, for 2016, they can confidently target total dividends of 6.34p per share (an increase of 1.2% in line with RPI).
As at 31 December 2015, the Group’s borrowings were £135m, equivalent to 20% of GAV (the company expects these to be between 20% and 30% over the medium term) and the Company also entered into a longer term loan(all debt facilities are now at the company level). In November, the Company raised gross proceeds of £48.3m through the placing of 44.9m new shares at an issue price of 107.5p per share. The issue was oversubscribed.
During the year, net generating capacity was increased to 301.4MW, through the acquisition of Stroupster in December at a cost of £84.8m (excluding cash balances). This acquisition was the first the Company has made for fifteen months although, during the year, the manager priced 48 wind farms totalling 1,854MW, with 12 (941MW) being presented to the Investment Committee. Of the 48 wind farms priced: one (Stroupster) was acquired; 12 were acquired by other buyers; and 26 are subject to continuing discussions.
In terms of outlook, the company says that says its believes that wind remains the most mature and widely deployed renewable technology available in the UK and that they are in a good position to benefit as electricity production from wind is becoming an increasingly important part of the UK’s generation mix. Regarding the policy changes announced during 2015 to the Renewables Obligation for onshore wind, the company says that they are not relevant to it as they relate to new capacity that is not yet built. Furthermore, this is not anticipated to have a significant impact on the investment opportunities available to the Company as the market size of operating UK wind farms (both onshore and offshore) is expected to reach £60 billion over the next few years providing extensive and very encouraging opportunities for further value creating investment. However, they do say that the announcement of the immediate loss of the Climate Change Levy exemption for renewable electricity in July’s Budget had a negative impact on NAV, although this was largely offset by the reduction in the Corporation Tax rate announced at the same time.
In terms of future opportunities, the manager says that it has a healthy pipeline of attractive investment opportunities and that there is significant potential for the Group to benefit from the growing market.
Greencoat sees strong wind generation offset lower power prices : UKW