Greencoat UK Wind (UKW) has announced its annual results for the year ended 31 December 2018. The company says that its performance was in line with its expectations. Cash generation was on budget despite their being a low wind levels [QD comment: UKW, like most other renewable generators, has a high fixed cost base with relatively low running costs. It will have benefitted from higher power prices brought on by both an uplift in commodity prices and a restructuring of the EU’s Emission Trading Scheme. This has pushed up the cost of carbon credits for non-renewable generators and therefore the power price with it.] Tim Ingram, Chairman of Greencoat UK Wind, says “With our continuing strong cashflow and robust dividend cover we confidently target a dividend of 6.94 pence per share with respect to 2019, again increased in line with RPI.”
Key Highlights from the results
- Performance in line with expectations with cash generation on budget
- The Group’s investments generated 2,003GWh of electricity, 6 per cent. below budget owing to low wind resource.
- On budget cash generation (Group and wind farm SPVs) of £117.3 million.
High quality acquisitions and oversubscribed equity raising
- Acquisition of 3 further wind farms and an additional interest in Clyde increased the portfolio to 32 wind farm investments, net generating capacity to 836MW and GAV to £1,872.8 million as at 31 December 2018.
- Agreement to acquire 75 per cent. of Tom nan Clach and 100 per cent. of Douglas West, the Group’s first CFD and subsidy free investments respectively.
- Issuance of further shares raising £118.8 million in May 2018.
Dividends, returns and balance sheet
- The Company has declared total dividends of 6.76 pence per share with respect to the year and is targeting a dividend of 6.94 pence per share for 2019 (increased in line with December 2018 RPI).
- NAV growth of 11.8 pence per share (adjusting for dividends).
- £480 million outstanding borrowings at 31 December 2018, equivalent to 26 per cent. of GAV.
Events subsequent to the year end
- On 1 February 2019, the Company announced a £452 million investment in the Stronelairg and Dunmaglass wind farms with SSE.
- Completion to occur at the end of March 2019, increasing total number of investments to 34 operating UK wind farms with a net generating capacity of 950MW.
- On 27 February 2019, the Company issued an additional 103 million new shares at a price of 127p per share, raising gross proceeds of £131 million in an oversubscribed share placing.
An active year of investment and a very healthy pipeline
During 2018, UKW committed to invest over £500m across 6 wind farms. It also increased the number of vendors it has acquired from to 14 (including new commitments). The company says that its acquisition pipeline remains very healthy and that it expects the majority of future investments to be made from the £50bn pool of UK Wind farms accredited under the ROC regime. Furthermore, it says that its portfolio is now reducing carbon dioxide emissions by approximately 1 million tonnes per annum through displacing thermal generation.
About Greencoat UK Wind
Greencoat UK Wind Plc has been listed on the main market of the London Stock Exchange since 27 March 2013 (it has a premium main market listing). The company invests in operating UK wind farms to provide shareholders with a sustainable and transparent income stream through an annual dividend payment. Given the nature of the Company’s income streams, the company’s Board intends to increase the dividend in line with Retail Price Index (RPI) inflation. The company also aims to preserve capital on a real basis by reinvesting excess cashflow in additional operating UK wind farms and through prudent use of portfolio leverage. Greencoat UK Wind invests in wind farm projects predominantly with a capacity of over 10 MW. The substantial majority of the portfolio will be operating UK wind farm projects.