I am pleased to present the Half Year Report of Greencoat UK Wind PLC for the six months ended 30 June 2022.
Portfolio generation for the period was 2,175GWh, 1 per cent above budget. Net cash generated by the Group and wind farm SPVs was £328.8 million, above budget due to high power prices, primarily re?ecting high gas prices, providing cover of 3.8x dividends paid during the period.
Dividends and Returns
The Company's aim is to provide investors with an attractive and sustainable dividend that increases in line with RPI in?ation while preserving capital on a real basis. In line with its stated target of 7.72 pence per share for 2022, the Company has paid a quarterly dividend of 1.93 pence per share with respect to Q1 2022 and has declared a dividend of the same amount per share with respect to Q2 2022, giving a total of 3.86 pence per share for the period (compared to 3.59 pence per share for the ?rst half of 2021). NAV per share increased in the period from 131.7 pence per share (ex-dividend) on 31 December 2021 to
151.7 pence per share (ex-dividend) on 30 June 2022, re?ecting an increase in forward power prices over the period 2022-2025 and an increase in short term in?ation.
During the period, the Group invested £50 million to acquire the Twentyshilling wind farm from Statkraft, increasing net generating capacity to 1,460MW. During the period, the Group also provided a further £18 million of construction ?nance to the Kype Muir Extension wind farm project (target commissioning in Q4 2022).
In Q3 2022, we expect to complete on our £400 million investment in the Hornsea 1 wind farm, through reinvestment of cash ?ow alongside a modest utilisation of our revolving credit facility, increasing generating capacity to 1,610MW.
As at 30 June 2022, the Group had £900 million of debt outstanding, equating to 20 per cent of GAV (limit 40 per cent).
Debt outstanding comprised £900 million of ?xed rate term debt at Company level. There was zero outstanding under the Company's £600 million revolving credit facility (the £250 million balance at the beginning of the period having been re?nanced with £200 million AXA term debt and £50 million repaid from excess cash ?ow during the period).
Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Group were identi?ed in detail in the Company's Annual Report to 31 December 2021, summarised as follows:
- dependence on the Investment Manager;
- ?nancing risk; and
- risk of investment returns becoming unattractive.
Also, the principal risks and uncertainties affecting the investee companies were identi?ed in detail in the Company's Annual Report to 31 December 2021, summarised as follows:
- changes in government policy on renewable energy;
- a decline in the market price of electricity;
- risk of low wind resource;
- lower than expected asset life; and
- health and safety and the environment.
The principal risks outlined above remain the most likely to affect the Group and its investee companies in the second half of the year.
The Company is investing in a mature and growing market, and the Board believes that there should continue to be further opportunities for investments that are bene?cial to shareholders. The Company will continue to maintain a strictly disciplined approach to acquisitions, only investing when it is considered to be in the interests of shareholders to do so.