Greencoat UK Wind (UKW) H1 2024 earnings summary

Executive summary

• H1 2024 saw resilient cash generation despite output 15% below budget, mainly due to low wind and a Hornsea One outage, which has since been resolved.

• Net asset value (NAV) declined 3% to £3,633m (159.3p per share), mainly due to lower long-term power price forecasts, but remains up in real terms since listing.

• £136.4m in dividends paid, including a £28.6m top-up for 2023, with a 2024 dividend target of 10p per share, up 14.2% from the prior year.

• Ongoing £100m share buyback program, with 32m shares (£44.4m) repurchased in H1 2024 and £53m since October 2023.

• Portfolio consists of 49 UK wind farms with 2,007MW capacity, powering 2.3 million homes and avoiding 2.5 million tonnes of CO2 emissions annually.

Financial highlights

• Net cash generation for H1 2024 was £165.4m, down from £204m year-over-year, with dividend cover at 1.5x (adjusted for the 2023 top-up).

• Gross debt stood at £2,329m (39% gearing), with £400m drawn on a £600m revolving credit facility (RCF).

• Weighted average cost of debt was 4.6%.

• Portfolio IRR maintained at 11%; net total return to shareholders at NAV is 10%.

• NAV per share at 159.3p as of 30 June 2024.

Outlook and guidance

• 2024 full-year dividend cover expected to remain at or around current levels, with five-year average guidance of 2x and over £1bn in cumulative excess cash generation expected.

• Dividend policy remains RPI-linked, with future increases anticipated.

• Labour's 2030 net zero grid target and market expansion could drive further growth; portfolio aims to double onshore and quadruple offshore capacity by 2030.

• UK wind market expected to double or triple by 2030, with strong demand for green electricity from sectors like EVs and hydrogen.