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 1 outage, which has since been resolved; 2,654GWh generated, powering 2.3 million homes and avoiding 2.5 million tonnes of CO2.

• Net asset value (NAV) declined 3% to £3,633m (159.3p per share), reflecting lower forecast power prices, 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 and above RPI.

• Ongoing £100m share buyback program, with 32m shares (£44.4m) repurchased in H1 2024 at an average cost of 140p per share.

• Portfolio consists of 49 operating UK wind farms with 2,007MW net generating capacity.

Financial highlights

• H1 2024 net cash generation was £165.4m, with dividend cover at 1.5x (adjusted for the 2023 top-up); revenue was £419.3m and operating profit £67.1m.

• Gross debt stood at £2,329m (39% gearing), with £400m drawn on a £600m revolving credit facility (RCF); weighted average cost of debt was 4.63%.

• Portfolio captured an average power price of £56.84/MWh in H1, 11% below the N2EX index.

• Profit after tax was £19.1m, down from £65.5m in H1 2023; EPS was 0.83p.

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

Outlook and guidance

• 2024 full-year dividend cover expected to remain at similar levels to H1; five-year average dividend cover guidance of 2x, with over £1bn in cumulative excess cash generation expected.

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

• UK wind market expected to double or triple by 2030, with Labour's targets potentially adding £100bn in investible market value and strong demand for green electricity.

• Portfolio aims to double onshore and quadruple offshore capacity by 2030.

• Disciplined capital allocation prioritising buybacks and debt repayment over new acquisitions unless accretive.