Half Yearly Results, NAV and Dividend Announcement

RNS Number : 2187U
Greencoat UK Wind PLC
28 July 2015
 



HALF-YEARLY RESULTS, NET ASSET VALUE AND DIVIDEND ANNOUNCEMENT

 

28 July 2015

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN.

 

GREENCOAT UK WIND PLC (the "Company")

Half-yearly results to 30 June 2015, Net Asset Value and Dividend Announcement

 

Greencoat UK Wind plc is the leading renewable infrastructure fund, solely and fully invested in operating UK wind farms. The Company's aim is to provide investors with an annual dividend that increases in line with RPI inflation (6.26p for 2015) while preserving the capital value of its investment portfolio in the long term on a real basis through reinvestment of excess cash flow and the prudent use of portfolio leverage.

 

·    The Group's investments generated 408.0 GWh of electricity, 10 per cent. above budget owing to high wind resource.

 

·    Net cash generation (Group and wind farm SPVs) was £29.2 million.

 

·    The Company declared total dividends of 3.13 pence per share in relation to the period.

 

·    NAV growth of 0.2 pence per share (adjusting for dividends).

 

"We are pleased to report the continued good performance of our UK operating wind portfolio, with overall performance in line with our expectations during the first half of 2015.

"The Company's aim is to provide investors with an attractive and inflating dividend alongside real capital preservation. The announcement of our sixth dividend, together with Net Asset Value growth during the period, emphasises the Company's continued delivery on its commitment to shareholders. The small valuation adjustment required as a result of changes announced in the Budget further demonstrates the prudent approach we take towards investing and running our business.

"We anticipate continued substantial growth in the UK wind farm secondary market, providing further value enhancing investment opportunities for the Company from an anticipated market of approximately £60 billion. As an investor in up and running UK wind farms, we are not significantly affected by the closure of the Renewables Obligation for new onshore wind farms from March 2016, and remain encouraged by the outlook for investment opportunities.

 

NAV

The Company announces that its unaudited Net Asset Value as of 30 June 2015 is £480.8 million (104.2p per share). The Company's June 2015 Factsheet is available on the Company's website, www.greencoat-ukwind.com.

 

Dividend Announcement

The Company also announces a quarterly dividend of 1.565p per share in respect of the period from 1 April 2015 to 30 June 2015.

 

Dividend Timetable

Ex-dividend date 6 August 2015

Record date 7 August 2015

Payment date 28 August 2015

 

For further information, please contact:

Greencoat UK Wind plc                                            020 7832 9400

Stephen Lilley

Laurence Fumagalli

Tom Rayner

 

Tulchan Communications      020 7353 4200

Stephen Malthouse

 

Heritage Administration Services Limited - Company Secretary

Joe McDaniel                              028 9078 5885

 

Details of the conference call for analysts and investors:

There will be a presentation call at 9.00am today for analysts and investors. To register for the call please contact Tulchan Communications on 020 7353 4200, or by email on UKWind@tulchangroup.com.

 

Presentation materials will be posted on the Company's website, , from 8.30am.

 

 

Key Metrics

KPI

As at
30 June 2015



Market capitalisation

£512.1 million

Share price

111.0 pence

Dividends with respect to the period

£14.4 million

Dividends with respect to the period per share

3.13 pence

GAV

£585.8 million

NAV

£480.8 million

NAV per share

104.2 pence

 

Chairman's Statement

 

I am pleased to present the half-yearly report of Greencoat UK Wind PLC for the six months ended 30 June 2015.

 

Performance

During the period, portfolio generation was 10 per cent. above budget at 408.0GWh owing to high wind resource. Net cash generated by the Group and wind farm SPVs was £29.2 million. Dividend cover was 2.0x (adjusted to reflect quarterly dividends).

 

Dividends and returns

The Company's aim is to provide investors with an attractive and sustainable dividend that increases in line with RPI inflation while preserving capital on a real basis. In line with our stated target of 6.26 pence per share for 2015, the Company paid its first quarterly dividend of 1.565 pence per share and declared its second, of the same amount, giving a total of 3.13 pence per share for the period. In addition, NAV per share increased from 102.4 pence (ex-dividend) on 31 December 2014 to 102.6 pence on 30 June 2015, an increase in NAV per share of 0.2 pence.

 

Group structure and financing

The Group's policy is to have no gearing at the individual asset level and to keep overall Group level borrowings at a prudent level (the maximum is 40 per cent. of GAV) to reduce risk while ensuring that the Group is at least fully invested thus always using capital efficiently. As at 30 June 2015, the Group's borrowings were £105 million, equivalent to 18 per cent. of GAV. Over the medium term, we would expect leverage to be between 20 per cent. and 30 per cent..

 

The Group's structure was simplified and the investment management arrangements were amended, creating value for the Group as explained in note 2 to the Financial Statements, and the Group's acquisition financing package was refreshed. In July 2015, the Company also entered into a longer term loan. All debt facilities are now at the Company level and rank pari passu with each other. The Board expects term financing to be an increasing feature of the Group's capital structure and is pleased with the highly attractive rates available to the Group, given the senior nature of all facilities.

 

Principal risks and uncertainties

As detailed in the Company's annual report to 31 December 2014, the principal risks and uncertainties affecting the Company are as follows:

·    dependence on the Investment Manager;

·    financing risk; and

·    risk of investment returns becoming unattractive.

 

Also as detailed in the Company's annual report to 31 December 2014, the principal risks and uncertainties affecting the investee companies are 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 life-span of the wind turbines; and

·    health and safety and the environment.

Further information in relation to these principal risks and uncertainties, which are unchanged from 31 December 2014 and remain the most likely to affect the Group in the second half of the year, may be found on pages 7 to 9 of the Group's Annual Report for the year ended 31 December 2014.

 

Outlook

·                provide additional economies of scale at Group level;

·                increase our market power when purchasing further assets; and

·                increase liquidity in our shares.

 

 

Tim Ingram 

Chairman

Investment Manager's Report

 

Investment portfolio

The Group's investment portfolio as at the date of this report consists of interests in SPVs which hold the following underlying operating wind farms:

 

Wind farm

Turbines

Operator

PPA

Total MW

Ownership Stake

Net MW

Bin Mountain

GE

SSE

SSE

9.0

100%

9.0

Braes of Doune

Vestas

DNV-GL

Centrica

72.0

50%

36.0

Carcant

Siemens

SSE

SSE

6.0

100%

6.0

Cotton Farm

Senvion

BayWa

Sainsbury's

16.4

100%

16.4

Drone Hill

Nordex

BayWa

Statkraft

28.6

51.6%

14.8

Earl's Hall Farm

Senvion

BayWa

Sainsbury's

10.3

100%

10.3

Kildrummy

Enercon

BayWa

Sainsbury's

18.4

100%

18.4

Lindhurst

Vestas

RWE

RWE

9.0

49%

4.4

Little Cheyne Court

Nordex

RWE

RWE

59.8

41%

24.5

Maerdy

Siemens

Wind Prospect

Statkraft

24.0

100%

24.0

Middlemoor

Vestas

RWE

RWE

54.0

49%

26.5

North Rhins

Vestas

DNV-GL

E.ON

22.0

51.6%

11.4

Rhyl Flats

Siemens

RWE

RWE

90.0

24.95%

22.5

Sixpenny Wood

Senvion

BayWa

Statkraft

20.5

51.6%

10.6

Tappaghan

GE

SSE

SSE

28.5

100%

28.5

Yelvertoft

Senvion

BayWa

Statkraft

16.4

51.6%

8.5

Total






271.5

 

Portfolio performance

Generation for the portfolio as a whole in the six months ended 30 June 2015 was 408.0GWh, 10 per cent. above budget owing to high wind resource.

 

The most significant event affecting the portfolio in the period was a grid transformer failure, which resulted in Earl's Hall Farm being offline from 18 April to 6 June, while the Distribution Network Operator (UKPN) resolved the issue.  The insurer has been notified in relation to lost revenue.

 

Other major unscheduled outages resulted from the blade failure at Little Cheyne Court (as a result of a lightning strike, as highlighted in the 2014 Annual Report), with the turbine brought back into operation on 21 March; the replacement of two gearboxes at Little Cheyne Court, following end of warranty inspections; and various yaw gear failures at Maerdy, which are being investigated by Siemens.

 

Lower than forecast power prices were seen throughout the period but revenue remained above budget owing to above budget generation.  Operating expenditure was below budget. Budgeted revenue and operating expenditure are inputs in the NAV calculation.

 

A new turbine operation and maintenance agreement has been entered into with RWE at Little Cheyne Court, following the expiry in May of the original five year contract with Nordex.  Interim turbine operation and maintenance agreements have been entered into with Vestas and Siemens, respectively, in relation to North Rhins and Carcant, pending the negotiation of longer term agreements.

 

Health and safety

There were no major incidents in the six months ended 30 June 2015.

 

Financial performance

The table below demonstrates strong dividend cover in the period of 2.0x.  Net cash generation was £29.2 million.  Cash balances (Group and wind farm SPVs) at 30 June 2015 were £25.7 million.

Group and wind farm SPV cash flows

For the six months ended 30 June 2015




£m


Net cash generation

29.2


Dividends paid (February and May 2015)

(21.4)





Acquisitions

-


Acquisition costs

-





Equity issuance

-


Equity issuance costs(1)

(0.3)





Debt repayment / drawdown

-


Upfront finance costs

(0.8)





Movement in cash (Group and wind farm SPVs)

6.7


Opening cash balance (Group and wind farm SPVs)

19.0


Ending cash balance (Group and wind farm SPVs)

25.7





Net cash generation

29.2


Dividends(2)

14.3


Dividend cover

2.0

x

 

(1) Carried over issuance costs in relation to October 2014 capital raise

(2) February 2015 dividend has been halved for dividend cover calculation purposes as it relates to six months as opposed to three months

Investment performance

Opening NAV 31 December 2014

£486.2m

Investment in new assets

-

Movement in DCF valuations

-£11.2m

Movement in cash

+£6.7m

Movement in other relevant assets/liabilities

-£0.9m

Movement in Aggregate Group Debt

-

Closing NAV 30 June 2015

£480.8m

 

A dividend of £14.2 million (3.08 pence per share) was paid in February 2015 in respect of the six month period ended 31 December 2014 and a dividend of £7.2 million (1.565 pence per share) was paid in May 2015 in respect of the three month period ended 31 March 2015.

 

A dividend of £7.2 million (1.565 pence per share) will be paid in August 2015 in respect of the three month period ended 30 June 2015.

 

NAV growth in the period was 0.2 pence per share (ex dividend):

 

pence per share



NAV at 31 December 2014

105.5

Less February 2015 dividend

(3.1)

NAV at 31 December 2014 (ex dividend)

102.4



NAV at 30 June 2015

104.2

Less August 2015 dividend

(1.6)

NAV at 30 June 2015 (ex dividend)

102.6



Movement in NAV (ex dividend)

0.2

 

The relatively weak NAV growth in the period reflects lower forecast power prices and the announcement of the loss of the Climate Change Levy exemption for renewable electricity from 1 August 2015 in July's Budget.

 

Reconciliation of statutory net assets to published NAV

 

As at
30 June 2015

As at
31 December 2014


£

£




DCF valuation

561,373,352

572,541,109

Cash (wind farm SPVs)

17,739,434

10,647,429

Fair value of investments

579,112,786

583,188,538

Cash (Group)

7,911,202

8,320,384

Other relevant liabilities

(1,180,770)

(263,359)

GAV

585,843,218

591,245,563

Aggregate Group debt

(105,000,000)

(105,000,000)

NAV

480,843,218

486,245,563

Reconciling items

-

-

Statutory net assets

480,843,218

486,245,563

Shares in issue

461,389,640

460,715,847

NAV per share (pence)

104.2

105.5

 

Gearing

As at 30 June 2015, the Group had £105 million of debt outstanding, equating to 18 per cent. of GAV.

 

The Group's acquisition financing package was refreshed during the period.  The Group now benefits from a £225 million revolving credit facility, which enhances its ability to make further acquisitions.

 

On 22 July, the Group entered into a seven year term debt facility of £75 million, together with associated interest rate swap.  On 29 July, proceeds from the seven year debt facility will be used to repay the revolving credit facility, together with £5 million from excess cash flow, leaving a drawn balance of £25 million under the revolving credit facility.

 

On 29 July 2015, total debt outstanding is expected to be £100 million, equating to 17 per cent. of GAV.

 

All borrowing is at the Company level (no project level debt).

 

Pipeline

The Investment Manager continues its ongoing process of identifying and executing potential new wind farm acquisitions.

 

A significant number of opportunities are being considered for 2015 and 2016, on and offshore.  The Group's independence and execution credibility continue to provide access to very attractive investment returns, often on a bilateral basis.

 

Outlook

The regulatory outlook for operational wind farms in the UK remains stable owing to the UK Government's policy of "grandfathering" for operational projects.  The Group invests in operational wind farms, backed by known and fixed support mechanisms.

 

Notwithstanding this, the announcement of the loss of the Climate Change Levy exemption for renewable electricity from 1 August 2015 in July's Budget has had a negative impact on NAV, although this was largely offset by announced reductions in the Corporation Tax rate.  The removal of the exemption is effectively an increase in taxation (including on imports of foreign renewable electricity) and benefits HM Treasury accordingly.  The Group was previously assuming the removal of the exemption from 2022.

 

In contrast to operational wind farms, regulatory risk is the key risk faced by renewable developers.  In particular, the Renewables Obligation is now closed to solar assets larger than 5MW from March 2015 and, given policy changes following the general election, will be closed to onshore wind from March 2016 (subject to certain grace periods in each case).  The CFD regime, which replaces the Renewables Obligation for new projects, brings considerable uncertainty for developers, particularly onshore wind and solar.

 

There is currently over 8GW of operational onshore wind capacity plus over 4GW offshore.  Installed capacity is set to grow over the next few years to over 12GW onshore plus over 12GW offshore, despite recent policy changes to the Renewables Obligation for onshore wind. In monetary terms, the secondary market for operational UK wind farms is approximately £30 billion, increasing to £60 billion in the medium term.  The Group currently has a market share of approximately 2 per cent..

 

As an owner of operational wind farms, the key risk faced by the Group is power price.  In general, independent forecasters expect UK wholesale electricity prices to continue to rise in real terms (in the short and long term), based on tighter UK capacity margins in the short term and global energy supply and demand in the long term, together with the ongoing phasing out of coal-fired power stations.  However, long term power price forecasts have fallen over recent quarters, reflecting downward revisions in commodity price forecasts.

 

The long term power price forecast is updated each quarter and reflected in the reported NAV.  The power price forecast incorporated in the current NAV is considerably lower than the forecast applicable at listing (March 2013), with consequently reduced downside exposure.

 

The outlook for the Group is very encouraging, with proven operational and financial performance from the existing portfolio combined with a particularly strong pipeline of attractive further investment opportunities.

 

Statement of Directors' Responsibilities

 

The Directors acknowledge responsibility for the interim results and approve this half-yearly report. The Directors confirm that to the best of their knowledge:

 

a)   the condensed financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" and give a true and fair view of the assets, liabilities and financial position and the profit of the Group as required by DTR 4.2.4R;

 

b)   the interim management report, included within the Chairman's Statement and Investment Manager's Report, includes a fair review of the information required by DTR 4.2.7R, being the significant events of the first half of the year and the principal risks and uncertainties for the remaining six months of the year; and

 

c)   the condensed financial statements include a fair review of the related party transactions, as required by DTR 4.2.8R.

 

The Responsibility Statement has been approved by the Board.

Tim Ingram 

Chairman

27 July 2015

Condensed Consolidated Statement of Comprehensive Income (unaudited)

For the six months ended 30 June 2015

 

Note

For the six months ended 30 June 2015

For the six months ended 30 June 2014



£

£





Return on investments

3

20,272,782

23,586,796

Other income

4

1,172,939

95,635

Total income and gains


21,445,721

23,682,431





Operating expenses

5

(3,694,024)

(2,617,160)

Investment acquisition costs


-

(375,216)

Operating profit


17,751,697

20,690,055





Finance expense

13

(2,440,767)

(1,930,819)





Profit for the period before tax


15,310,930

18,759,236





Tax expense

6

-

-





Profit for the period after tax


15,310,930

18,759,236





Profit and total comprehensive income attributable to:




Equity holders of the Company


15,310,930

18,759,236





Earnings per share




Basic and diluted profit from continuing operations in the period (pence)

7

3.32

5.47

 

 

All results are derived from continuing operations.

 

The accompanying notes form an integral part of the financial statements.

Condensed Consolidated Statement of Financial Position (unaudited)

As at 30 June 2015

Note

30 June 2015

31 December 2014



£

£





Non current assets




Investments at fair value through profit or loss

9

579,112,786

583,188,538



579,112,786

583,188,538

Current assets




Receivables

11

281,354

1,409,033

Cash and cash equivalents


7,911,202

8,320,384



8,192,556

9,729,417

Current liabilities




Payables

12

(1,462,124)

(1,672,392)

Net current assets


6,730,432

8,057,025





Non current liabilities




Loans and borrowings

13

(105,000,000)

(105,000,000)





Net assets


480,843,218

486,245,563





Capital and reserves




Called up share capital

15

4,613,896

4,607,158

Share premium account

15

205,727,009

205,022,575

Other distributable reserves


206,548,203

227,972,650

Retained earnings


63,954,110

48,643,180

Total shareholders' funds


480,843,218

486,245,563





Net assets per share (pence)

16

104.2

105.5

 

Authorised for issue by the Board on 27 July 2015 and signed on its behalf by:

 

Tim Ingram                                                       Shonaid Jemmett-Page

Chairman                                                        Director

 

The accompanying notes form an integral part of the financial statements.

 

Condensed Consolidated Statement of Changes in Equity (unaudited)

For the six months ended 30 June 2015

 

For the six months ended   30 June 2015

Note

Share capital

Share premium

Other distributable reserves

Retained earnings

Total



£

£

£

£

£

Opening net assets attributable to shareholders (1 January 2015)


4,607,158

205,022,575

227,972,650

48,643,180

486,245,563

Issue of share capital

15

6,738

704,434

-

-

711,172

Profit and total comprehensive income for the period


-

-

-

15,310,930

15,310,930

Interim dividends paid in the period

8

-

-

(21,424,447)

-

(21,424,447)








Closing net assets attributable to shareholders


4,613,896

205,727,009

206,548,203

63,954,110

480,843,218

 

After taking account of cumulative unrealised gains of £21,865,645, the total reserves distributable by way of a dividend as at 30 June 2015 were £248,636,668.

 

For the six months ended 
30 June 2014


Share capital

Share premium

Other distributable reserves

Retained earnings

Total



£

£

£

£

£








Opening net              assets attributable           to shareholders                  (1 January 2014)


3,412,430

80,654,271

248,811,063

18,196,789

351,074,553

Issue of share capital


23,069

2,348,004

-

-

2,371,073

Share issue costs


-

(9,871)

-

-

(9,871)

Profit and total comprehensive     income for the          period


-

-

-

18,759,236

18,759,236

Interim dividends         paid in the period


-

-

(10,246,496)

-

(10,246,496)








Closing net assets attributable to shareholders


3,435,499

82,992,404

238,564,567

36,956,025

361,948,495

 

After taking account of cumulative unrealised gains of £27,733,636 the total reserves distributable by way of a dividend as at 30 June 2014 were £247,786,956.

 

The accompanying notes form an integral part of the financial statements.

 

Condensed Consolidated Statement of Cash Flows (unaudited)

For the six months ended 30 June 2015

 

Note

For the six months ended 30 June 2015

For the six months ended 30 June 2014



£

£





Net cash flow from operating activities

17

24,144,255

17,743,106





Cash flow from investing activities




Acquisition of investments


-

(96,363,700)

Net cash flow from investing activities


-

(96,363,700)





Cash flows from financing activities




Issue of share capital


-

2,050,000

Payment of issue costs


(305,562)

(9,871)

Revolving credit facility




                Drawdowns

13

105,000,000

-

Acquisition loan facility




                Drawdowns


-

93,000,000

                Repayments

13

(105,000,000)

(8,000,000)

Finance expense


(2,823,428)

(1,852,186)

Dividends paid

8

(21,424,447)

(10,246,496)

Net cash (outflow)/inflow from financing activities


(24,553,437)

74,941,447





Net decrease in cash and cash equivalents during the period


(409,182)

(3,679,147)





Cash and cash equivalents at the beginning of the period


8,320,384

7,257,576





Cash and cash equivalents at the end of the period


7,911,202

3,578,429

 

 

The accompanying notes form an integral part of the financial statements.

 

Notes to the Unaudited Condensed Consolidated Financial Statements

For the six months ended 30 June 2015

 

1.    Significant accounting policies

 

Basis of preparation

The condensed consolidated financial statements included in this half-yearly report have been prepared in accordance with IAS 34 "Interim Financial Reporting". The same accounting policies, presentation and methods of computation are followed in these condensed consolidated financial statements as were applied in the preparation of the Group's consolidated annual financial statements for the year ended 31 December 2014, except as noted below.

 

The Group's consolidated annual financial statements were prepared on the historical cost basis, as modified for the measurement of certain financial instruments at fair value through profit or loss, and in accordance with IFRS to the extent that they have been adopted by the EU and with those parts of the Companies Act 2006 applicable to companies under IFRS.

 

These condensed financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Group's consolidated annual financial statements as of 31 December 2014. The audited annual accounts for the year ended 31 December 2014 have been delivered to the Registrar of Companies. The audit report thereon was unmodified.

 

Review

This half-yearly report has not been audited or reviewed by the Company's Auditor pursuant to the Auditing Practices Board's guidance on the review of interim financial statements.

 

Going concern

After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

 

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors, as a whole. The key measure of performance used by the Board to assess the Group's performance and to allocate resources is the total return on the Group's net assets, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements. For management purposes, the Group is organised into one main operating segment, which invests in wind farm assets. All of the Group's income is generated within the UK. All of the Group's non-current assets are located in the UK.

 

Seasonal and cyclical variations

The Group's results do not vary significantly during reporting periods as a result of seasonal activity.

 

2.    Investment management fees

 

As disclosed in note 18, the structure of the Group was simplified during the period. As part of this restructuring the Company has entered into a new Investment Management Agreement with the Investment Manager, replacing the previous agreement between the Company, LLP, Holdco and the Investment Manager, and the minimum term under the Investment Management Agreement has been extended by 15 months. Effective from 1 April 2015, the Base Fee and the PPS have been replaced by a single Cash Fee. The amount of the Cash Fee (previously Base Fee plus PPS) remains unchanged and is now fully tax deductible.

 

Under the terms of the revised Investment Management Agreement, the Cash Fee is based upon the NAV as at the start of the quarter in question on the following basis:

 

·    on that part of the then most recently announced NAV up to and including £500 million, an amount equal to 0.25 per cent. of such part of the NAV;

 

·    on that part of the then most recently announced NAV over £500 million and up to and including £1,000 million, an amount equal to 0.225 per cent. of such part of the NAV; and

 

·    on that part of the then most recently announced NAV over £1,000 million, an amount equal to 0.2 per cent. of such part of the NAV.

 

The Equity Element remains unchanged from that disclosed on page 50 of the Company's Annual Report for the year ended 31 December 2014.

 

Investment management fees and PPS paid or accrued were as follows:

Base Fee

PPS

Cash Fee

Value of Equity Element

Total amounts payable to the Investment Manager


£

£

£

£

£







Quarter to March 2015

275,000

940,614

-

243,123

1,458,737

Quarter to June 2015

-

-

1,200,045

240,009

1,440,054

Total

275,000

940,614

1,200,045

483,132

2,898,791

 

As at 30 June 2015, total amounts payable to the Investment Manager were £925,045 (31 December 2014: £467,171). Total amounts paid to the Investment Manager for the six months ended 30 June 2014 were £2,112,373.

 

3.    Return on investments

For the six months ended  30 June 2015

For the six months ended

  30 June 2014


£

£

Dividends received (note 18)

24,348,534

20,624,458

Movement in fair value of investments (note 9)

(4,075,752)

2,962,338


20,272,782

23,586,796

 

4.    Other income

For the six months ended 

 30 June 2015

For the six months ended 

30 June 2014


£

£

Consideration for investee company tax losses

955,202

-

Management services fees

183,600

92,500

Other income

34,137

3,135


1,172,939

95,635

 

5.    Operating expenses

For the six months ended 

30 June 2015

For the six months ended 

 30 June 2014


£

£

Management fees (note 2)

1,958,177

902,062

PPS (note 2)

940,614

1,210,311

Group and SPV administration fees

212,500

154,053

Non-executive Directors' fees

94,250

87,500

Other expenses

452,383

198,722

Fees to the Company's Auditor:



for audit of the statutory financial statements

32,500

36,524

for other audit related services

3,600

3,500

for tax compliance services

-

24,488


3,694,024

2,617,160

 

The fees to the Company's auditor includes £3,600 (2014: £3,500) payable in relation to a limited review of the half-yearly report and estimated accruals proportioned across the year for the audit of the statutory financial statements.

 

6.       Taxation

Taxable income during the period was offset by management expenses and the tax charge for the period ended 30 June 2015 is £nil (30 June 2014: £nil). The Group has tax losses carried forward available to offset against current and future profits as at 30 June 2015 of £4,971,439 (30 June 2014: £2,247,539).

 

7.       Earnings per share


For the six months ended 

 30 June 2015

For the six months ended 

 30 June 2014




15,310,930

18,759,236

Weighted average number of ordinary shares in issue

461,144,695

343,104,606

3.32

5.47

 

Dilution of the earnings per share as a result of the Equity Element of the investment management fee as disclosed in note 2 does not have a significant impact on the basic earnings per share.

 

8.       Dividends declared in relation to the period

Interim dividends paid during the period ended 30 June 2015

Dividend per share

Total dividend


pence

£




In relation to the 6 months ended 31 December 2014

3.080

14,203,699

In relation to the 3 months ended 31 March 2015

1.565

7,220,748


4.645

21,424,447

 

Interim dividends declared after 30 June 2015 and not accrued in the period

Dividend per share

Total dividend


pence

£




In relation to the 3 months ended 30 June 2015

1.565

7,224,358


1.565

7,224,358

 

As disclosed in note 19, on 22 July 2015, the Board approved a dividend of 1.565 pence per share bringing the total dividends declared in respect of the period to 3.13 pence per share. The record date for the dividend is 7 August 2015 and the payment date is 28 August 2015.

 

9.    Investments at fair value through profit or loss

For the six months ended 

  30 June 2015

For the six months ended 30 June 2014


£

£




Opening balance

583,188,538

394,765,170

Additions

-

96,363,700

Movement in fair value of investments (note 3)

(4,075,752)

2,962,338





579,112,786

494,091,208

 

During the period, the movement in fair value of investments comprised movement in cash balances of SPVs of £7.1 million, which was offset by a decrease in the DCF valuation of the investments of £11.2 million.

 

Fair value measurements

As disclosed on pages 54 and 55 of the Group's Annual Report for the year ended 31 December 2014, IFRS 13 "Fair Value Measurement" requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities ranges from level 1 to level 3 and is determined on the basis of the lowest level input that is significant to the fair value measurement.

 

The fair value of the Company's investments is ultimately determined by the underlying fair values of the SPV investments. Due to their nature, they are always expected to be classified as level 3 as the investments are not traded and contain unobservable inputs. There have been no transfers between levels during the six months ended 30 June 2015.

 

Sensitivity analysis

The fair value of the Group's investments is £579,112,786 (31 December 2014: £583,188,538). The analysis below is provided in order to illustrate the sensitivity of the fair value of investments to an individual input, while all other variables remain constant. The Board considers these changes in inputs to be within reasonable expected ranges. This is not intended to imply the likelihood of change or that possible changes in value would be restricted to this range.

 

Input

Base case

Change in input

Change in                     fair value of investments

Change in NAV per share




£

pence






Discount rate

8 - 9 per cent.

+ 0.5 per cent.

(19,157,076)

(4.2)



- 0.5 per cent.

20,301,959

4.4






Energy yield

P50

10 year P90

(36,442,769)

(7.9)



10 year P10

36,421,682

7.9






Power price

Forecast by leading consultant

- 10 per cent.

(32,864,707)

(7.1)


+ 10 per cent.

32,841,460

7.1






Inflation rate

2.5 per cent.

- 0.5 per cent.

(19,548,255)

(4.2)



+ 0.5 per cent.

20,615,671

4.5

 

10.  Unconsolidated subsidiaries, associates and joint ventures

 

The following table shows subsidiaries of the Group. As the Company is regarded as an Investment Entity under IFRS, these subsidiaries have not been consolidated in the preparation of the financial statements:

 

Investment

Place of Business

Ownership Interest as at 30 June 2015

Bin Mountain

Northern Ireland

100%

Carcant

Scotland

100%

Cotton Farm

England

100%

Earl's Hall Farm

England

100%

Kildrummy

Scotland

100%

Maerdy

Wales

100%

Tappaghan

Northern Ireland

100%

Drone Hill

Scotland

51.6%

North Rhins

Scotland

51.6%

Sixpenny Wood

England

51.6%

Yelvertoft

England

51.6%

SYND Holdco*

UK

51.6%

 

* The Group's investments in Drone Hill, North Rhins, Sixpenny Wood and Yelvertoft are held through SYND Holdco.

 

The following table shows associates and joint ventures of the Group which have been recognised at fair value as permitted by IAS 28 "Investments in Associates and Joint Ventures":

 

Wind Farm

Place of Business

Ownership Interest as at 30 June 2015

Braes of Doune

Scotland

50%

ML Wind*

England

49%

Little Cheyne Court

England

41%

Rhyl Flats

Wales

24.95%

 

* The Group's investments in Middlemoor and Lindhurst are held through ML Wind.

 

Security deposits and guarantees provided during the period by the Group on behalf of its investments are as follows:

Provider of security

Investment

Beneficiary

 

Nature

 

Purpose

 

Amount









£

Holdco

 Middlemoor

 Northumberland County Council

Cash

Development works

77,048

 

There were no other changes to security deposits and guarantees as disclosed on page 57 of the Group's Annual Report for the year ended 31 December 2014.

 

11.       Receivables

30 June 2015

31 December 2014


£

£




Prepayments

104,303

52,556

Other receivables

177,051

56,477

Dividends receivable

-

1,300,000


281,354

1,409,033

 

 

12.       Payables


30 June 2015

31 December 2014


£

£




Investment management fee payable (note 2)

925,045

467,171

Loan interest payable

14,456

517,836

Commitment fee payable

149,589

-

Other payables

373,034

366,939

Share issue costs payable

-

320,446


1,462,124

1,672,392

 

13.       Loans and borrowings

30 June 2015

31 December 2014


£

£

Opening balance

105,000,000

50,000,000

Amounts drawn down in the period/year

105,000,000

183,000,000

Amounts repaid in the period/year

(105,000,000)

(128,000,000)

Closing balance

105,000,000

105,000,000

 

For the six months ended 30 June 2015

For the six months ended  30 June 2014


£

£




Facility arrangement fees

675,000

930,000

Loan interest

1,423,798

703,187

Commitment fees

149,589

-

Other facility fees

59,880

217,500

Professional fees

132,500

80,132

Finance expense

2,440,767

1,930,819

 

The loan as at 30 June 2015 has not been revalued to reflect amortised cost, as this amount is not materially different from the outstanding balance.

 

On 23 April 2015, the Company entered into a revolving credit facility with RBS, RBC and Santander of up to £225,000,000. £105,000,000 was drawn down and used to repay the £105,000,000 outstanding under the previous loan facility between Holdco, RBS, RBC and Santander.

 

The final maturity date of the revolving credit facility is 23 April 2018 which is the third anniversary of the facility agreement. The margin is 2 per cent. per annum. The Company is also obliged to pay a quarterly commitment fee of 0.7 per cent. per annum on the undrawn commitment available under the revolving credit facility.

 

As at 30 June 2015, accrued interest on the loan was £14,456 (31 December 2014: £517,836).

 

As disclosed in note 19, on 22 July, the Company entered into a seven year term debt facility with Commonwealth Bank of Australia of £75,000,000, together with associated interest rate swap.  The margin is 1.65 per cent. per annum and the swap rate is 1.94 per cent. per annum.

 

All borrowing ranks pari passu and is secured by a debenture over the assets of the Company, including its shares in Holdco, and a floating charge over Holdco's bank accounts.

 

14.       Contingencies

 

There are no changes to the Group's existing contingencies as disclosed on page 59 of the Group's Annual Report for the year ended 31 December 2014.

 

15.       Share capital - ordinary shares of £0.01

Date

Issued and fully paid

Number of shares issued

Share capital

Share premium

Total




£

£

£







1 January 2015


460,715,847

4,607,158

205,022,575

209,629,733

4 February 2015

Q4 2014 Equity Element - Issued at £1.05

171,947

1,719

178,447

180,166

4 February 2015

True up of 2014 Equity Element  - Issued at £1.17

40,908

409

47,465

47,874

4 February 2015

Q1 2015 Equity Element - Issued at £1.06

230,358

2,304

240,819

243,123

5 May 2015

Q2 2015 Equity Element - Issued at £1.04

230,580

2,306

237,703

240,009







30 June 2015


461,389,640

4,613,896

205,727,009

210,340,905

 

16.       Net assets per share


30 June 2015

31 December 2014




Net assets - £

480,843,218

486,245,563

Number of ordinary shares issued

461,389,640

460,715,847

Total net assets - pence

104.2

105.5

 

 

17.       Reconciliation of operating profit for the period to net cash from operating activities

Group

For the six months ended  30 June 2015

For the six months ended 30 June 2014


£

£

Operating profit for the period

17,751,697

20,690,055

Adjustments for non cash movements:



Movement in fair value of investments (note 3)

4,075,752

(2,962,338)

Decrease/(increase) in receivables

1,156,549

(115,949)

Increase/(decrease) in payables

449,085

(189,735)

Equity Element of Investment Manager's fee (note 15)

711,172

321,073

Net cash flow from operating activities

24,144,255

17,743,106

 

 

18.       Related party transactions

 

As disclosed in note 4, on 5 February 2015 £955,202 was received from Braes of Doune in relation to tax losses surrendered for the year ended 31 December 2013.

 

On 24 April 2015, Holdco issued one ordinary share to the Company at an issue price of £105,000,000, which Holdco used to repay the outstanding balance on its loan facility as disclosed in note 13.

 

On 30 April 2015, the structure of the Group was simplified and LLP transferred its equity interest of one ordinary share of £1 in Holdco to the Company. To facilitate the restructuring, the Company waived an interest free loan outstanding with LLP amounting to £461,017,861, LLP waived its senior and junior loans outstanding with Holdco amounting to £461,017,861 and Holdco issued one ordinary share to the Company at an issue price of £461,017,861. The restructuring has had no overall financial impact on the Group.

 

The below table shows dividends received in the period from the Group's investments.

 

For the six months ended 30 June 2015


£



SYND Holdco

4,053,180

Rhyl Flats

3,143,700

ML Wind

3,124,654

Braes of Doune

2,385,000

Kildrummy

2,310,000

Little Cheyne Court

1,968,000

Maerdy

1,935,000

Cotton Farm

1,628,000

Tappaghan

1,554,000

Earl's Hall Farm

1,040,000

Bin Mountain

680,000

Carcant

527,000


24,348,534

 

19.       Subsequent events

 

On 22 July 2015 the Board approved a dividend of £7,224,358, equivalent to 1.565 pence per share. The record date for the dividend was 7 August 2015 and the payment date is 28 August 2015.

 

Defined Terms

 

Base Fee means the cash fee that the Investment Manager was entitled to under the previous Investment Management Agreement

BDO LLP means the Company's Auditor as at the reporting date

Bin Mountain means Bin Mountain Wind Farm (NI) Limited

Board means the Directors of the Company

Braes of Doune means Braes of Doune Wind Farm (Scotland) Limited

Carcant means Carcant Wind Farm (Scotland) Limited

Cash Fee means the cash fee that the Investment Manager is entitled to under the revised Investment Management Agreement

CFD means Contract For Differences

Climate Change Levy means the tax imposed by the UK Government to encourage reduction in gas emissions and greater efficiency of energy used for business or non domestic purposes

Company means Greencoat UK Wind PLC

Cotton Farm means Cotton Farm Wind Farm Limited

DCF means Discounted Cash Flow

Drone Hill means Drone Hill Wind Farm Limited

Earl's Hall Farm means Earl's Hall Farm Wind Farm Limited

Equity Element means the ordinary shares issued to the Investment Manager under the Investment Management Agreement

EU means the European Union

GAV means Gross Asset Value as defined in the prospectus

Group means Greencoat UK Wind PLC, Greencoat UK Wind 1 LLP and Greencoat UK Wind Holdco

Holdco means Greencoat UK Wind Holdco Limited

IAS means International Accounting Standard

IFRS means International Financial Reporting Standards

Investment Manager means Greencoat Capital LLP

Kildrummy means Kildrummy Wind Farm Limited

KPI means Key Performance Indicator

Lindhurst means Lindhurst Wind Farm

Little Cheyne Court means Little Cheyne Court Wind Farm Limited

LLP means Greencoat UK Wind 1 LLP, a limited liability partnership of which the Company and the Investment Manager are the members

LLP Agreement means the Limited Liability Partnership Agreement for LLP

Maerdy means Maerdy Wind Farm Limited

Middlemoor means Middlemoor Wind Farm

ML Wind means ML Wind LLP

NAV means Net Asset Value as defined in the prospectus

NAV per Share means the Net Asset Value per Ordinary Share

North Rhins means North Rhins Wind Farm Limited

PPA means Power Purchase Agreement entered into by the Group's wind farms

PPS means priority profit share payable by way of a member's distribution under the LLP Agreement dated 1 February 2013 prior to 31 March 2015

RBC means the Royal Bank of Canada

RBS means the Royal Bank of Scotland PLC

Renewables Obligation means the financial mechanism by which the UK Government incentivises the deployment of large-scale renewable electricity generation by placing a mandatory requirement on licensed UK electricity suppliers to source a specified and annually increasing proportion of electricity they supply to customers from eligible renewable sources or pay a penalty

Review Section means the front end review section of this report (including but not limited to the Chairman's Statement and the Investment Manager's Report)

Rhyl Flats means Rhyl Flats Wind Farm Limited

RPI means the Retail Price Index

Santander means Santander Global Banking and Markets

Sixpenny Wood means Sixpenny Wood Limited

SPVs means the Special Purpose Vehicles which hold the Group's investment portfolio of underlying operating wind farms

SYND Holdco means SYND Holdco Limited

Tappaghan means Tappaghan Wind Farm (NI) Limited

TSR means Total Shareholder Return

UK means the United Kingdom of Great Britain and Northern Ireland

Yelvertoft means Yelvertoft Wind Farm Limited

 

Cautionary Statement

 

The Review Section of this report has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any other purpose.

 

The Review Section may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology.

 

These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs or current expectations of the Directors and the Investment Manager concerning, amongst other things, the investment objectives and investment policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, and distribution policy of the Company and the markets in which it invests.

 

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company's actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this document.

 

Subject to their legal and regulatory obligations, the Directors and the Investment Manager expressly disclaim any obligations to update or revise any forward-looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

 

In addition, the Review Section may include target figures for future financial periods. Any such figures are targets only and are not forecasts.

 

This half-yearly report has been prepared for the Company as a whole and therefore gives greater emphasis to those matters which are significant in respect of Greencoat UK Wind PLC and its subsidiary undertakings when viewed as a whole.

 

Disclaimer

This announcement is not for publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada, South Africa or Japan. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

 

This announcement does not contain or constitute an offer for sale of, or the solicitation of an offer or an invitation to buy or subscribe for, Ordinary Shares to any person in the United States, Australia, Canada, South Africa or Japan or in any jurisdiction to whom or in which such offer or solicitation is unlawful.

 

The Company will not be registered under the US Investment Company Act of 1940, as amended. In addition, the Ordinary Shares referred to herein have not been and will not be registered under the US Securities Act of 1933 (the "Securities Act") or under the securities laws of any state of the United States and may not be offered or sold in the United States or to or for the account or benefit of US persons absent registration or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable State securities laws. The offer and sale of Ordinary Shares referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of any state, province or territory of Australia, Canada, South Africa or Japan. Subject to certain exceptions, the Ordinary Shares referred to herein may not be offered or sold in Australia, Canada, South Africa or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, South Africa or Japan. There will be no public offer of the Ordinary Shares in the United States, Australia, Canada, South Africa or Japan.

 

 

 


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