Half-yearly results, Net Asset Value and Dividend

RNS Number : 4367F

Greencoat UK Wind PLC

28 July 2016

 



HALF YEARLY RESULTS, NET ASSET VALUE AND DIVIDEND ANNOUNCEMENT

28 July 2016

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 2016, Net Asset Value and Dividend Announcement

Greencoat UK Wind PLC is the leading listed renewable infrastructure fund, 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 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.

Highlights

·     The Group's investments generated 451.4GWh, 3 per cent. below budget owing to low wind resource.

·     Net cash generation (Group and wind farm SPVs) was £30.9 million.

·     Acquisition of an interest in Clyde wind farm and the acquisition of Screggagh wind farm increased the portfolio to nineteen wind farm investments, net generating capacity to 420MW and GAV to £874.4 million as at 30 June 2016.

·     Issuance of further shares raising £100 million.

·     The Company declared total dividends of 3.17 pence per share with respect to the period.

·     £245 million outstanding borrowings at 30 June 2016, equivalent to 28 per cent. of GAV.

Commenting on today's results, Tim Ingram, Chairman of Greencoat UK Wind, said:

"We are pleased to report the continued steady performance of our portfolio, with good cash generation, an increase in the dividend and strong dividend cover.

"During the period, we added two high quality wind farm investments to the portfolio. Clyde, which at 350MW is one of the UK's largest wind farms, and Screggagh, a 20MW wind farm in Northern Ireland, reflect our ability to select the best investments and efficiently process a wide range of transaction type and scale.

"We were also pleased with the strong support shown by both existing and new investors to the Share Issuance Programme we launched in April.  With the proceeds of the first tranche having partly paid down our acquisition facility we are well placed to take advantage of our attractive pipeline of growth opportunities."

NAV

The Company announces that its unaudited Net Asset Value as of 30 June 2016 is £629.4 million (104.5p per share). The Company's June 2016 Factsheet is available on the Company's website, www.greencoat-ukwind.com.

Dividend Announcement

The Company also announces a quarterly dividend of 1.585p per share in respect of the period from 1 April 2016 to 30 June 2016.

Dividend Timetable

Ex-dividend date 4 August 2016

Record date 5 August 2016

Payment date 26 August 2016

Key Metrics

As at 30 June 2016:

Market Capitalisation	£689.9 million
Share price	114.5 pence
Dividends with respect to the period	£17.6 million
Dividends with respect to the period per share	3.17 pence
GAV	£874.4 million
NAV	£629.4 million
NAV per share	104.5 pence

Details of the conference call for analysts and investors:

There will be a conference call at 9.00am today for analysts and investors. To register for the event please notify Tulchan Communications, either by email to [e-mail] or by telephone on [phone].

Presentation materials will be posted on the Company's website, www.greencoat-ukwind.com, from 9.00am.

For further information, please contact:

Greencoat UK Wind PLC                 020 7832 9400

Stephen Lilley

Laurence Fumagalli

Tom Rayner

Tulchan                                              020 7353 4200

Stephen Malthouse

 

Chairman's Statement

I am pleased to present the half-yearly report of Greencoat UK Wind PLC for the six months ended 30 June 2016.

Performance

During the period, portfolio generation was 451.4GWh, 3 per cent. below budget. Net cash generated by the Group and wind farm SPVs was £30.9 million. Dividend cover was 1.9x.

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 6.34 pence per share for 2016, the Company has paid a dividend of 1.585 pence per share in respect of Q1 2016 and has declared a dividend of the same amount in respect of Q2 2016, giving a total of 3.17 pence per share for the period (compared to 3.13 pence for the first half of 2015). NAV per share was flat in the period: 102.9 pence (ex-dividend) at 31 December 2015 and at 30 June 2016, reflecting strong cash generation offset by lower power price forecasts.

Gearing

The Group's policy is to have no gearing at the individual asset level and to keep overall Group 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 2016, the Group's borrowings were £245 million, equivalent to 28 per cent. of GAV, of which £100 million is longer term debt. Over the medium term, we would expect total gearing to be between 20 per cent. and 30 per cent..

Acquisitions and Equity Raising

During the period, the Group made two additional high quality acquisitions, increasing our net generating capacity to 420MW. In March, the Group acquired a 28.2 per cent. stake in the 350MW Clyde wind farm, one of the largest windfarms in the UK. Clyde is the fourth wind farm to be acquired from SSE and maintains a longstanding relationship between both companies. The acquisition also brought in the Greater Manchester Pension Fund and the London Pensions Fund Authority as co-investment partners. In June, the Group acquired Screggagh, a 20MW wind farm in Northern Ireland. The mix of acquisitions demonstrates the Group's ability to source and execute transactions across the market - and only on terms that we consider to be advantageous to our shareholders.

In May, the Company raised gross proceeds of £100 million through the placing of 95.2 million new shares at an issue price of 105 pence per share. The Board was delighted with this placing, the first tranche of our programme to issue 300 million new shares.

Principal Risks and Uncertainties

As detailed in the Company's Annual Report to 31 December 2015, the principal risks and uncertainties affecting the Group 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 2015, 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 2015 and remain the most likely to affect the Group in the second half of the year, may be found on pages 6 to 8 of the Company's Annual Report for the year ended 31 December 2015.

Outlook

Wind continues to remain the most mature and widely deployed renewable technology available in the UK and the Company is in a good position to benefit as electricity production from wind becomes an increasingly important part of the UK's generation mix.

The Company does not expect any material change to its business as a result of the UK exiting the European Union. Being solely UK focused and deliberately low-risk, all of the Group's assets and liabilities are inside the UK and sterling denominated. In addition, the regulatory regime under which the assets operate is robust, longstanding and rooted in UK legislation.

Owing to recent significant sterling devaluation, it is reasonable to assume that the price of gas will increase in sterling terms. Everything else being equal, this should feed into higher power prices and this is already being seen in the forward market, however our 30 June reported NAV utilises power price forecasts that were produced immediately before the EU referendum.

At the end of June, the Government approved the Fifth Carbon Budget under the 2008 Climate Change Act, legislating for a 57 per cent. reduction in carbon emissions (relative to 1990) by 2032. The Fifth Carbon Budget lies on the pathway to 80 per cent. emission reductions by 2050, which is more onerous than European Union legislation.

The Company continues to look at acquiring operating UK wind farms (both onshore and offshore) from a market that is expected to reach £60 billion over the next few years, providing extensive and very encouraging opportunities for further value creating investment. 

The Board considers that, for the foreseeable future, it is in the interest of our shareholders to grow the portfolio, through further wind farm investments, where these provide attractive returns. Growth in the portfolio:

·                provides additional economies of scale at Group level;

·                increases our market power when purchasing further assets; and

·    increases liquidity in our shares.

Tim Ingram 

Chairman

27 July 2016

Investment Manager's Report

Investment Portfolio

The Group's investment portfolio as at 30 June 2016 consisted 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
Clyde	Siemens	SSE	SSE	349.6	28.2%	98.6
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
Screggagh	Nordex	Subject to contract	Energia	20.0	100%	20.0
Sixpenny Wood	Senvion	BayWa	Statkraft	20.5	51.6%	10.6
Stroupster	Enercon	BayWa	BT	29.9	100%	29.9
Tappaghan	GE	SSE	SSE	28.5	100%	28.5
Yelvertoft	Senvion	BayWa	Statkraft	16.4	51.6%	8.5
Total(1)						420.0

⁽¹⁾ Numbers do not cast owing to rounding of (0.3)MW.

Portfolio Performance

Portfolio generation for the six months ended 30 June 2016 was 451.4GWh⁽¹⁾, 3 per cent. below budget owing to low wind resource in Q2 (Q1 generation above budget).

Overall portfolio availability was high. Notable major outages across the portfolio were a 3.5 day scheduled outage of the Clyde North substation for upgrade works in preparation for the connection of Clyde Extension and a turbine transformer failure at Yelvertoft, which led to the turbine being offline for six weeks. Yaw gear failures at Maerdy remain an ongoing Siemens issue.

Wind energy true-ups for Cotton Farm, Earl's Hall Farm and Kildrummy were agreed in the period. Cotton Farm and Earl's Hall farm resulted in no net payment and Kildrummy resulted in a payment of £1.2 million from BayWa to the Group. The Middlemoor wind energy true-up process is underway. The true-up mechanism is designed to mitigate the risk associated with investing in a wind farm before sufficient operational data are available.

⁽¹⁾ Including Clyde curtailed generation.

Health and Safety

There were no major incidents in the six months ended 30 June 2016.

Acquisitions

The Group invested £195.5 million (including acquisition costs, excluding cash) to acquire a 28.2 per cent. stake in the 350MW Clyde wind farm on 18 March 2016. SSE retained a 50.1 per cent. stake, with the Greater Manchester Pension Fund and the London Pensions Fund Authority investing £150 million alongside the Group (21.7 per cent. stake). The Group has enjoyed a strong relationship with SSE since listing (March 2013) and the transaction demonstrates the attractiveness to utilities of the Group's unlevered investment model.

The Group acquired 100 per cent. of the 20MW Screggagh wind farm on 30 June 2016 for £28.2 million (including acquisition costs, excluding cash). The transaction was executed in three weeks from the granting of exclusivity and reflects the Group's ability to select the best investments and efficiently process a wide range of transaction types and sizes.

Financial Performance

The table below demonstrates strong dividend cover in the period of 1.9x. Net cash generation was £30.9 million. Cash balances (Group and wind farm SPVs) at 30 June 2016 were £27.8 million.

Group and wind farm SPV cash flows	For the six months ended 30 June 2016
	£m
Net cash generation	30.9
Dividends paid	(16.0)
Acquisitions (1)	(214.4)
Acquisition costs	(2.5)
Equity issuance	100.0
Equity issuance costs	(1.7)
Debt drawdown	110.0
Upfront finance costs	(0.6)
Movement in cash (Group and wind farm SPVs)	5.7
Opening cash balance (Group and wind farm SPVs)	22.0
Ending cash balance (Group and wind farm SPVs) (2)	27.8
Net cash generation	30.9
Dividends	16.0
Dividend cover	1.9	x

⁽¹⁾Net of £3.2 million wind energy true-up payments relating to Maerdy and Kildrummy.

⁽²⁾Numbers do not cast owing to rounding of £0.1m.

Investment Performance

The NAV at 30 June 2016 was £629.4 million.

Opening NAV at 31 December 2015	£529.8m
Investment in new assets(1)	+£223.7m
Movement in DCF valuations	-£14.6m
Movement in cash (Group and wind farm SPVs)	+£5.7m
Movement in other relevant assets/liabilities	-£5.2m
Movement in Aggregate Group Debt	-£110.0m
Closing NAV 30 June 2016	£629.4m

⁽¹⁾ Including acquisition costs, excluding cash

A dividend of £7.9 million (1.565 pence per share) was paid in February 2016 in respect of the three month period ended 31 December 2015 and a dividend of £8.0 million (1.585 pence per share) was paid in May 2016 in respect of the three month period ended 31 March 2016.

A dividend of £9.6 million (1.585 pence per share) will be paid on 26 August 2016 in respect of the three month period ended 30 June 2016.

NAV per share was flat in the period:

	pence per share
NAV at 31 December 2015	104.5
Less February 2016 dividend	(1.6)
NAV at 31 December 2015 (ex dividend)	102.9
NAV at 30 June 2016	104.5
Less August 2016 dividend	(1.6)
NAV at 30 June 2016 (ex dividend)	102.9
Movement in NAV (ex dividend)	0.0

The share price as at 30 June 2016 was 114.5 pence, representing a 9.6 per cent. premium to NAV.

Reconciliation of Statutory Net Assets to Reported NAV

	As at 30 June 2016	As at 31 December 2015
	£'000	£'000
DCF valuation	851,920	642,784
Cash (wind farm SPVs)	19,629	14,806
Fair value of investments	871,549	657,591
Cash (Group)	8,143	7,231
Other relevant liabilities	(5,298)	(56)
GAV	874,394	664,766
Aggregate Group Debt	(245,000)	(135,000)
NAV	629,394	529,766
Reconciling items	-	-
Statutory net assets	629,394	529,766
Shares in issue	602,526,968	506,787,431
NAV per share (pence)	104.5	104.5

Gearing

As at 30 June 2016 the Group had £245 million of debt outstanding, equating to 28 per cent. of GAV.

£245 million outstanding debt comprised a term debt facility of £100 million together with associated interest rate swaps and £145 million drawn under the Group's revolving credit facility.

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

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. In contrast to operational wind farms, regulatory risk is the key risk faced by renewable developers.

There is currently over 9GW of operational onshore wind capacity plus over 5GW offshore.  Installed capacity is set to grow over the next few years to over 12GW onshore plus over 12GW offshore, despite recent policy changes for new projects, as assets in construction come into operation. In monetary terms, the secondary market for operational UK wind farms is approximately £33 billion, increasing to £60 billion in the medium term. The Group currently has a market share of approximately 3 per cent..

The Company does not expect any material change to its business as a result of the UK exiting the European Union ("Brexit"). Being solely UK focused and deliberately low-risk, all of the Group's assets and liabilities are inside the UK and sterling denominated. In addition, the regulatory regime under which the assets operate is robust, longstanding and rooted in UK legislation.

As an owner of operational wind farms, the key risk faced by the Group is power price. In general, independent forecasters expect UK wholesale power prices to rise in real terms from current levels, driven by higher gas and carbon prices combined with the ongoing phasing out of coal-fired power stations. 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.

In addition, the power price forecast incorporated in the current NAV was produced immediately pre Brexit. UK power prices are set by the marginal generator (typically gas-fired). Owing to post Brexit sterling devaluation, it is reasonable to assume that the price of gas will increase in sterling terms. Everything else being equal, this should feed into higher power prices and this is already being seen in the forward market.

As a further consequence of Brexit, both as a result of foreign exchange movements and the potential for further quantitative easing, the market is pricing higher inflation expectations. Increased RPI would be beneficial for the Group, primarily as a result of RPI-linked ROC revenue. We have modelled an increased long term RPI assumption of 2.75 per cent. reflecting market expectations.

In general, the outlook for the Group is very encouraging, with proven operational and financial performance from the existing portfolio combined with a healthy 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 2016

Condensed Consolidated Statement of Comprehensive Income (unaudited)

For the six months ended 30 June 2016

	Note	For the six months ended 30 June 2016	For the six months ended 30 June 2015
		£'000	£'000
Return on investments	3	26,838	20,273
Other income		224	218
Total income and gains		27,062	20,491
Operating expenses	4	(3,959)	(3,694)
Investment acquisition costs		(2,562)	-
Operating profit		20,541	16,797
Finance expense	12	(3,903)	(2,441)
Profit for the period before tax		16,638	14,356
Tax credit	5	344	955
Profit for the period after tax		16,982	15,311
Profit and total comprehensive income attributable to:
Equity holders of the Company		16,982	15,311
Earnings per share
Basic and diluted profit from continuing operations in the period (pence)	6	3.20	3.32

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 2016

	Note	30 June 2016	31 December 2015
		£'000	£'000
Non current assets
Investments at fair value through profit or loss	8	871,549	657,591
		871,549	657,591
Current assets
Receivables	10	749	3,619
Cash and cash equivalents		8,143	7,231
		8,892	10,850
Current liabilities
Payables	11	(6,047)	(3,675)
Net current assets		2,845	7,175
Non current liabilities
Loans and borrowings	12	(245,000)	(135,000)
Net assets		629,394	529,766
Capital and reserves
Called up share capital	14	6,025	5,068
Share premium account	14	350,971	253,310
Other distributable reserves		176,124	192,096
Retained earnings		96,274	79,292
Total shareholders' funds		629,394	529,766
Net assets per share (pence)	15	104.5	104.5

Authorised for issue by the Board on 27 July 2016 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 2016

For the six months ended 30 June 2016	Note	Share capital	Share premium	Other distributable reserves	Retained earnings	Total
		£'000	£'000	£'000	£'000	£'000
Opening net assets attributable to shareholders (1 January 2016)		5,068	253,310	192,096	79,292	529,766
Issue of share capital	14	957	99,563	-	-	100,520
Share issue costs	14	-	(1,902)	-	-	(1,902)
Profit and total comprehensive income for the period		-	-	-	16,982	16,982
Interim dividends paid in the period	7	-	-	(15,972)	-	(15,972)
Closing net assets attributable to shareholders		6,025	350,971	176,124	96,274	629,394

The total reserves distributable by way of a dividend as at 30 June 2016 were £263,098,988.

For the six months ended 30 June 2015		Share capital	Share premium	Other distributable reserves	Retained earnings	Total
		£'000	£'000	£'000	£'000	£'000
Opening net assets attributable to shareholders (1 January 2015)		4,607	205,023	227,973	48,643	486,246
Issue of share capital		7	704	-	-	711
Profit and total comprehensive income for the period		-	-	-	15,311	15,311
Interim dividends paid in the period		-	-	(21,425)	-	(21,425)
Closing net assets attributable to shareholders		4,614	205,727	206,548	63,954	480,843

The total reserves distributable by way of a dividend as at 30 June 2015 were £248,636,668.

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 2016

	Note	For the six months ended 30 June 2016	For the six months ended 30 June 2015
		£'000	£'000
Net cash flows from operating activities	16	31,407	24,144
Cash flows from investing activities
Acquisition of investments		(219,373)	-
Cash received for adjustment to purchase price of investments		3,200	-
Investment acquisition costs		(2,520)	-
Net cash flows from investing activities		(218,693)	-
Cash flows from financing activities
Issue of share capital	14	100,000	-
Payment of issue costs		(1,736)	(305)
Amounts drawn down on loan facilities	12	210,000	105,000
Amounts repaid on loan facilities	12	(100,000)	(105,000)
Finance expense		(4,094)	(2,823)
Dividends paid	7	(15,972)	(21,425)
Net cash flows from financing activities		188,198	(24,553)
Net increase/(decrease) in cash and cash equivalents during the period		912	(409)
Cash and cash equivalents at the beginning of the period		7,231	8,320
Cash and cash equivalents at the end of the period		8,143	7,911

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 2016

1.    Significant accounting policies

Basis of accounting

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 2015 and is expected to continue to apply in the Group's consolidated financial statements for the year ended 31 December 2016.

The Group's consolidated annual financial statements were prepared on the historic 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 2015. The audited annual accounts for the year ended 31 December 2015 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 in accordance with the International Standards on Auditing (ISAs) (UK and Ireland) or International Standard on Review Engagements (ISREs).

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

Under the terms of the Investment Management Agreement, the Investment Manager is entitled to a combination of a Cash Fee and an Equity Element from the Company.

The Cash Fee and Equity Element are calculated quarterly in advance, as disclosed on page 51 of the Company's Annual Report for the year ended 31 December 2015.

Investment management fees paid or accrued in the period were as follows:

For the six months ended 30 June 2016	Cash Fee	Value of Equity Element	Total amounts paid to the Investment Manager
	£'000	£'000	£'000
Quarter to March 2016	1,317	257	1,574
Quarter to June 2016	1,305	256	1,561
Total	2,622	513	3,135

As at 30 June 2016, total amounts payable to the Investment Manager were £nil (31 December 2015: £1,242,704). Total amounts paid to the Investment Manager for the six months ended 30 June 2015 were £2,898,791.

3.    Return on investments

	For the six months ended 30 June 2016	For the six months ended 30 June 2015
	£'000	£'000
Dividends received (note 17)	32,723	24,349
Shareholder loan interest received (note 9)	1,874	-
Gain on adjustment to purchase price of investment (note 8)	1,200	-
Unrealised movement in fair value of investments (note 8)	(8,959)	(4,076)
	26,838	20,273

4.    Operating expenses

	For the six months ended 30 June 2016	For the six months ended 30 June 2015
	£'000	£'000
Management fees (note 2)	3,135	1,958
PPS	-	941
Group and SPV administration fees	243	213
Non-executive Directors' fees	113	94
Other expenses	434	452
Fees to the Company's Auditor:
for audit of the statutory financial statements	30	32
for other audit related services	4	4
	3,959	3,694

The fees to the Company's auditor includes £3,600 (2015: £3,600) 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.

During the period, BDO was paid £95,000 in relation to a capital raise of the Company which was included in share issue costs.

5.    Taxation

Taxable income during the period was offset by management expenses and the tax charge for the period ended 30 June 2016 is £nil (30 June 2015: £nil). The Group has tax losses carried forward available to offset against current and future profits as at 30 June 2016 of £7,636,756 (30 June 2015: £4,971,439).

During the period, £344,000 was received from Little Cheyne Court as compensation for corporation tax losses surrendered via consortium relief in relation to the year ended 31 December 2015.

6.    Earnings per share

	For the six months ended 30 June 2016	For the six months ended 30 June 2015
Profit attributable to equity holders of the Company - £'000	16,982	15,311
Weighted average number of ordinary shares in issue	529,969,070	461,144,695
Basic and diluted profit from continuing operations in the period - pence	3.20	3.32

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.

7.    Dividends declared in relation to the period

Interim dividends paid during the period ended 30 June 2016	Dividend per share	Total dividend
	pence	£'000
In relation to the quarter ended 31 December 2015	1.565	7,931
In relation to the quarter ended 31 March 2016	1.585	8,041
	3.150	15,972

Interim dividends declared after 30 June 2016 and not accrued in the period	Dividend per share	Total dividend
	pence	£'000
In relation to the quarter ended 30 June 2016	1.585	9,554
	1.585	9,554

As disclosed in note 18, on 25 July 2016, the Board approved a dividend of 1.585 pence per share in relation to the quarter ended 30 June 2016, bringing the total dividends declared in respect of the period to 3.17 pence per share. The record date for the dividend is 5 August 2016 and the payment date is 26 August 2016.

8.    Investments at fair value through profit or loss

For the period ended 30 June 2016	Loans	Equity interest	Total
	£'000	£'000	£'000
Opening balance	-	657,591	657,591
Additions	113,380	109,537	222,917
Adjustment to purchase price of investment (note 13)	-	(1,200)	(1,200)
Gain on adjustment to purchase price of investment (note 3)	-	1,200	1,200
Unrealised movement in fair value of investments (note 3)	18	(8,977)	(8,959)
	113,398	758,151	871,549

For the period ended 30 June 2015	Loans	Equity interest	Total
	£'000	£'000	£'000
Opening balance	-	583,189	583,189
Unrealised movement in fair value of investments (note 3)	-	(4,076)	(4,076)
	-	579,113	579,113

The unrealised movement in fair value of investments of the Group during the period was made up as follows:

	For the six months ended 30 June 2016	For the six months ended 30 June 2015
	£'000	£'000
Decrease in DCF valuation of investments	(14,551)	(11,168)
Movement in cash balances of SPVs	3,030	7,092
Acquisition costs	2,562	-
	(8,959)	(4,076)

During the period, the Group acquired a 28.2 per cent. interest in Clyde.

The Clyde Extension is being developed by SSE within the same SPV (Clyde) as the operating wind farm. SSE has agreed to take construction risk and certain arrangements have been agreed to effect this which will remain in place until the commissioning date of the Clyde Extension. SSE has agreed to meet all construction costs relating to the Clyde Extension, and has provided an indemnity to Holdco and GLIL in respect of any claims against Clyde in connection with construction of the Clyde Extension.

Following the commissioning date Holdco and GLIL's 49.9 per cent. stake in Clyde will dilute to reflect the increase in value of Clyde as a result of the commencement of operation of the Clyde Extension. It is intended that the economic value of Holdco and GLIL's current stake will remain unchanged as a result of the dilution, and will reduce to a minimum of 30 per cent. in Clyde to reflect the increase in value of Clyde. Reserved matters, board representation rights and other minority protections will remain unchanged notwithstanding Holdco and GLIL's reduced shareholding. Holdco and GLIL have a right of first offer should SSE decide to reduce its shareholding, including upon the commissioning of the Clyde Extension.

Fair value measurements

As disclosed on page 55 of the Company's Annual Report for the year ended 31 December 2015, 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 Group'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 2016.

Sensitivity analysis

The fair value of the Group's investments is £871,549,388 (31 December 2015: £657,590,555). 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
			£'000	pence
Discount rate	8 - 9 per cent.	+ 0.5 per cent.	(29,378)	(4.9)
		- 0.5 per cent.	31,123	5.2
Energy yield	P50	10 year P90	(56,087)	(9.3)
		10 year P10	56,065	9.3
Power price	Forecast by leading consultant	- 10 per cent.	(51,301)	(8.5)
		+ 10 per cent.	51,507	8.5
Inflation rate	2.75 per cent.	- 0.5 per cent.	(30,612)	(5.1)
		+ 0.5 per cent.	32,227	5.3

The sensitivities above are assumed to be independent of each other. Combined sensitivities are not presented.

9.    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 2016
Bin Mountain	Northern Ireland	100%
Carcant	Scotland	100%
Cotton Farm	England	100%
Earl's Hall Farm	England	100%
Kildrummy	Scotland	100%
Maerdy	Wales	100%
Screggagh	Northern Ireland	100%
Stroupster	Scotland	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 2016
Braes of Doune	Scotland	50%
ML Wind*	England	49%
Little Cheyne Court	England	41%
Clyde	Scotland	28.2%
Rhyl Flats	Wales	24.95%

* The Group's investments in Middlemoor and Lindhurst are 49 per cent. (31 December 2015: 49 per cent.) and their place of business is England. These are held through ML Wind.

As disclosed in note 17, on 18 March 2016, Holdco advanced a loan to Clyde of £113,380,464 to replace loans from former shareholders. The loan accrues interest at a rate of 5.8 per cent. per annum.

Wind farm	Loan provided in the period	Loan interest received in the period
	£'000	£'000
Clyde	113,380	1,874
	113,380	1,874

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
					£'000
The Company	Braes of Doune	Land owner	Guarantee	Decommissioning	2,000
The Company	Stroupster	RBS	Counter-indemnity	Decommissioning	366
Holdco	Clyde	SSE	Counter-indemnity	Grid connection, radar, decommissioning	21,771
					24,137

The fair value of financial guarantees and counter-indemnities provided by the Group are considered to be £nil.

There were no other changes to security deposits and guarantees as disclosed on page 58 of the Company's Annual Report for the year ended 31 December 2015.

10.  Receivables

	30 June 2016	31 December 2015
	£'000	£'000
Prepayments	68	79
Other receivables	681	323
Amounts due in relation to wind energy true-up (note 13)	-	2,000
Amounts due as consideration for investee company tax losses	-	1,217
	749	3,619

11.  Payables

	30 June 2016	31 December 2015
	£'000	£'000
Deferred payment (note 18)	3,544	-
Loan interest payable	765	574
Commitment fee payable	84	216
Amounts due as consideration for investee company tax losses (note 17)	356	356
Share issue costs payable	244	85
Acquisition costs payable	168	126
Finance costs payable	54	304
Other payables	832	771
Investment management fee payable	-	1,243
	6,047	3,675

12.  Loans and borrowings

	30 June 2016	31 December 2015
	£'000	£'000
Opening balance	135,000	105,000
Acquisition loan facility
Repayments	-	(105,000)
Revolving credit facility
Drawdowns	185,000	190,000
Repayments	(100,000)	(130,000)
Term debt facility
Drawdowns	25,000	75,000
Closing balance	245,000	135,000

	For the six months ended 30 June 2016	For the six months ended 30 June 2015
	£'000	£'000
Loan interest	3,209	1,424
Commitment fees	327	150
Facility arrangement fees	275	675
Other facility fees	70	60
Professional fees	22	132
Finance expense	3,903	2,441

The loan balances as at 30 June 2016 have not been revalued to reflect amortised cost, as the amounts are not materially different from the outstanding balances.

There are no changes to the terms of the revolving credit facility as disclosed on page 60 of the Company's Annual Report for the year ended 31 December 2015.

As at 30 June 2016, accrued interest on the revolving credit facility was £183,883 (31 December 2015: £109,172) and the outstanding commitment fee was £83,616 (31 December 2015: £215,562).

On 11 March 2016, the Company extended the amounts drawn under the seven year term facility with CBA to £100,000,000 together with associated interest rate swap. The terms for the initial facility of £75,000,000 remain unchanged from those disclosed on page 60 of the Company's Annual Report for the year ended 31 December 2015. The margin for the extended amount of £25,000,000 is 1.65 per cent. and the swap rate is 1.23 per cent. per annum.

The swap is an embedded derivative closely related to the host contract. Accordingly it has been treated as a single fixed rate loan agreement which effectively sets interest payable at fixed rates of 3.59 per cent. for the initial amount drawn down of £75,000,000 and 2.88 per cent for the extended amount of £25,000,000 drawn down in the period.

As at 30 June 2016, accrued interest on the term debt facility and associated swap was £581,474 (31 December 2015: £464,862).

13.  Contingencies

On 24 March 2016 the Group agreed an amount of £1.2 million to be paid from BayWa in settlement of the Kildrummy wind energy true-up. This amount was received by the Group on 7 April 2016. The Kildrummy load factor assumption has been reduced accordingly.

During the period, the Group received £2.0 million from Velocita in settlement of the Maerdy wind energy true-up that was agreed in December 2015.

Wind energy true-ups for Cotton Farm and Earl's Hall Farm were also agreed in the period which resulted in no net payment.

The following three wind energy true-ups remain outstanding and the maximum adjustment to purchase price under each are as follows: Middlemoor £7.0 million; Stroupster £6.1 million; and Clyde Extension £4.7 million.  

14.  Share capital - ordinary shares of £0.01

Date	Issued and fully paid	Number of shares issued	Share capital	Share premium	Total
			£'000	£'000	£'000
1 January 2016		506,787,431	5,068	253,310	258,378
Shares issued to the Investment Manager
4 May 2016	True-up of 2015 Equity Element	7,686	-	6	6
4 May 2016	Q1 2016 Equity Element	246,275	2.5	255	257.5
4 May 2016	Q2 2016 Equity Element	247,475	2.5	254	256.5
		501,436	5	515	520
Other shares issued
17 May 2016	Capital raise	95,238,101	952	99,048	100,000
17 May 2016	Less share issue costs	-	-	(1,902)	(1,902)
30 June 2016		602,526,968	6,025	350,971	356,996

15.  Net assets per share

	30 June 2016	31 December 2015
Net assets - £'000	629,394	529,766
Number of ordinary shares issued	602,526,968	506,787,431
Total net assets - pence	104.5	104.5

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

	For the six months ended 30 June 2016	For the six months ended 30 June 2015
	£'000	£'000
Operating profit for the period	20,541	17,752
Adjustments for non cash movements:
Movement in fair value of investments (note 8)	8,959	4,076
Adjustment to purchase price of investment (note 13)	(1,200)	-
Investment acquisition costs	2,562	-
(Increase)/decrease in receivables	(347)	1,156
(Decrease)/increase in payables	(1,189)	449
Equity Element of Investment Manager's fee (note 14)	520	711
Consideration for investee company tax losses	1,561	-
Net cash flows from operating activities	31,407	24,144

17.  Related party transactions

On 18 March 2016, the Company drew down £165,000,000 from its revolving credit facility and £25,000,000 from the extended CBA facility and increased its loan to Holdco by £190,000,000 relating to the acquisition of Clyde. On 29 June 2016, the Company drew down £20,000,000 from its revolving credit facility and increased its loan to Holdco by £20,000,000 relating to the acquisition of Screggagh. During the period, Holdco repaid £24,690,736 of the loan and the amount outstanding at the period end was £268,822,374 (31 December 2015: £83,513,110).

As disclosed in note 9, on 18 March 2016 Holdco advanced a loan to Clyde of £113,380,464 to replace loans from former shareholders. The loan accrues interest at a rate of 5.8 per cent. per annum. Amounts received in the period from Clyde in relation to this shareholder loan were £1,873,729.

During the period £602,937 (30 June 2015: £nil) was received from Little Cheyne Court and £958,392 (30 June 2015: £955,202) was received from Braes of Doune, as compensation for corporation tax losses surrendered via consortium relief through the Group.

As at 30 June 2016, an amount of £356,369 (31 December 2015: £356,369) was due to Rhyl Flats in relation to corporation tax losses received via consortium relief by the Group.

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

	For the six months ended 30 June 2016	For the six months ended 30 June 2015
	£'000	£'000
SYND Holdco	4,132	4,053
Stroupster	3,947	-
Maerdy	3,093	1,935
Kildrummy	2,863	2,310
Rhyl Flats	2,779	3,144
Cotton Farm	2,682	1,628
Tappaghan	2,576	1,554
ML Wind	2,538	3,125
Braes of Doune	2,465	2,385
Earl's Hall Farm	1,978	1,040
Little Cheyne Court	1,952	1,968
Bin Mountain	1,008	680
Carcant	710	527
	32,723	24,349

18.  Subsequent events

On 25 July 2016 the Board approved a dividend of £9,554,337, equivalent to 1.585 pence per share. The record date for the dividend is 5 August 2016 and the payment date is 26 August 2016.

Group payables as at 30 June 2016 include £3,544,073 deferred consideration payable to the sellers of Screggagh. £544,073 comprises certain non-ordinary course of business receivables of Screggagh, which will be passed to the sellers on receipt. On 27 July 2016, Holdco made a payment of £2,870,000 to the sellers, representing deferred consideration of £3,000,000 less agreed adjustments of £130,000. The figure reflected in Group payables as at 30 June 2016 is the unadjusted amount of £3,000,000.

Defined Terms

BayWa means BayWa r.e. Operation Services GmbH and/or any other subsidiary of BayWa AG as the context requires

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 Investment Management Agreement

CBA means Commonwealth Bank of Australia

Clyde means Clyde Wind Farm (Scotland) Limited

Clyde Extension means the Clyde extension wind farm currently being developed by SSE adjacent to the operational Clyde wind farm

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

GLIL means GLIL Corporate Holdings Limited which is an investment vehicle of GMPF and LPFA Infrastructure LLP, and owns 21.7 per cent of Clyde

GMPF means Greater Manchester Pension Fund

Group means Greencoat UK Wind PLC 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

Lindhurst means Lindhurst Wind Farm

Little Cheyne Court means Little Cheyne Court Wind Farm Limited

LPFA means London Pensions Fund Authority

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 share of profit as governed by the Investment Management Agreement prior to 31 March 2015

RBC means the Royal Bank of Canada

RBS means the Royal Bank of Scotland PLC

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

ROC means Renewables Obligation Certificate

RPI means the Retail Price Index

Santander means Santander Global Banking and Markets

Screggagh means Screggagh Wind Farm Limited

Sixpenny Wood means Sixpenny Wood Wind Farm Limited

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

Stroupster means Stroupster Caithness Wind Farm (Scotland) Limited

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.

 

END

 

 

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