Exceptional costs and higher finance charges dragged Renewable Energy Generation (WIND) into the red at the half-year stage, but the big news came after the half-year end when the onshore wind developer signed a strategic alliance with global investment manager BlackRock. REG will sell two wind farms to BlackRock for £32.1m, which includes an upfront cash payment of £16.2m, and will run them for it in return for an asset management fee. The 4MW Orchard End wind farm could also be sold in the spring.
The two farms sold generate 16MW of electricity, leaving REG with operational capacity of 41.15MW, with a further 10MW under construction and another 30MW of consented schemes. Even without a development pipeline of around 1,000MW, analysts at Cenkos reckon the £2m per MW valuation by BlackRock values REG's assets at 112p a share.
Progress during the first half of the year included winning planning consent for the 10MW St Breock Repower project in Cornwall, while project financing was completed for the 10MW Sancton Hill wind farm, and also the 6MW South Sharpley site, which started generating electricity in January.
Cenkos is reviewing estimates post-results.
| RENEWABLE ENERGY GENERATION (WIND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 66p | MARKET VALUE: | £68.2m | |
| TOUCH: | 65-66p | 12-MONTH HIGH: | 66p | LOW: 45p |
| DIVIDEND YIELD: | 3% | PE RATIO: | na | |
| NET ASSET VALUE: | 60p | NET DEBT: | 29%* | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 6.26 | 0.01 | 0.01 | 0.50 |
| 2012 | 6.47 | -1.70 | -1.46 | 0.50 |
| % change | +3 | - | - | - |
Ex-div: 20 Mar Payment: 8 Apr Includes £6.1m of restricted cash | ||||
