Investec view: The NAV at 30 June 2022 was 153.6p/share, which represents an increase of 20.1p/share over H1 (+4.3p/share, +2.9% in Q2). A key driver of the increase in NAV was the uplift in the portfolio valuation, which added 10p/share. Increases in forecast power prices added 13p/share, and an increase in inflation assumptions (at Q1) added 6p/share. Excess cashflow added a further 10p/share. These moves were offset by depreciation and other assumption changes (-6p/share) and, notably, UKW disclosed an increase in its portfolio discount rate, which reduced the valuation by 3p/share. Net cash generated by the portfolio was extremely strong and covered the dividend 3.8x (without any debt amortisation). UKW portfolio discount rate increased by 50bps to 7.7%, reflecting both a greater proportion of merchant cashflows (which attract a higher discount rate vs. fixed cashflows) and an increase in the underlying benchmark rate. We understand that the split between the two drivers was roughly even. The Renewables Infrastructure Group (TRIG) also announced an NAV today as at 30 June 2022. It outlined that no change had been made to benchmark discount rates applied in the valuation, with demand for assets in the renewables sector remaining resilient. Both funds have recently transacted in the same asset, so UKWs move appears pre-emptive rather than a reflection of actual market pricing. Whether transactional pricing eventually moves remains to be seen, but the link between discount rates and risk-free benchmarks is anything but exact, as we have seen across over a decade of near-zero interest rates. We believe that this is a strong set of results and that the company is well-placed to benefit in the current macroeconomic environment, principally from higher inflation and elevated power prices, which are both likely to persist for longer than perhaps initially expected. As a result, the company is generating significant cashflow, and this more than underpins its RPI-linked dividend, and allows excess cashflow to be reinvested into pipeline assets. The shares are currently trading around NAV, which we believe is an attractive entry point, and given strong fundamentals, we upgrade to Buy. Gearing: At 30 June 2022, the company had £900m of fixed rate, term debt, which equates to c.20% of GAV. The £250m balance on the RCF at the beginning of the period was refinanced with £200m AXA term debt and £50m from excess cashflow during the period. The company has access to a £600m RCF that is currently undrawn. It also has cash balances of c.£236m, which in addition to the RCF and excess cashflow generated, will be used to fund the company’s committed pipeline of c.£771m.