Greencoat UK Wind (UKW)
06/03/2025
Results analysis from Kepler Trust
Intelligence
UKW's NAV
total return, which had been previously announced, was -8.5% for
the year to 151.2p per share, with the most significant movements
from downward power price forecasts largely seen in the first half,
and a revised expectation on long term wind speeds, announced with
the Q4 NAV on 29/01/2025. The final results provided more colour on
this, which has seen a number of recent years' wind speeds
incorporated into the data, serving to lower expected long term
electricity generation by 2.4%.
Underlying
dividend cover for 2024 was 1.3x on a normalised basis. The board
is targeting a dividend of 10.35p per share with respect to 2025, a
rise in line with December's RPI of 3.5%.
The board and manager acknowledge the difficult
market backdrop in the alternative investment trust sector. In our
view, UKW has always been managed for the long term and by doing
the right things for shareholders. UKW was the first to list
in this sector, the first to reflect rising interest rates through
an increase in discount rates and the first to introduce a material
share buyback programme. The announcement on 10/12/2024 is another
example of UKW implementing shareholder friendly initiatives.
Management fees from 01/01/2025 run on the lower of market
capitalization and NAV. This level of fee reduction is, as yet,
unmatched by UKW's peers. The manager is therefore even more
strongly aligned with shareholders in the desire to see the share
price improve.
UKW's board and manager undertake to generate
and allocate capital wisely for shareholders. UKW recently
completed its initial £100m buyback programme announced last year.
UKW expects to generate over £1bn of excess cashflow in the next
five years, and to augment this with further disposals. In
the near term, excess capital will be applied in a new £100m
buyback programme, and beyond that UKW expects to allocate further
capital dynamically and between further, or accelerated, share buy
backs and repaying debt to reduce gearing.
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