LONDON - Greencoat UK Wind PLC (UKW) has announced a planned dividend increase and a new share buyback program despite a challenging market environment for alternative investment funds. Although the net asset value (NAV) recorded a total return of -8.5% to 151.2 pence per share for the year, impacted by lower electricity price forecasts and a downward revision to long-term wind speed expectations, the company plans to increase its dividend by 3.5% in line with December's retail price index (RPI). A dividend of 10.35 pence per share is targeted for 2025.
The annual results provided additional detail on the adjustments to long-term power generation expectations, showing a 2.4% decrease due to wind speed data in recent years. Underlying dividend cover for 2024 was 1.3x on a normalized basis.
Despite the challenging environment, UKW's Board of Directors and management emphasize their long-term management approach and shareholder-oriented initiatives. In order to align interests with shareholders, management fees were adjusted from January 1, 2025. They are now based on the lower of market capitalization and NAV - a fee reduction strategy not yet adopted by UKW's competitors.
UKW has already completed an initial £100 million share buyback program and expects to generate over £1 billion of excess cash flow over the next five years, supplemented by further asset disposals. The company plans to use surplus capital for a new £100 million buyback program and then dynamically allocate capital between additional share buybacks and debt repayment to reduce debt.
This strategy underlines UKW's commitment to generating and allocating capital efficiently for shareholders. It continues the company's trend of shareholder-friendly measures. UKW was the first company in the industry to go public, the first to adjust discount rates in response to rising interest rates, and the first to implement a significant share buyback program
