Greencoat UK Wind - Capital Allocation Update

Greencoat UK Wind

26/10/2023 07:01

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RNS Number : 3267R  Greencoat UK Wind PLC  26 October 2023

26 October 2023

 

This announcement contains inside information

 

Greencoat UK Wind PLC

 

Capital Allocation Update

 

Increase in Annual Dividend & Commencement of Share Buyback Programme

 

Greencoat UK Wind PLC (the "Company" or "UKW"), the leading listed renewable
infrastructure fund, invested in UK wind farms, today announces an increase in
its annual dividend target to 10p and the launch of a share buyback programme
of up to £100 million (the "Programme").

 

Background

 

From admission to the London Stock Exchange on 27 March 2013 to 30 September
2023, the Company has generated £1,764 million of cash flow, paid £887
million of dividends and reinvested £877 million of excess cash generation.
The Company has increased its dividend in line with RPI every year and
additional funds generated have been reinvested in UK wind power assets to
drive NAV growth above RPI, with UKW now delivering net returns to investors
of 10%, assuming shares purchased at NAV.

 

The Company is very well capitalised enabling UKW to benefit from its market
leading position, as evidenced by the Company's recent investment in the
London Array offshore wind farm.

 

In line with UKW's capital allocation policy, which is regularly reviewed by
the Board, the Company always considers a range of options to optimise
shareholder returns from its leading market position.  Given continued
operational strength, which the Board and Manager believe is not reflected in
the current share price, the Company is launching a share buyback programme of
up to £100 million and increasing the annual dividend target to 10 pence per
share.

 

Increase in Annual Dividend

 

As a consequence of the Company's prospects, strong balance sheet and cash
flow generation, the Board has determined it will increase its annual dividend
target to 10 pence share for the 2024 financial year, an increase of 14.2%
over the 2023 target dividend of 8.76p. This increase is significantly higher
than forecast December 2023 RPI inflation.

 

In recognition of the very strong cash flow delivered by the business through
2023 to date, the Board also has decided to pay a 3.43 pence per share
dividend for Q4 2023 increasing the 2023 full year dividend target to 10 pence
per share.

 

Since listing, the Company's aggregate dividend cover has been 2.0x and the
average dividend cover is projected to remain strong over the long term,
whilst also remaining robust in the face of a range of extreme downside power
price sensitivities. The Board expects that future dividends will continue to
be increased in line with RPI, as has been the policy since IPO.

 

Commencement of Share Buyback Programme

 

Reflecting the discount to NAV that the shares are currently trading at, as
well as the Company's prospects, strong balance sheet and cash flow
generation, the Board has determined that the commencement of a share buyback
programme will also provide greater flexibility to achieve an optimal use of
cash to deliver value for shareholders and represents a highly attractive
investment opportunity for the Company.

 

The Programme will commence shortly, and subject to market conditions, end by
no later than 25 October 2024.  The sole purpose of the Programme is to
reduce the issued share capital of the Company and therefore the repurchased
shares will either be held in Treasury or cancelled, either immediately or at
a later date.  Treasury shares are not entitled to dividends and have no
voting rights at general meetings.

 

 

The Programme will be executed under the authority granted by shareholders at
the Greencoat annual general meeting on 23 April 2023 to acquire up to
347,506,861 shares, equating to c.14.99% of the issued share capital at the
time.

 

The Company is entering into a non-discretionary arrangement with RBC Europe
Limited and Jefferies International to conduct the Programme during closed
periods.  Any purchase of shares during a closed period pursuant to the
Programme shall be made independently of the Company.

 

Any purchase of ordinary shares pursuant to the Programme will be announced no
later than 07:30 am on the business day following the calendar day on which
the purchase occurs.

 

The Programme will be conducted within certain pre-set parameters, including
those prescribed by the Market Abuse Regulation 596/2014 (as it forms part of
domestic law by virtue of section 3 of the European Union (Withdrawal) Act
2018 (as amended)) and Chapter 12 of the Listing Rules.

 

The Board will keep the programme under regular review and continue to assess
it against its capital allocation priorities in light of the then market
conditions and opportunities.

 

Lucinda Riches, Chairman of Greencoat UK Wind, said: "Since listing in 2013,
UKW has established a strong track record of delivering significant
shareholder value, having paid £887 million of dividends to date and
reinvested £877 million of excess cash generation. Reflecting our market
leading position, as well as the Company's strong prospects, balance sheet and
cash flow generation, I am pleased to announce an increase in the annual
dividend target by over 14% to 10p per share for the 2024 financial year and
an increase in the 2023 dividend target to 10p, as well as the launch of a
share buyback programme of up to £100 million, to the benefit of our
shareholders."

 

 

For further information, please contact:

Greencoat UK Wind PLC                      020 7832 9400

Stephen Lilley

Laurence Fumagalli

 .

Ocorian Administration (UK) Limited - Company Secretary      028 9693
0219

Josh Finlay

 

Headland
020 3805 4822

Stephen Malthouse

Rob Walker

Charlie Twigg

ukwind@headlandconsultancy.com (mailto:ukwind@headlandconsultancy.com)

 

RBC Europe Limited                            020
7653 4000

Matthew Coakes

Duncan Smith

Max Avison

Jack Wood

 

Jefferies International Limited              020 7029 8000

Stuart Klein

Gaudi Le Roux

 

 

Notes to Editors:

Greencoat UK Wind PLC is the leading listed renewable infrastructure fund,
invested in 48 operating UK wind farms with net generating capacity of
1,973MW. The Company's aim is to provide investors with an annual dividend hat
increases in line with RPI inflation (10p for 2023) while preserving the
capital value of its investment portfolio in the long term on a real basis
through reinvestment of excess cash flow.

UKW provides investors with the opportunity to participate directly in the
ownership of UK wind farms, so increasing the resources and capital
dedicated to the deployment of renewable energy and the reduction of
greenhouse gas emissions.

UKW is managed by an experienced team at Schroders Greencoat LLP, a leading
European renewable investment manager with over £10 billion of assets under
management. UKW is governed by a strong and experienced independent board.

UKW is incorporated in England and Wales and is a UK Investment Trust.

For more information about UKW, please visit http://www.greencoat-ukwind.com
(https://protect.mimecast-offshore.com/s/uy5HCD9okjCnJ8ABCWtQvg?domain=greencoat-ukwind.com)

For more information about Schroders Greencoat LLP, please
visit http://www.schrodersgreencoat.com
(https://protect.mimecast-offshore.com/s/ez97CE9pRkCg0ZxWIwDDJh?domain=schrodersgreencoat.com)

 

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