Greencoat UK Wind doubles share buyback after year of strong cash generation

(Sharecast News) - Greencoat UK Wind reported strong cash generation and strategic capital allocation in its full-year results on Thursday, despite a decline in net asset value and total shareholder return. The FTSE 250 renewable infrastructure fund, which invests in UK wind farms, also announced an additional £100m share buyback programme, doubling its total buyback commitment to £200m.

It said it generated 5,484 GWh of renewable electricity during 2024, avoiding 2.2 million tonnes of carbon dioxide emissions and powering two million homes.

Net cash generation from the group and its wind farm special-purpose vehicles reached £278.7m.

Greencoat UK Wind declared total dividends of 10p per share for 2024, and set a target of 10.35p per share for 2025, reflecting RPI inflation.

During the year, the company repurchased 59.2 million of its own shares at an average price of 137p each.

Additionally, it acquired a further 15.6% interest in the Kype Muir Extension wind farm for £14.25m, and divested 40% stakes in the Douglas West and Dalquhandy wind farms for £41m.

Balance sheet adjustments included an oversubscribed debt refinancing, reducing its revolving credit facility to £400m and replacing £325m of near-maturing debt with £425m in longer-term financing.

As of 31 December, total group debt stood at £2.24bn, representing 39.7% of gross asset value.

Greencoat UK Wind said its market capitalisation fell to £2.88bn from £3.5bn a year earlier, with a share price decline to 127.7p from 151.5p.

The net asset value per share dropped to 151.2p from 164.1p, while the total shareholder return was negative 8.6%, compared to a 5.4% gain in 2023.

Following the completion of its initial £100m share buyback on 13 February, the company said it was now launching an additional £100m programme.

It said the buyback, to be executed over the next 12 months by RBC Europe and Jefferies International, aimed to reduce the company's issued share capital.

The purchases would be made under shareholder authority granted at the 2024 annual general meeting.

Greencoat UK Wind said it was continuing to focus on delivering inflation-linked dividends while reinvesting excess cash flow to preserve long-term capital value.

"The board and the investment manager recognise that this has been a challenging year for investors, but have been working hard to drive shareholder value through proactive actions and continued active asset management," said chairman Lucinda Riches.

"Despite lower portfolio generation for the year, cash generation has remained strong at £279m.

"Over the next five years we expect to generate over £1bn in excess cashflow, and additional capital should be available through further opportunistic disposals, providing optionality for capital allocation and shareholder returns."

Riches said that, notwithstanding the current market conditions, the company's "simple, low risk and proven model" remained highly attractive.

"We have a sizable and diverse portfolio of high quality assets and are well positioned to help deliver the UK government's net zero ambitions.

"We are continuing to deliver net returns to investors of 10% on NAV, and we remain confident in our ability to continue to meet our objectives of dividend growth in line with RPI and capital preservation over the longer term."

At 0945 GMT, shares in Greencoat UK Wind were down 0.13% at 111.05p.

Reporting by Josh White for Sharecast.com.