Greencoat UK Wind (UKW) has promised to sell more assets, buy back more shares while reducing borrowing after another “challenging” year delivered a 4.9% loss to shareholders.
However, in a sign of the conflicting pressures the £2bn alternative income fund is under as it faces another continuation vote in two months, the investment company said it would need to make a “disciplined return to reinvestment”.
Chair Lucinda Riches said while the initial focus would be on low-cost investments in existing assets, the company would also review acquisition opportunities that emerge from “dislocation in the market” that has seen renewable funds fall to wide share price discounts, forcing them to offload assets to appease shareholders with returns of capital.
She said the board had to consider the balance of the portfolio in order to support UKW’s inflation-linked dividends (which last month were switched to CPI from RPI in response to the government’s change in indexation for renewable subsidies) as its existing wind farms matured and reached the end of their subsidy periods.
Fund managers Stephen Packwood and Matt Ridley said: “Given the current market dynamics, there is potential to further enhance value for shareholders.”
However, for the time being the emphasis is on compensating investors for the near 29% discount at which UKW shares stand below net asset value (NAV), which has triggered a second continuation vote at the annual general meeting in April.
NAV dropped 17.8p to 135.5p per share in 2025 largely due to falling power price forecasts. Electricity generation was 8.5% below budget as the UK recorded its fifth successive year of below average wind speeds, which independent research has not definitively pinned on climate change.
Nevertheless, the company generated net cash of £291m to cover its dividends by 1.3 times. The company is targeting a 10.7p per share pay-out this year, up 3.4% in line with the consumer prices index, putting the shares on an 11% yield.
It also purchased £99m of its undervalued shares under its second £100m buyback programme which added 1.3p to NAV per share.
The company raised £181m in 2025 selling partial interests in three wind farms which it used to pay down debt which stood at £2.1bn at the end of the year. This is made up of £1.5bn term debt, £230m drawn on its credit facility plus a £408m share of the debt of the Hornsea 1 wind farm off the Yorkshire coast.
UKW shares have fallen 43% from a 167p peak in September 2022 but are 0.5% firmer this morning at 94p.
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