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.