Low wind speeds hit Greencoat UK Wind’s portfolio
Schroders-run investment trust Greencoat UK Wind saw its net asset value drop slightly over the last year, as the trust struggled with a drop in wind speeds and lower power prices.
The trust, which invests solely in windfarms, revealed in its annual results that electricity generation in its assets fell 13 per cent throughout the year due to “low wind.”
As a result, its net asset value declined to £3.8bn from £3.9bn or to 164.1p per share from 167.1p per share.
At the end of December aggregate group debt was £2.4bn, 38 per cent of gross asset value.
Despite this, the trust has still pushed to keep growing its assets, with 49 operating wind farms now sitting within its portfolio.
Throughout the year, the trust saw its investments generate 4,743GWh of sustainable electricity or approximately 1.5 per cent of the UK’s electricity demand last year.
This meant the portfolio generated enough electricity to power 2.3m homes and avoid approximately 2.5m tonnes of CO2 emissions.
Greencoat UK Wind currently sits on a 16.1 per cent discount to net asset value, having been plagued by the same problems as many in the investment trust sector.
While the trust has seen its share price decline 6.5 per cent over the last year, it’s the third-best performer out of the 22 renewable energy infrastructure trusts on the market, with the average returning -17.5 per cent.
In October, the trust upped its dividend and launched a share buyback programme of up to £100m, pushing its dividend per share for the year from 7.7p to 10p – above its initial target of 8.8p. The group has committed to paying 10p per share in 2024.
Lucinda Riches, chair of Greencoat UK Wind, noted the trust’s recent £821m investment in the Dalquhandy, London Array, South Kyle and Kype Muir Extension wind farms, pushing its portfolio to two gigawatts of net generating capacity and maintaining its position as one of the largest wind farm owners in the UK.
“With the final dividend for the year, our investors will have received over £1bn of dividends since listing. With our continuing strong cash flow and dividend cover, we can confidently target a dividend of 10p per share with respect to 2024, extending our track record of attractive dividends and returns,” she said.
“We are now delivering net returns to investors of 10 per cent 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 in real terms.”