Greencoat UK Wind PLC (UKW) Earnings Call Transcript & Summary

Good morning. Welcome to UK Wind's 13th Annual Results Presentation. Before we get into the results and the presentation, just a bit of housekeeping. We expect to run for about 30 minutes and to allow plenty of time for Q&A at the end. If you're online, please familiarize yourself with how to ask questions so that you're not frustrated later. I think it's pretty obvious, but I haven't done it myself. There's also a disclaimer in this pack at the end, which I'd encourage you to read in your own time. And lastly, for those in person as a health and safety conscious business, just be aware of the fire exit signs over there and the doors on the right behind you. So Steve and I will take you through the results shortly. But before we do, we just wanted to give a bit of context to the results. So the broader market backdrop for renewables is very positive. The future of deployment of renewables in the U.K. gathers further support and pace. And I'm sure you've all seen the award of around 15 gigawatts of wind and solar capacity in the recent AR7 auction. And the pace of electrification also continues. We'll look at that a bit later in the presentation, too. And it's clear that in the short term, wind and solar will be the generators that provide the extra electrons. There's a disconnect, of course, between the broader positive sentiment around renewable energy and renewable energy investment trusts. It won't have escaped any of you that it's been a challenging year with falling NAVs and below budget performance weighing on sentiment across the sector. So it remains clear to us that this is a sector that, frankly, is still too big for the amount of inherent demand. And whilst a number of companies have left the sector, we think that this could be the year where we see more of that, particularly with the advent of activism and the launch of processes that everybody can see. So we remain of the view that further rationalization is necessary for a return to health for the sector. And against that backdrop, we delivered relatively robust cash generation again and shown that the Board and Manager are active in addressing the situation that the company is in. So our actions in 2025, which we'll talk about in more detail later, GBP 181 million of disposals all at NAV, taking the total to GBP 222 million, GBP 109 million of buybacks, so GBP 200 million in total and a significant reduction in debt principal of GBP 168 million. And you'll also see in the financial results this year, the effect of the change to fee basis in December '24, turning into a reduction in cash paid for fees for shareholders. So whilst these actions demonstrate ours and our Board's commitment, it's clear that there's more to do to enhance shareholder value. We remain a highly cash-generative business. And if we look at the capital allocation optionality that we have over the long term, it's significant. So we'll also walk through our priorities for 2026 and then look at the 5 years beyond that. Steve will now take you through the results.

So thanks, Matt, and good morning, everyone. So as Matt said, I'm going to take you through the financial and operational performance during 2025. And here are some of the financial highlights. And I think you all know it's been a difficult year with wind speeds during the first half of the year being some of the lowest we've seen this century. And then backdrop of that falling power prices over the course of the year as well. But despite that, we still had a pretty robust dividend cover of 1.3x and net cash generation of GBP 291 million. And that was helped by wind speed normalizing during the back end of last year. We also thought we'd present here our EBITDA number to help you compare us against some of our broader peers. And it's also worth noting that whilst the portfolio IRR might be 11%, our dividend yield on NAV is now at 8% and 11% on our share price. So on to net cash generation. So again, consistent with previous years, we've got a very high operating margin of 71%. And this is a high operating business with high revenues and relatively low operational costs, and this will remain a high-margin business for the years to come. In terms of looking at some of the variances over the year, as you can see, revenue is slightly up compared to last year. And there's a combination of factors to do that. One is the lower management fee, one is lower debt costs and also the inflation linkage in our revenues as well, which helps increase the underlying cash flows year-on-year, all things being equal. SPV level debt amortization, again, might appear low compared to last year, and that was because in 2024, there was a one-off payment at Hornsea 1 relating to weight compensation proceeds that we received, which we used to delever the project. And the actual overall reduction in debt level will continue because of the disposal we made in H1 -- H2, sorry, for Hornsea 1. Also, as Matt mentioned earlier on, we've reduced our debt principal by GBP 168 million during the year. So that will continue to reduce the overall debt burden of the business. Tax is slightly up from 2024, and this is reflective of the ongoing run rate of the business being a high operating margin business, but also some of the writing down allowances, changes in the government that came out from the November budget, which we'll touch on later on. Management fee led to a GBP 6 million saving of cash for shareholders. We remain the first and only person in our sector to reduce fees to the lower of NAV or market cap. And obviously, now we're on market cap. And actually, it's worth pointing out that although it's a GBP 6 million saving in cash on a P&L basis, it's actually more like GBP 10.5 million savings for shareholders, which we think is a significant share of alignment between the manager and our shareholders. And indeed, if we continue to trade at around about a 24% discount to NAV, the ongoing charge ratio will fall to 73 bps, which we think is a pretty competitive proposition and shows again our alignment with our shareholders. So just a few points on dividend cover. So again, we believe it's a very robust position, 1.3x despite those really low wind speeds during H1 and the lower power prices experienced during the whole year. That normalization of wind speeds during H2 really helps get close to budget. And we've seen that performance continue in the early part of this year, which we can touch on a bit later on. You can also see on this chart some elements of the capital allocation activities that we've undertaken during 2025. So that includes GBP 181 million in disposals, GBP 109 million spent on share buybacks and GBP 168 million reduction in debt principal. And that's left us with a net increase of cash on the balance sheet at the end of 2025 of GBP 16 million. So in terms of dividend track record, this is a 2025 was the 12 consecutive year of paying at or above inflation increases dividend, which leaves us as one of only a handful of FTSE 250 businesses to have achieved this, and we're pretty proud of that fact. We've announced a 3.4% increase in dividend for 2026 to 10.7 pence, we think this stands us out against our peers. Historic dividend cover has been 1.7x, which again, we think is a healthy position. And going forward over the next 5 years, the guidance is 1.8x, giving us plenty of capital to allocate in the best interest of shareholders. So on to net asset value and what the balance sheet looks like. So moving from left to right on the chart, you can see the net cash generation delivered 13.2 pence per share, which led to the 1.3 dividend cover. At the beginning of the year, some of you may remember, we are forecasting 1.8x dividend cover. And in order to bridge that gap from 1.8x to 1.3x, about 0.2 of that was due to the aforementioned lower budget generation due to the low wind speed principally in H1. 0.2 again was from lower power prices and 0.1 is from a combination of factors, including some late revenues and a reduction in REGO pricing achieved during the year. You can also see the equity effects of capital allocation here, 1.3 pence per share increase as a result of the capital allocation, where, as I mentioned earlier, we spent GBP 109 million buying back around 95 million shares. And then looking at some of the forward valuation assumptions. I talked a bit about power prices in '25 and in '26 onwards, we also see a reduction. We'll talk more about that on the next slide. And going right to the other side of the chart, we've also shown some of the impacts of government policy during the year. So firstly, writing down allowances were reduced from 18% to 14% in the November budget. And we all know about the ROC indexation consultation, which was announced at the end of January, reducing the inflation on the ROC buyout from retail prices index to the consumer prices index. And together, both of those effects have had a 3 pence per share impact on NAV. So on to power prices. So first, just taking a step back, so how do we come up with our power prices. So in the first couple of years, we take the futures market. So this is actual traded prices in the market where people are buying and selling power at those prices, and we take those and use those directly for the first couple of years. After that, we use a leading market consultant to come in and forecast the rest of this curve, which you can see in the top left-hand side of here. To 2029, compared to last year, we're about 10% lower. So there has been a drop in power prices. And in the 2030s is around about 5% drop, and this trends towards the 2040s onwards round about GBP 50 a megawatt hour in real terms. Maybe just thinking a little bit about supply and demand as well and the dynamics there. So with data centers, with AI, with electrification of heat, electrification of transport, we see some strong factors to increase demand for electricity. And we think that's going to help support power prices over the short, medium and long term. Also, what's interesting about all those factors is they could be responsive. So not necessarily baseload drawing power, they could be responsive to intermittent generators like wind, which we think will be helpful for us again in the short and medium term. In terms of why power prices have been reducing, it's principally a result of gas prices as we soften up from the war in Ukraine. There's also, to a lesser extent, the impact of carbon softening as well. It's important to remember that 60% of U.K. wind's cash flows over the next 5 years are fixed and have -- the vast majority of which have a very strong inflation linkage as well. We've also been exploring options to fix power prices, both in the short and medium term. And over the past 2 or 3 months, we fixed 150 gigawatt hours per annum of offshore wind up until for a couple of year period. And we're also looking at additional options as well, both physical, financial and insurance options in order to mitigate some of the power price risk. Final point on this slide in the bottom left is the table. So as you can see here, we're showing what the dividend cover is over the next 5 years of a range of different power price assumptions. I think what you can take from this is that even at a very low power price, like GBP 30 per megawatt hour, we're still more than covering our dividend after inflating that dividend by CPI too, which shows the resilience in the business model. Okay. So we talked a bit about wind resource, and we thought this chart would just help explain exactly the phenomenon that we experienced during 2025. So you can see the horizontal dash green line show the H1 average and then the H2 average. And you can see that massive change from H1 to H2 with that normalization of wind speeds. In H1, we had 4 months out of the 6 with more than a 20% reduction to the annual long-term average. But that big recovery in H2 has really helped us in terms of delivering that net cash generation and the 1.3x dividend cover. And indeed, that improvement has been seen in January and February, where we're above budget to date and combined with some of the lower late revenues that we didn't receive at the end of '25, gives us some significant tailwinds going into Q1 2026. Now of course, in terms of availability of our turbines, it's important to make sure that your kit is available to generate as and when the wind is blowing. And we're pleased to say that last year, we had availability more or less on budget. So going on to the balance sheet. And where the -- what the debt structure looks like. So many of you will know that we have term debt, but we've also got about 10% of our debt is structured in RCF, short term. About 20% is amortizing. That's related to Hornsea 1 with the rest all being term debt. And that is spaced with different maturities, as you can see on the right-hand side here, which we believe reduces refi risk. We like the option of the term debt because it allows us to decide when and where to deploy our capital rather than being fixed with in terms of the amortization profile. We also think the bank market is highly liquid, very competitively priced and flexible in terms of repayments, which some other structures do not give you. And as I mentioned earlier, we've actually reduced our debt burden by GBP 168 million during 2025. So although gearing hasn't reduced to below sub 40%, that's mainly as a result of a decrease in GAV rather than the gearing itself in absolute terms not reducing. You'll note also that we have a couple of upcoming maturities, one in November and one in May next year. We've already started discussions with lenders, and we're seeing very strong appetite to refinance that debt. And we expect the cost to be broadly similar to they are today and in the worst-case scenario, maybe a few million more in terms of interest costs per annum. Our current lenders have significant appetite for this. And we've actually seen that in 2024, we managed to refinance GBP 750 million through our existing lender club, and we expect to continue that going forward. The refi that we're working on at the moment, we expect the November tranche to be refied probably late Q3, maybe early Q4, with the May '27 maturity refied in Q1 2027. So Matt will talk to us now about market backdrop, capital allocation and strategy. Thank you very much.

Thank you, Steve. So let's zoom out for a bit of broader context on the renewable energy market backdrop, which we spoke a bit about at the beginning and also our plans and actions for capital allocation and a bit more about the longer-term strategy of the business. So electrification, as we mentioned earlier, continues at pace. You can see here, based on the range of forecasts as estimates, an increase of between 50% and 100% of the number of electrons that we need by 2040. It's pretty significant. All demand is good for generators. But in particular, and it's a point that Steve touched on, dynamic demand or demand that's responsive to pricing is particularly good for intermittent generators when you don't get to choose how you dispatch. If you just look at one of the examples of potentially demand-driven use, you see the blue wedge that grows over time. That's the electrification of transport. So whilst EV targets for this year are slightly behind government targets, I think it's 25% versus 28%. There are still 2 million EVs on the road today and expect it to be 6 million to 7 million by 2030. That's a lot of electricity that's needed, right? And just to do a bit of simple math, if you had 7 million EVs, you go and plug them in a home, let's just guess the average charging rate is 3 kilowatts per hour. I've got about 7, I think in my house, but. If you do that, that's 21 gigawatts of instantaneous demand if everybody plugged their car in at the same time, which, of course, they won't do. And it's not that we don't have the number of electrons for that, we do, but 21 gigawatts of demand is 1/3 of peak demand, right? So I think there's a high level of coexistence of interest in optimizing when things are charged. But all of this you can do today, right? You just need a half hourly meter at home, lots of people have those and a smart cable. And if you do that, I don't really mind when my car is charged as long as it's charged at 80% by 7:00 a.m. An algorithm can pick, if you like, the half hours overnight that is cheapest. They could, in the future, coincide with a more intermittent driven system with the times when renewables are generating, obviously, not solar. And that is quite helpful in terms of reducing or being constructive for the capture rate discount that intermittent generators can get. Another key area of growth in demand and one that we think is underestimated by most forecasters is data centers, AI. I don't know how much you will use AI more than you used to. I certainly use it quite a lot. I didn't write this speech or presentation, by the way, but it's going to get a lot of use, right? And data center operators themselves are recognizing that the constraints in getting connected are around their preference for baseload power demand. But actually, a lot of hyperscalers, Google included, you can go and see on their website, are looking at how they can order programming that their data centers do, so nonessential tasks to match the point at which you have either cheaper electricity or an abundance of it. So I think the smart demand future is coming. And I think that's really, really constructive for intermittent generators. So that obviously brings the question of where, if we think we need more electrons, well, where are they going to come from? So you've all seen the outcome of allocation round 7. It's 15 gigawatts of new renewable capacity. Why renewables? There's a couple of main reasons, and we'll address this in a carbon agnostic way. So first, speed. Renewables are relatively quick to deploy. Once you have the grid program in place and a lot of work, I think you can see it's been done on that. Onshore can be built in 12 to 18 months, depending on the size and complexity of the site. Solar could be 6 to 12 months, again, depending on the size and complexity. Offshore wind obviously takes a little longer, perhaps 3 years, but that's a relatively short-term deployment when you think about the alternatives of where new electrons can come from. So first, you think about nuclear. I personally think nuclear does have a significant role to play in the U.K.'s electricity mix. But the flash to bang from award of subsidy commencement of planning and project for Hinkley Point is 2013 to the first electrons in 2030. That might be a slightly uncharitable characterization because some of that time is spent on planning and modeling and health and safety and design, which is replicable across energy future nuclear energy plants, but it's still a relatively long time to wait. The second new area, of course, would be to add new gas. But given that there's a significant global demand for gas turbines, the waiting period can be as much as 5 years. The second point really is cost. So you can see here that in 2024 money prices for the sites that have got 15 gigawatts of capacity in CFD, ranging between GBP 65 and GBP 90. The government's own expectation of the cost as in the levelized cost of electricity, and all the data is on their own website. For a new gas plant is around GBP 150 a megawatt hour. And having said -- I'll steer clear of carbon, I will make a slightly political comment. I mean I think it's pretty clear in the short term, renewables are there. There is quite a lot of political noise out there that says, well, actually, we don't need renewables, we can rely on gas. There's a lot of things we can do. I think the fundamental question that a lot of that fails to address is where are the electrons going to come from and when, right? Renewables is there, you know the cost, the grid is being built around them. They're deliverable. And if you want a vision of what a future looks like where you really start to curtail renewable growth, just look at the PGM market in the U.S. So that's in a significant fall in the amount of new renewable projects that are expected to be connected. And that's fine. But where are the new electron is going to come from? So if you look at the prices in that market, and we have assets in there in our U.S. business, power prices are up 10% to 15% over the next 3 or 4 years. Why? Because there's going to be a shortage. Capacity prices are even higher. So there's a glimpse of the future of what it looks like if you don't have renewable capacity coming online. So having spoken about how many renewables there are and how they're great, it's probably a good moment to just set a reminder of what UK Wind's business model is, how it's worked over time and how reinvestment has been a key pillar of it. So over time, we've generated GBP 2.4 billion of free cash, GBP 1.4 billion has gone in dividends, which is a number that always staggers me every time I read it out and GBP 1 billion has gone back in reinvestment. And it's always been structured that way and designed for the long term to grow organically in essence. And of course, the amount of capital available to do something with can be enhanced by disposals. So if we look at how that played out in 2025, we show here the commitment and work that we and the Board have done to deliver on the priorities that we had. So first of all, net cash generation, we've added back the amount of debt that we amortized inherently and the disposal and affected our sources. And you can see the dividend is there. It's been maintained, it's 12th consecutive year of paying a dividend that increases in line with inflation. A significant amount of debt repayment that doesn't appear in the gearing ratio that many are fond of because the NAV has fallen. We've accepted that. We've acknowledged that, but GBP 168 million of principal came off of the debt stack that we had last year. And GBP 109 million spent buying shares back, as Steve said, taking the total to GBP 200 million over time, the largest program in the sector, the balance being a small amount of cash. So looking at the work that we've done over 2025, it's clear that there's more to do to protect and enhance shareholder value. So we'll look at where we're going in 2026. And just a further demonstration of us being a cash-generative model, we set out a range of net cash generation for the year for next year. There's a bit of excess cash on the balance sheet. And we remain focused on delivering further disposals in line with the GBP 222 million we've delivered in the last 14 months and work continues there fulsomely. If you take that as our sources are available to allocate throughout the next year. The first port of call, as it's always been for UK Wind is a dividend that's supported by a very clear policy. I would say it's unrivaled in clarity. You've 12 years of knowing exactly what's going to happen and being surprised to the upside. You now have a dividend that is targeted to be linked to CPI rather than RPI because of the changes made to the RO through the indexation consultation. It's a very clear signal for investors that the dividend is there. That's the policy. It's unambiguous. Beyond that, I think it's clear to everyone that share buybacks, particularly when you're at the discount that we stand out this morning are an accretive short-term use of capital. So that will definitely be a feature of this year. But we also have to be mindful of the balance sheet of the business. So despite paying off GBP 168 million of debt last year, we still stand above our 40% debt level. That doesn't have any sort of inherent consequence for the business. It just means we can't draw more debt to invest. But nonetheless, if we wanted to with a small amount of capital that sits at the bottom of the waterfall, make a disciplined return to reinvestment, we think it's sensible to be below 40% in most cases. So our first priority this year will be to degear the business a little, and we expect to repay a portion of the RCF on its next row day, which is the end of March. We'll announce that at the time. So when we think about a return to reinvestment, this isn't -- I wouldn't expect if I were you for us to go out and buy a whole bunch of shiny wind farms. Really, we're talking about investments that have relatively low cost but reasonably high optionality. So looking at the assets that we have in our own portfolio, there's a number where for a relatively low cost, you can seek to extend the lease beyond the horizon, the operational horizon that you presently have to preserve the optionality for repowering. That isn't going to work for every site. Not every site should be repowered. But if you can get the optionality for it at a relatively low cost that to me seems like a very sensible investment that plans for the future deployment of the business. And there are also adjacent extension opportunities across our portfolio where, again, for a relatively low amount of money, you could secure the rights to build sites without taking development risk. So that's the sort of characterization of reinvestment opportunities that we're thinking about this year. But you'll note that it comes at the end of the waterfall. So then if we look forward to the next 5 years and think about the capital that we'll have to allocate, again, a further demonstration that we remain a highly cash-generative business. And we show here the outturn. We've quoted EBITDA figures for the first time, as Steve said, to, our comparison against a broader set of peers. And net cash generation, GBP 2 billion to GBP 2.4 billion. We've used a sensitized range across power prices and energy production, GBP 1.2 billion of dividends, that's our current dividend inflating in line with CPI over the next 5 years. And that leaves a material amount of capital at the end, GBP 0.8 billion to GBP 1.2 billion, so central case, GBP 1 billion to deploy over the medium term. And that to me seems like a pretty good moment just to remind people of the UK Wind business model. It's always been built on reinvestment, right? 13 years on from the IPO, the average age of our site is just over -- our site is 9 years. You can achieve that through reinvestment, right? And if we invest with discipline, as we've done today, you can see here that by adding the blue stacks of cash flow, which are the future yield from reinvestments, you can increase the amount of free cash that's available to investors, which then increases the amount that you have to deploy going on and so on and so forth. In effect, it's compounding in the fund's hands. That's the power of reinvestment. Obviously, our existing portfolio's cash flows will fall, but that green line in effect is assuming that we never do anything with excess dividend cover. So it's an unrealistic scenario, but it's a point to illustrate the power of reinvesting over time. You also, when you reinvest, grow the gross asset value of the business. So all other things being equal, you reduce the percentage of debt over time by growing the GAV of the business. And it is clear to us that there's a range of medium-term opportunities for investment, some in our portfolio, some outside. And when we look at what to invest in, we'll have the same discipline we've always had, thinking about what works for the products that UK Wind is, what's most additive to the portfolio and also using reinvestment and disposals as a way to trim and shape the portfolio in terms of fixed cash flow. That's the optionality that's available for us. So just to summarize before we allow some time for Q&A. Let's be clear, we recognize that there are challenges in the sector. As we've said, we remain of the view that there's just too many products in our sector for the level of inherent demand. But there are signs that rationalization is underway with the advent of activism and the things we mentioned earlier. And against that backdrop, we've continued to take action and we will continue to take action, setting out what we've achieved last year and where we expect to go this year and reinforcing that we have unrivaled clarity in our dividend policy. Because looking at the longer term, looking back at the renewables market, looking at AR7, looking at the electrification of demand, we have a cash-generative model with a huge addressable market. So we believe it's a year where you might see sector rationalization, return to health with fewer larger companies. And in the meantime, our job is to generate and allocate the capital that we have as wise stewards of your company. Thank you for your attention for the last 32 minutes. We're now going to move to Q&A, which John will compere.

Good morning, everyone. So we'll start with questions in the room. There are some online that I've got here that we can address first. So if you -- there's a mic, if you want to put your hand up, I can come to you if you just state your name and your organization, and we'll go from there. Given the mic is with you actually already, we'll start with Ashley.

Ashley Thomas from Winterflood. Just 2 questions. Firstly, on weight loss because you mentioned the 2024 weight loss compensation Hornsea 1. A couple of weeks back, we had the consent for [ Outerdousing ]. And I think Equinor historically it estimated, I think, about a 67 bps output loss from weight loss, GBP 30 million to GBP 90 million revenue loss. So I just wondered you sort of, have you had discussions with the developer at Outerdousing regarding any potential compensation? And have you modeled any potential impact from weight loss for Hornsea 1? And the second question was on fixed price certificates because I'm aware in the ROC FiT indexation response that Schroders gave, there was quite an extensive response regarding the potential FPC consultation as well. So I just wondered if you could perhaps provide sort of an update on your thoughts regarding that potential consultation and any feedback you've had with the government?

Thanks Ashley, yes, you can have the first one.

Thanks, Ashley. So in terms of weight loss compensation, there are different ways that developers and operators deal with this. So there's some private law contracts where you enter into direct discussions with developers and builders of offshore wind farms, even onshore wind farms as well. And we can't comment on specific projects for obvious reasons. There's also protection in planning as well under many of the projects where there is an obligation on the developer of the project to compensate the losses that such projects cause on surrounding wind farms as well. So there's a couple of protection mechanisms there. And again, I can't comment on the specifics here. In terms of the model weight losses, typically, you do build into your energy yield forecast over time, the impacts of weight losses through everything from new wind farms, even tree growth as well. So they are modeled in on the whole into new projects and the cash flows over the course of a project.

So Ashley, you also mentioned the fixed price certificate review. So as you can see from our engagement on the RO indexation review, we do speak to government a lot at a lot of different layers within Schroders and also on behalf of Greencoat UK Wind specifically. So we had a decent amount of engagement on RO indexation consultation. We're, of course, disappointed with the outcome. But we do feel that as part of that and as part of the discussions that we had around zonal pricing, there is an understanding and recognition from governments that this market is sensitive to disturbance in cost of capital. And when you think about the things that we've spoken about earlier in terms of what's yet to be built, 15 gigawatts of AR7 projects doesn't mean tomorrow, you have 15 gigawatts of operational projects, right? So the cost of capital remains an enduring theme for the delivery of those projects. And we think this is a point that the government is alive to and aware of. And when the fixed price certificate review is published, we'll again be engaging with government to discuss it.

Colette Ord, Numis. Three from me, please. You've mentioned about not all of the projects are suitable for extension and just some of the smaller reinvestment opportunities. If you can give a bit more color or quantum around what you think is deliverable in the relatively near term. Second one is on the statement you made on being alive to dislocation opportunities and what we might infer from that and whether there is anything in your viewpoint that would see you look to add different types of technologies or other areas of the market into your portfolio as part of that potential dislocation opportunity? And then thirdly, in results, you talked about some inconclusive work on the energy yield assessments. Obviously, you've made some adjustments in previous periods, and you're obviously monitoring that. If you can just give a bit of color about the inconclusive nature of that or what we need to think about timing-wise, would be great.

Thank you, Colette. So when we look at repowering or extension, so thinking about repowering first, the thing that many people don't consider is that if you've got 10 years of operational cash flow left, if you want to repower the site, the economics have to be extremely compelling because you're about to forego 10 years of cash flow that you can get from the existing site. So given that our oldest site is 23 years old, it isn't an immediate thing for us. It's really about spending the relatively small pounds number to secure the optionality for it later. That to us seems like a pretty decent investment given it's not particularly capital intensive. Not all sites will work for repowering. If you have a 6-megawatt site that's got 3 turbines at 2 megawatts, they're not sort of spaced out like modern turbines would be. You may not have the ability to augment the grid beyond 6 megawatts, for example. And you definitely need a lot more land. So it's almost like having a new site. But some of the bigger sites that you have are more accommodating. So it isn't one that you would consider applicable to every asset that you have. In terms of extensions, there are a number of -- the best place to get planning for a wind farm is next one that already exists because by then, by and large, most of the objections to the first one being built have kind of fallen away. So there are a number of adjacent extension opportunities across the portfolio that we could access, again, without taking development risk. In terms of magnitude of capital, we put this kind of last in the waterfall, if you like, for a reason. These are not hundreds of millions of pounds of investment. We think the first priorities are degearing the business and addressing share buybacks throughout the year. You mentioned that you've seen the wording that we've had in the Chairman statement in this presentation. I mean it's simply a reflection around being alive to the market opportunity. And there's lots of opportunities as we discussed, right? It is a dislocative year. You can see a number of things are underway. Obviously, we wouldn't comment on any of them specifically. You asked the question of, well, would you consider different technologies? It comes back to all of the set of considerations that we make when we're thinking about new investments. Is it additive to the portfolio? How does it work in terms of the portfolio's cash flow construction? If it's diversification, is there some real resource benefit that one can really bring to light. But the bar is pretty high, right? There's a lot of wind that we can invest in both in our own portfolio, as we've mentioned before. And also as a result of AR7, that's a GBP 40 billion opportunity as well as the recycling of assets that will go into delivering the equity to build those assets. So I would say it's a high bar.

And Colette, just on the last point around the inconclusive work on energy yield, it's probably worth just taking a step back. In 2024, we looked at our overall portfolio. And looked at bringing that in line in terms of the data for calculating the energy yields there, and that led to a 2.4% reduction on average across the whole portfolio of our energy yields. During 2025, we then looked at what the potential future impacts of climate change could be on our sites. And so what we did, we commissioned a study with a leading expert to take a bunch of different climate models and different temperature scenarios over a 10-year period, over the next 30 years and looked at what the impacts of wind speeds could potentially be. And the results of that were inconclusive. Basically, the range of uncertainties was such that you couldn't really draw any conclusions, and that's principally because the climate models themselves have so much uncertainty. And what you actually see is that as temperature increases, it doesn't actually correlate with wind on many sites. It will go up and then wind will go back down as temperature carries on going back up again. So there's a significant amount of uncertainty there, which led to the inconclusive results. However, we remain alive to that question, and we will keep working on that question and see if there's an improvement in the climate models, which we expect to happen over the coming years, and we'll carry on looking at that piece of work.

I'll just do a couple of online questions to keep it interactive here. So both on sort of capital allocation. First one is, given that the shares are currently trading at a significant discount to NAV and buybacks offer an immediate accretion, is there a specific hurdle rate or IRR that you are looking at for any new investments in 2026? Secondly, similarly on the same point, your capital allocation strategy relies partly on disposals. How deep is the pool of private buyers? And are you confident that you can still sell assets at or above NAV?

Thank you, John. So when we look at how buybacks work in the market today, right, it's obviously economically accretive. You just take your funds return at NAV and you divide it by well, minus your discount, that should be your IRR. And frankly, if you like your own assets, you should like buying them back at a significant discount, right? And we have done that. We've spent GBP 200 million buying our own shares back over the last 2.5 years. So -- and that over time has added a decent amount to the value of the business in terms of pence per share. So we published in our half year results in effect, if you like, a sort of grading of hurdle as to what one would have to consider a new investment return to be in order to be better than the short-term effects of buybacks. I think what we're seeing here is something slightly different. Our first priority is going to be degearing the business. I think that's something that investors will, in general, like. And the investments that we're going to make, as we just discussed in answer to Colette's question, are relatively small about preserving future optionality. Another way to write that would be, of course, that the amount of capital spent on them is unlikely to make a material difference to what would already be a big share buyback that's been delivered or perhaps more to do. So we won't set a specific target for the small low-cost, high optionality investments that we have. But as we've said, if you look at our waterfall of capital allocation throughout the year, buybacks is there in a second. The question also touched on disposals, John. So yes, look, we've delivered GBP 222 million of disposals after 14 months -- the last 14 months. You will have all probably observed that the right time to sell a rock asset probably wasn't somewhere between October and January this year. So that has stymied somewhat transactional activity, although a few things have gotten away. It's something that we continue to work on ardently under the Board's supervision. And you can expect an update from us in due course. I would just point out that beyond disposals, which we very much are pursuing and are in a number of active processes, we do have free cash flow generation to add to what we can deploy in capital allocation. I just wanted to make that point because for many of the funds in our sector that doesn't really exist other than the ability to reborrow.

We go back to questions in the room. I think Joe, you had a question or maybe more than one question.

Joe Okore, RBC. Just one from me, please. Just thinking about the selective reinvestment you spoke about, particularly the characteristics around it being low CapEx but high IRR. Also apply those same characteristics from early-stage development projects, which some of your peers have focused on. As you're going to weighing up those 2 different options, can you just talk a little bit towards why you prefer reinvesting in operational assets on a risk-adjusted basis?

So it's sort of somewhere in between really. The low-cost optionality investments are for preserving the future ability to make construction or operational investments, which is UK Wind's bread and butter. If we think about development, it's something that both Steve and I spent a lot of our careers doing. But to think about investing in development would be a very long and informed conversation with our shareholders. It's not the sort of thing that UK Wind has done, spending a significant amount in development has challenges if you're a yielding business. So I think we're not signaling that we're about to start investing in development. That's not the fund's mandate, although both of us and broader Schroders Greencoat have the ability to do that. These aren't really development investments. They're more about preserving future optionality with relatively low costs.

And ultimately it will come down to the risk-adjusted return. And we think the risk-adjusted return, the types of capital opportunities that we've got at the moment are very attractive and actually quite deep pool of opportunities too.

Conor Finn from Barclays. A quick one on the recent fixes. Does that signify that we should expect you to kind of run a higher level of fixes and hedges than you have done historically?

It's something we keep in mind, and it depends upon the commercial viability of the options we've got in front of us. I mean what we are seeing is the market is becoming more sophisticated in terms of what it can offer generators in terms of those fixes, both physical, financial and as I mentioned earlier on, insurance-related projects -- products as well. And again, we'll look at what the risk reward is in terms of the balance and the impact on NAV to see what makes most sense at any one time. So we're not setting a specific target, but it's something we are certainly exploring in more detail, and you've seen us transact on that basis over the past 2 or 3 months.

And I would just add, where you can enter into NAV-neutral fixes, that's the sort of thing that we would consider. 150 gigawatts is, of course, a significant part of the 5 terawatts that we sell every year. right? But it demonstrates that you can fix these things on a NAV-neutral basis. And just to go back to where we stand, the next 5 years are 60% contracted with most of the linkage coming from CPI. So it isn't a burning issue at the moment, but it is something that we'll continue to explore.

And over time, we expect us to do more and more of those fixes as the assets roll off their subsidies.

I'm just going to come in with 3 relatively quick, more numbers-based questions here. So can you talk about the cannibalization assumption embedded within the power price curve? And how does that change going further out? Secondly, on Slide 10, dividend cover fall slightly in 2027 to 1.6 before improving again. Can you also explain the moving parts behind that shape? And then finally, how much of the RCF do you think you could pay off next month with the excess cash you have on balance sheet?

Thank you, John. Do you want to talk about the capture assumptions, and I can address the other 2 questions, Steve.

Yes, sure. So in terms of the cannibalization rates, and we look at what we experienced in the market and what the outturn position was from last year, I think it's 13% in 2025. And that helps us inform what we look at going forward. We use over the short and medium term, the numbers from our market consultant. And over the longer term that blends into a more of a fixed number. So it's baked into our power prices and increases over time up until the mid-2030s.

And I think one of the points to think about there going forward is some of the some of what we mentioned around the advent of dynamic and responsive demand. We think that will be constructive for capture rates for renewable generators as well the expansion of battery capacity in the UK. Dividend cover. So if you look at '27's dividend cover, you're right, it's 1.6. That happens to be at least in the estimations that we receive the trough of power prices in the next 3 or 4 years, and that comes from market data. That's why it's lower for that year. And as to how much of the RCF we would repay, we'll look at the end of March as to where we are in terms of liquidity. There isn't a particular new amount of information that is going to arrive. We've got already January and February's generation data, and we know how much cash flows over from last year in terms of ROCs. We think it will be a meaningful amount, but we'll announce to the market what that is when we sat down and work through where we are cash-wise at the end of March.

And maybe it's just worth reiterating we're over budget year-to-date as well. So the cash position of the business is very strong.

Do we have any more questions in the room? Just wait for the mic, just in case for the recording.

[ Steve Luc ] from Canaccord. Just coming back to Slide 21, the cash flows. I mean there's quite a bit of volatility. Obviously, you can see 2027 coming down and then we see quite a sharp move up to 2030. What's actually driving a lot of that movement? Is it just the short-term medium-term price assumptions?

Yes, that's right, yes. And the blue line accelerating the green line is really a function of when you get back to reinvesting and what you invest in. We're obviously not going to be doing very much reinvesting in the next year. So that's why it takes a while for it to accelerate back upwards.

Thank you. Do we have any more questions in the room? Okay. I can hand it back to Matt and Steve for concluding comments.

Thank you for attending and for many of you for coming in person. It's the first time in a while, I think UK Wind's held an in-person results meeting, and it's good to see many of you here. I hope that was constructive for our online guests as well, and there were no frustrations in terms of raising questions. We'll now spend the next couple of weeks talking to institutional shareholders as part of our road show. There are also a number of retail events. I think this afternoon, I'm recording a video. So there should be more content upcoming. And if there's any questions you wish that you'd ask that you haven't, you know where we are, ask John.