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

Good morning, and welcome to the Greencoat UK Wind Plc presentation. [Operator Instructions] The company may not be in a position to answer every question during the meeting itself. However the company can review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to the Greencoat UK Wind Plc team. Good morning.

Good morning, and thank you for joining us. We're going to cover our 14th half year results presentation. Steve and I will be your speakers. We'll probably run for about 20, 25 minutes and after that, we'll have time for Q&A and you will receive instructions as to how you can submit your questions in advance. We'll get through as many of those as we do now. So just before we dive into the results and stats, I thought if you is to give a bit of backdrop on U.K. Wind for those who are less familiar with it. So UK Wind was the first renewable investment process list on LSE. We've had a long track record. We've been doing this for 30 years. And you'll see on the slide that we are telling to you now a very simple business model that I'll walk you through. So in essence, it includes in the name, it's U.K. Wind Plc. What do we do? We buy wind farms. We have a total capacity of 1.9 gigawatts, so relatively significant in the context of UK generation. And those wind farms produce electricity. Then, I think, it's turned into cash. So we call that net cash generation. So that's after we paid all of the operating costs of the wind farms, we paid for our debt service, we paid for fund level costs and [indiscernible] that biggest converted into 2 things, 2 very important elements that are part of our proposition. [indiscernible] Dividends. This increase in line with or ahead of inflation every year for 13 years, and so far, GBP 1.5 billion have been paid in dividends. And the last half [indiscernible], the rest of the money, GBP 1.1 billion is available for us to reinvest back in the business. And that's a very important feature of our model will give out a bit more coverage later. A bit of who's who. So as an investment trust, as a Plc, a very high-quality board of independent directors, all you take together their skills and their backgrounds comprise all the elements that you need to run a business like this. So it's a very highly qualified [indiscernible] base point. And then lastly, will not spent much time on that. Steve and I, we run the time together. John handles Investor Relations for the fund. We're also part of a broader business [indiscernible] SpinCo, which is the largest renewable on investment manager. So with a bit of background given we'll now walk through the results which Steve will take you through.

Thanks, Matt. So the first part of 2026 has been a very positive period for the company. I mentioned earlier, our net cash generation has been very strong, having delivered GBP 222 million additional net cash generation to the business. That's a 36% increase on this time last year, it's predominantly driven by higher-than-budgeted wind generation as well as some elevated power prices. That's a limit of a very solid dividend cover for the half year period of 1.9x. Actually, with the cash that's already been generated during the early half of July, it means that the dividend for the whole year is already fully covered by cash generated in the year-to-date has a very solid proposition. There's been moderate NAV growth during the period, leaving at 134.1p and that gives us a levered IRR of around 11.5%, which implies a return to shareholders of a 10.5% of taking into account our market-leading fees at [ 1.8 ]%. So where does that leave us the guidance for the rest of the year. Well, given it's been such a great stuff there, it means that we're really happy to be able to say that we're on course to be at the top end of our guidance on both EBITDA and net cash generation. And of course, for a dividend, however, which we expect to be at or above 1.7x at the end of the year. And that means that we're going to have significant cash to allocate the best interest of shareholders over the coming months. So in terms of capital allocation, that GBP 222 million, that's part of the GBP 2.6 billion that the business is generating for shareholders over the life of the business since IPO in 2013. And this worthwhile just taking a step back on making an observation. These organic cash flows that U.K. will part beyond the dividend that it pays means that we have the self generated cash to invest back into the business to ensure that the NAV rose over time. That's really important in assets for the finite life like wind farms. We have to be able to do that. You compare that to some of the other models out there in the marketplace with a lower dividend cover model. It's very hard for them to be able to find the excess cash to be able to generate and invest back into their portfolio to extend the life of their assets or buy new projects without having to reborrow, sell assets or raise equity [indiscernible] wins, that's not needed. So what have we done with the GBP 222 million this year. So firstly, we have paid a dividend of GBP 114 million we leased to you already. We paid GBP 54 million in debt. And you can see at the end of the share buyback program, which is GBP 200 million steamed in February this year. We still are in the market buying back some shares, but much more on a tactical basis rather than enduring taken. That leaves us with a net increase in cash for the period of GBP 73 million. So bringing this on to the EBITDA track record. So as Matt mentioned earlier on, it's a 13th consecutive year of delivering an at or above inflation dividend, which this year has increased by 3.4% to 10.7p per share. That makes us one of a handful of 250 companies that delivered year-on-year increases to the dividend. And that's a fact we're quite proud of. The other thing to be clear is that our dividend policy is very clear, dependable and ambiguous. We increased our dividend in line with inflation each year CDR. So in terms of [indiscernible], we're forecasting 1.8x over the next 5 years in 2031, and that's on the back of a historical dividend cover of 1.7x. Over that next 5 years in '27 to 2031, the expectation is to deliver an additional GBP 1 billion of cash beyond the dividend, which will be used to sustain the growth in the business -- the business going forward. And again, we think that's a real important asset of this marketplace. So moving on to net asset value. As I mentioned, it's been a stable position for the business over the first half of 2026. And that's obviously a good thing for shareholders and part of the business model, which we are trying to deliver for you. What's really interesting thing on the left-hand side of the graph here is that the somewhat net cash generation and less depreciation, less dividends, [indiscernible] that is positive, which means that we are generating cash faster we are paying out dividends for the portfolio is depreciating. And again, that is the important point to take away that we've got that cash so we can regenerate the portfolio by buying the states or investing in new projects in order to make sure that this is a self-sustaining organic business model. To the right-hand side of that -- of this chart, the assumptions are mainly just that. And probably the team wants to call out that the inflation and discount rate. So earlier in the year, as we announced in our Q1 now, we increased discount rates, which we believe appropriately reflect the rate of risk climate for U.K. wind assets. In terms of inflation, over the period of H1, there's been a bit of a spike of inflation largely caused by volatility in the Middle East. That's meant [indiscernible]. And -- so that's meant that over the period of time, there's been a slight increase in inflation. And actually, if you look at what happened during the course of July, the 20 days of a ceasefire when we mark is now on the 30th of June inflation expectations was more moderate. What's been going on since then, unfortunately, is that inflation expectations and we agreed many market commentators are likely to lead to high power prices, which in turn is likely to lead to the higher inflation, which we have an indexation to in terms of our [indiscernible]. So moving on to power prices. we just wanted to recap how our power prices are forecasted. So over the first 2 years, we use the futures market. So that's the actual price that people are out there trading power for buying and selling at those prices. So it is the market price. Beyond that, we use a leading market consultant who looks at the dynamics of pine demand over time and build up that in order to come up with a yearly price, as you can see here on the chart on the top left-hand side. This is the first time where the recent hostilities in the Middle East are reflected in the power price. And actually, it's really only a short-term impact. It's over the next 18 to 24 months where that's made a difference. Over the medium and long term, there's very little difference to the long-term power price. And as you can see here, the graph generally trends down in real tailing that power prices in real terms will decrease perhaps an interesting reflection here would be to think about whether the recent events in the Middle East and will happen in Ukraine back in 2022 are a structural run episodic dividend, affecting the disruption to the power markets. If we believe that they are structural, and then it's interesting to note whether this rather smooth graph here trending down over time is actually the right thing to look at. Or whether we have that might be priced by in [indiscernible], which companies such as UK Wind is well placed to take advantage of. Another point to point out on power prices would be what sort of the effective asset management that we've been undertaking. So we were able to, under our PPA or power purchase agreements, we're able to fix power prices for a period of time. So we're out there actively sourcing the best prices for our assets. And we've done about 20% of our annual volume during this first half year period. And in July, we've got another 10% or so. And that's just one of the ways of which over time, one of the leaders that we have over time that we can manage the match exposure of the portfolio. Another point to take out here is in the bottom left-hand chart, you can see the dividend cover sensitivity over time against different power price levels. And one you can see here is that even at very, very low power price levels, the dividend is still more than [ 30 ] showing the robustness of the business model. Perhaps the most encouraging part of this presentation and our picture of performance has been what we see as a reversion to the medium wind generation. The last 2 or 3 years, we've been under budget in terms of wind generation. This first half of the year, we have 4.97x. And actually, when we look over the last 12 months, we're above budget too. Now this is quite usual in terms of wind generation, you do see periods of up and down, but we're just very pleased to be able to show this to the market back at these periods do reverse themselves and H1 has been a very positive period for us. Availability has been a tick below budget, and that's mainly due to some access issues to 1 or 2 of our offshore wind farms which draw are now fixed. And then to wrap up on the balance sheet. Just to recap, so we -- our debt is split between about 10% revolving credit facility, the short-term facility. 20% is associated with 1 of our largest offshore wind budgets on D1, which is project finance, which has an already agreed reduction profile amortization profile as a [indiscernible] and the rest is spaced to tap that. So this is debt which matures -- the maturities, you can see on the bottom right-hand side here. We believe this is the best structure of the business. It gives us a low cost, high optionality model and allows us to decide how and where to allocate capital. Some of the highlights in terms of balance sheet management in this first half of the year to be refinancing GBP 200 million of that term debt. And we secured 6, 7, 8 year debt periods, as you can see in the bottom right-hand side here, all within our existing member club. What's really positive about that is that our existing lenders see U.K. win credit and they're very happy with that and are willing to let us going forward. And indeed, we're in discussion right now refinancing the next GBP 150 million that's due next year with our existing [indiscernible]. In terms of the debt repayment I've already mentioned, we've repaid GBP 54 million, and that makes actually GBP 222 million of debt principal reductions over the last 18 months, which shows the active approach we've got to managing our [indiscernible]. Gearing remains slightly above where our target -- long-term target of 40% is, 41.7% that is something which we've got under control. It doesn't cause any issues for the business. The only restriction it has is we can't draw more debt, which we're not going to do anyway. And there's a natural path to getting below 40% both with the amortization of reduction in debt principle with our project financing. I mentioned earlier on with policy one, but also with growing the gross asset value of this by reinvesting excess cash flows and grow the business. So with that, I'll hand back to Matt.

Thanks, Steve. Sorry that the lights have gone out. We probably should go above [indiscernible] in the meter, but it looks to us like you can probably still see us for at least [indiscernible] business you like to. And so having given a bit of an interruption to the business and also to the half year results, which has covered, I thought it would make sense to give a bit of context as to what you do in [indiscernible] trying the market that it sits in both in terms of the investment trust sector but also the board renewable energy market. And for those of you that have joined us on these calls before, otherwise this into our full half year results presentation, we've spoken quite a lot about the sector that we're in, renewable energy investment trusts. And a VP have that there's probably too many companies in the sector, the level of inherent demand is a lot of the investments that create this sector where multi-asset in investors and then you see in home elsewhere now. That's that imbalance. Don't worry, we still think there's plenty of demand in the space for the right products. If you look at our sense that we suggested that rationalization, consolidation and excess of companies from our set was quite likely. And if you follow this, you'll see that's happening with increased pace. And as those -- as those companies [indiscernible] sell their assets, winds down or are otherwise approached by activist investors, it seems to us that it's clear that distinction is emerging. And we see the businesses that will be successful and that can prosper in the sector having 3 characteristics: First, an attractive proposition at a meaningful scale because after all investors want the ability in the shot. The sole sustaining model that generates excess cash to amount for reinvestment, we'll go into a little bit in a second why reinvestments are ported. And finally, low execution risk in what you do and how you do it. You see investors are making that distinction increasingly. And we also feel that we're relatively advantaged in that sector. and it's pretty obvious why and it kind of comes back to the slides on the screen now. Well, we are a large area scale. We were the first. We do have a self-funding business model that Steve said the life we generated 1.7x more our dividend, and that's given us GBP 1.1 million to reinvest. And when it comes to execution risk, there's no -- we don't do anything transformation is surface even [indiscernible] go by more wind farms, we're simply doing what we've been doing for the majority of our working careers. We don't require a transformation pivot. We don't have to generate cash by selling assets. We don't have to raise equity. We just need to keep operating a good business model. So we feel that we're relatively advantage in that there's a lot of companies in our sector that have to go through branded transformational change to get what you do in or disasters. So what I'd like to do now is just walk you through those components that I mentioned. I think scale and liquidity to start product look up the market capitalization. And the business model is basically the demonstration of delivery of organic cash. So as I said, GBP 1.1 billion available for investments since IPO in those 13 years and GBP 1.5 billion paid in dividends. And just to translate that into what that looks like over the next 5 years. So what this chart is showing is our EBITDA on the left, the amount of net cash that we expect to generate again, that's the cash that we have at our disposal after paying for all the funding costs and all the wind farm costs and our dividend and more [indiscernible]. So if you look at the middle of our net cash generation range in the next 5 years, that's about GBP 2.3 billion. Until our share price is not this morning, that was pretty much our market cap. So that's, in fact, the 20% free cash flow yield on present market price. That then affords us the ability to pay a dividend that increases in line with CPI for the next 5 years. And then that leaves us with, again, if you look at the midpoint versus GBP 0.25 billion of cash to reinvest. And again, that's a crucial demonstration of the UK Wind business model. A question really then becomes not whether we will have capital to allocate in that as relatively short is what we're going to do with it. The first thing I always say on this is that the first quarter call is to pay our dividend. As you said, we're one of only a handful of 32 different companies who have increased our dividend every year since IPO. So that's that. But in our view, in today's sector in this market, an attractive dividend is up on its own, sustainable dividend is a dividend that requires reinvestment and reinvestment in fact, you're generating returns, higher dividend to return is a lot more important than just yield. So then you kind of said, well, how are we going to allocate that? And why is reinvestment so important, and we are already talking about reinvestment here. So we've got a very simple chart on the next page. If you let me walk you through it. So why is reinvestment important? Well, it's really no set for us that the assets that we own eventually are workers valuation assumption there or published in our accounts is that of 30 years of operations, these assets that have 0 value. And whether that will actually be the case, we approach the end. We can certainly -- I can see some questions coming already around life extension and repowering, we can address that there. But fundamentally, if you don't keep investing in your assets, the amount of cash coming out of them plus full perhaps what the green stack there shows. That shows the free cash flow that we have to do something with all over time, if we don't reinvest why, well, your assets depreciating fast by the end of the chart, some of them will have been decommissioned if nothing else happens. So if you want to be in the business of providing a sustainable dividend, you need to reinvest. So if you look at the blue chart and the [indiscernible] on top, all that shows is if we take the amount of cash we expect to have after having paid our dividend increasing in line with CPI, and we can grow the business and we can grow the cash flow that's available to our shareholders. And I would challenge any business in the sector to be able to explain this to the shareholders. And we've just done that I have for a -- because if you can see that then in effect, dividends are ready to some degree coming up of caps. That's why having a model that's designed from first principles that we've heard you over life, you generate more cash than needs for your dividend is really, really important to having a sustainable business. It also partly speaks to how we'll manage the share price discount, and we can see some questions on that, but I'm sure we'll get to. We've looked at all the short-term measures we've -- as Steve mentioned, completely accounts with the buybacks. In our view, long-term discount management strategies have a good sustainable proven business between gross cash flow to shareholders and that is why reinvestment is where we're going to spend capital we're generating. And this [indiscernible] moment for us to have [indiscernible]. So when you look at what's happening to the U.K. electricity system, a lot of emissions and other uses of energy are basically being electrified into a significant demand for electrons and new electrons. Depending on which forecast you look at, over the next 15 to 20 years, you probably need 50% to 100% more electrons than today right, that's a lot. So the question then is, where is it going to come from? We've seen the recent options where particularly onshore wind is going to achieve this [indiscernible] new electricity production, offshore wind as well. And you can see from this chart, which shows the share of generation growing over time, that wind is going to do most of the heavy lifting. And we estimate that today's asset value for all of the wind in the U.K. is about GBP 100 billion. We see that growing to GBP 200 billion over the next 5 years or so. And if you then look at, well, I said over the next 5 years, if it all goes well for us, we've got GBP 1 billion to invest. That's really only 1% of that growing market. So there's a notion of opportunity and the things that Steve and I are well versed in. Beyond that, there are also opportunities in our existing portfolio. So we have wind farms that are varying degrees of age. And there are lots of inherent investments that one can make in either adjacent sites to them, extending their life or ultimately pass [indiscernible]. So there's a lot of opportunity for us. There's no shortage of it really, frankly, Steve and it's about applying the same discipline and investment that we've proved over our careers. So just to summarize and perhaps look at the characteristics that I said I feel investors are increasingly appreciating in this area. And we've spoken about sector rationalization, what's happening. I think for those of you that follow it, you can see it for your own eyes. So we feel well positioned because we do have an attractive proposition of scale. We have a very good track record. It's fair to see for everyone. We do have a self-fulfilling model. It's self-funded. We generate more cash than we need. We've done that over life, and we expect to continue to do so. And low execution risk, none of what we're talking about here today requires any transformational pivot. It doesn't require us to sell lots of assets. It doesn't require us to fundamentally restructure the business or progressively invest. It just requires us to keep doing the things that we've been doing for the entirety of our careers. So we think these characteristics are really, really important and will probably differentiate the companies that thrive from those to take. And also, we already possess them. We're not trying to create them. The exist early. So for that reason, we feel that we're relatively well positioned in this market. So now that we've run through our results for the past 25 minutes, we're going to open up to Q&A, which I think, John, you'll take us through. Is that correct?

Yes. And thank you for all the questions that have come in. I'll try to get through as many as we can in the hour that we have remaining. So trying to prioritize these in some way, but it's difficult because there's a number of them. So I'll start with a question here around the increasing opportunities in the U.K. market. any energy arbitrage and the growing role of hybrid renewable projects and essentially a question asking whether we would be looking at adding batteries into the existing portfolio and how they would fit in as colocation options with our current assets.

Thanks, John. So yes, in a renewable penetrated system, there are periods of time where the gap between the lowest price to day and the highest price to day is pretty significant. And that is sort of the battery energy storage systems aim to capture. So there is an opportunity. There are also other solutions beyond battery energy storage systems. So you've got long-duration energy as well and the government did some awards in the last week notifications to order in effect very large long-duration projects. So think of pump storage hydro where you basically pump water up fill when it's cheap and you let it down when our prices are expensive. So there are a number of mechanisms that will address this. The question then comes to whether that type of investment, particularly that is complementary to U.K. wind. So in our view, it isn't especially complementary at all. So when you look at how batteries make money, as I said, it's when there's a very low price during a day and a very high price at some other point in that day because these systems can't store energy for a very long period of time without eroding their capacity and the useful stable life. And those moments when batteries capture most of that revenue are characterized by either a scarcity in generation or a lot of solar prevalence driving the price down and then a bit of a scarcity in generation later in the day. And then when you look at -- so if you're looking for something that was complementary to wind, you look at, well, what are the periods of time when wind performs at least well in terms of earning money. And that's typically when it's very, very windy because there are lots of wind farms at the same time, and that drives the price down. And this is something that we capture in our power price assumptions by the way. So the profile of that doesn't look like a bottom peak during the day, it's just flat and it's probably flat for 24, 48 hours. And there's basically no overlap. It's not like a battery would help you very much there. And even if you start a battery on your site, if it's windy for 24 or 48 hours, you need such a big battery to capture that electricity. That It's really being used part of the time and the economic case doesn't work. So in our view, there isn't at present, and I say present because these things can change over time, complementarity between [indiscernible] assets and wind assets. I think that case is quite different if you own solar because solar is typically the thing that's going to drive the capture opportunity for a battery. So hybridization of solar and battery projects to us makes much more sense. But we don't own any solar and there's plenty of wind for us to invest in. So I guess our views are there. Steve, is there anything you want to add?

I think that's a very thorough explanation. I mean maybe just another way that we look at it, we just don't think that the risk return that you get from BEV assets is better than the risk return you get from wind assets at the moment. So until that equation changes, the focus will be on wind assets.

So a similar question. What about plans for expansion into solar or other renewables outside of batteries as we've just covered?

So I think it's a similar answer to what we just said. I mean, as Matt clearly said earlier, we don't remain like close minded forever. This is a view today. And the world does change, and we're keeping our eyes very much open. But again, if you look at the financial returns you would get, for instance, from solar, it be largely dilutive to our current portfolio. So it has to be another reason why that made a lot of sense, and we don't believe there's a huge amount of diversification benefit from that. So until those equations change, and we actually think that and see that solar is beneficial to the current portfolio that U.K. wind owns, I don't think we're going to change our mind on that. We'll stick to wind assets. And the other thing is the wind market is huge. The current market is huge, and it's going to grow. So the opportunity -- we're not constrained by the opportunity at all. So for our view, we'll stick to where we are at the moment. And if things change, and they might well do, if things change, we will change our mind as well. But at the moment, we're very clearly focused on wind assets.

Okay. So continuing the theme on investment and following on from those answers, how should shareholders think about the balance between extending the life of your existing turbines, repowering assets and eventually replacing assets where technology has moved on.

Yes. So another good question, and I'm sure Steve will have some remarks to that as well. So the first thing to think about is our job is to operate these assets well and to operate them for the long term. So we're always thinking about the life cycle of our assets and all of the maintenance work that we do and how we approach it. Because fundamentally, our base case is to make our assets last 30 years financially, and we're sure we'll be successful at that. But if there's the opportunity to add more years at the end, so say, another 5 years, then that's in effect revenue that presently we're not budgeting for. So adding life is typically quite highly additive to an older asset in terms of this valuation and clearly its cash flows as well. Repowering is a little bit more nuanced conversation. Not every asset is going to be suitable to be repowered. So many of the earlier assets that were created, frankly, they were not -- they probably wouldn't be financially viable from you in today's world. So you need to do quite a lot to build a more scaled wind farm that has a lower cost of energy. So there are some sites if they're particularly small, it's going to be quite hard to make repowering work. If you have a site that has a decent level of grid capacity, which is one of the scarcest resources and good wind speeds and the ability for you to build bigger, larger machines that capture more wind turbine, then repowering can be a useful addition for us and certainly an area that we explore in terms of investment. But that doesn't mean that you would do it straight away because if an asset is a number 20 years old, probably think we've got 10 years of cash flow left to go anyway. So if you wanted to repower, you have to forgo if you want to repower today, you have to forgo those 10 years of cash flow. So it's quite a nuanced set of calculations that isn't frankly one size fits all.

Okay. And a couple more here, and then we'll try and change the topic. So a specific one on repowering and/or new assets. What is your take on Chinese wind turbine technology?

Yes. So I mean our take on Chinese wind turbine technology, we don't have any in the portfolio. That's not because we don't like the Chinese technology, it's because it's just not that prevalent in Europe. I mean the technology is fine. The install capacity in China far [ out feeds ] what we have in the whole of Europe. So it's not like there's a technology issue. What we tend to find and what developers tend to find over time is actually the pricing is no better than you can get out their European or American counterparts. And so there's no sort of reason to go at using that type of technology. And then you've got a service issue, it's the chicken and egg. Wind farms, there's a lot of CapEx, but there's also you need to have availability of spare parts and the people on the ground servicing those assets. And the Chinese have found it difficult to crack that chicken and egg situation. There are certain countries where there are some Chinese technology in Europe and maybe it will grow. We remain open-minded to it. It's not a technology thing. It's more around the fact that they don't outcompete their European counterparties as things stand today.

Okay. And then one more here is -- we've talked about repowering and what is the average age of the turbines and how long, how near term is the repowering opportunity. And if you were to invest the GBP 1 billion of excess cash, what do you think that would do to the age of the portfolio?

So we obviously think a lot about the age of the portfolio in terms of how we approach investment. The average age of our portfolio is 10 years. But that, of course, dispersion in some assets that are, say, 3 or 4 years old. And I think it's 23 heading to 24 years old. So naturally, you start to look at some of the old sites, and we've already taken steps to secure lease extensions or repowering options for land. That's one of the ingredients that you need. And we expect we'll be progressing to planning applications that allow you to extend the life of those assets or perhaps repower them. So the price at the end of that, of course, is you get a brand-new asset. And the other thing that we can invest in, as we mentioned earlier, there are lots of projects being built out that were successful under allocation round 6 and allocation round 7. Those would be, by definition, assets that are yet to be created and therefore, very young. So in effect, we can manage portfolio duration and age through new investment and also selectively where we choose to through divestments.

Okay. So we'll move on to a few more questions around capital allocation. So this one, which was pre-submitted and given share price movements, I'll change it a little bit. But with the shares currently trading at a persistent discount to NAV, buying back shares offers a highly certain risk-free accretive return to shareholders. How do you look at reinvestment versus this? And at what specific NAV discount does the Board believe physical reinvestment becomes more value accretive?

So I think there's a couple of components to this. And let's just pick a discount so we can do a bit of math pretend a 20% discount, I think it is somewhat narrower at the moment. But I don't think anyone can argue on a purely economic basis that if you can buy your own assets back at a 20% discount, but that's probably a better investment than any new wind farm you can make, right? But the narrow the discount, the less that's true, but let's just take that as true for a second. So you could see a gain in NAV per share from buying shares back. We know because we've done that over the past years, we bought back GBP 200 million of shares. I think where the debate is far more nuanced is when you look at what our business is, our business is there to give a sustainable dividend over time, and it isn't a sustainable dividend if we don't reinvest. That's why we walk through what the cash flows do and could look like with reinvestment. So it becomes quite different from how do we add $0.01 to NAV per share versus what is our proposition and how we think that proposition is received by the market. I think it's pretty widely established that share buybacks in our sector haven't really achieved anything other than adding a few pence in NAV per share and making the sector and company smaller. And this is -- the problem is where short-term measures run for the long term in effect to continue buying back shares gradually will just be to shrink the business to the point that it can't really operate and the dividend does become unsustained. In our view, a better -- a much better long-term strategy for managing the discount is to ensure that you have a good business model that is self-sustaining and continues to provide something that investors find attractive. That's why for us, the reinvestment is fundamentally important, and that's where we expect to deploy most of our capital.

So following on from that, given discounts are prevalent across the sector and perhaps U.K. wind trading at a tighter discount to others, is UK Wind now in a position where it can act as a consolidator?