Greencoat UK Wind PLC Stock

Good morning, and welcome to the Greencoat UK Wind PLC presentation. [Operator Instructions] Before we begin, we'd like to submit the following poll. I'd now like to hand 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 even directed as to how you can submit your questions in advance. We'll get through as many of those as we begin.

So just before we dive into the results themselves, I thought it would be a good opportunity just to give a bit of backdrop on UK Wind for those that are less familiar with it.

So UK Wind was the first renewable investment trust to list on the LSE. We have a long track record. We've been doing this for 13 years.

And you'll see on the slide that we're telling to you now a very simple business model that I'll walk you through. So in essence, the clue is in the name, it's UK 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. That then gets turned into cash.

So we call that net cash generation. So that's after we've paid all of the operating costs of the wind farms. We paid for our debt service, we paid for fund level costs. And crucially, that then gets converted into 2 things, 2 very important elements that are part of our proposition, a dividend that's increased in line with or ahead of inflation every year for 13 years.

And so far, GBP 1.5 billion has been paid in dividends. And the last part, really crucial part, 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. We'll give that a bit more coverage later.

Just to give you 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 sort of 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 London-based Board. And then lastly, we won't so much time on that. Steve and I, we run the fund together. John handles Investor Relations for fund and we're also part of a broader business called Schroders Greencoat, which is the largest renewables-only 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 has delivered a very solid dividend cover for the half year period of 1.9x. And actually, with the cash that's already been generated during the early part 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 about 11.5%, which implies a return to shareholders of above 10.5% after taking into account our market-leading fees of 0.8%.

So where does that leave us in terms of guidance for the rest of the year? Well, given it's been such a great start to the year, 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 for both EBITDA and net cash generation and of course, for a dividend cover, 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 in 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 has generated for shareholders over the life of the business since IPO in 2013.

And firstly, it's worthwhile just taking a step back and making an observation. The organic cash flows that Greencoat UK Wind makes above and beyond the dividend that pays means that we have the self-generated cash to invest back into the business to ensure that the NAV grows over time. That's really important in assets with a finite life like wind farms.

You 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] you came in, 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've alluded to already. We paid GBP 54 million in debt. And you can see the end of the share buyback program, which is a GBP 200 million scheme that ended in February this year.

We still are in the market buying back some shares, but much more on a tactical basis rather than an enduring mechanism.

That leaves us with a net increase in cash for the period of GBP 73 million. So bringing this on to dividend track record. So as Matt mentioned earlier on, it was the 13th consecutive year of delivering an at or above inflation dividend, which this year has increased by 3.4% to 10.7 per share.

That makes us one of a handful of [ FT 250 ] companies that have delivered year-on-year increases to the dividend. And it's a fact we're quite proud of. The other thing to be clear of is that our dividend policy is very clear, dependable and ambiguous.

We increase our dividend in line with inflation each year, CPI. So in terms of dividend cover, we're forecasting 1.8x over the next 5 years from '27 to 2031, and that's on the back of a historic 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 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 this first half of 2026. And that's obviously a good thing for shareholders and part of the business model, which we're trying to deliver for you. What's really interesting on the left-hand side of the graph here is that some of net cash generation and less depreciation, less dividends means that this positive, which means that we are generating cash faster than 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 that we can regenerate the portfolio by buying further stakes 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 this chart, the assumptions are mainly just that and probably the 2 ones to call out would be inflation and discount rates.

So earlier on in the year, as we announced with [indiscernible] our Q1 NAV, we increased discount rates, which we believe appropriately reflect the rate of risk climate for UK Wind assets.

In terms of inflation, over the period of H1, there's been a bit of a spike of inflation, largely caused by the positivity in the Middle East. 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 cease fire. When we mark this down on the 30th of June, inflation expectations were more moderate. What's been going on since then, unfortunately, is that inflation expectations, and we agree with many market commentators are likely to lead to higher power prices, which in turn is likely to lead to higher inflation, which we have an indexation to in terms of our NAV.

So moving on to power prices. So 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 power at those prices.

So it is the market price. Beyond that, we use a leading market consultant who looks at the dynamics of supply and demand over time and builds up that in order to come up with a yearly price, you can see here on the chart on the top left-hand side. This is the first time where the recent facilities 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 terms, meaning that power prices in real terms will decrease. Now perhaps an interesting reflection here would be to think about whether the recent events in the Middle East and what happened in Ukraine back in 2022 are a structural rather episodic event affecting the disruption to the power markets.

If we believe that they are structural, 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 in reality, there might be price spikes in the future, which companies such as UK Wind is well placed to take advantage of.

Another point to point out on power prices would be some of the active asset management that we've been undertaking. So we're 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 done another 10% or so. And that's just one of the ways in which over time, one of the levers that we have over time that we can manage the merchant exposure of the portfolio.

Another point to pick out here is in the bottom left-hand chart, you can see a dividend cover sensitivity over time against different power price levels. And what you can see here is that even at very, very low power price levels, the dividend is still more than fully covered, showing the robustness of the business model.

So perhaps the most encouraging part of this presentation and our H1 performance has been what we see as a reversion to the mean in wind generation. The last 2 or 3 years, we've been under budget in terms of wind generation. But this first half of the year, we are 4.9% up.

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 that 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 are all now fixed. And then to wrap up on the balance sheet. So just to recap, so we -- our debt is split between about 10% of revolving credit facility for the short-term facility. 20% of it is associated with one of our largest offshore wind projects on D1, which is a project finance, which has an already agreed reduction profile or amortization profile as it can be known.

And the rest is space to term debt. So this is debt which matures in maturities, as you can see in 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 has been the refinancing of GBP 200 million of the 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 lender club.

And what's really positive about that is that our existing lenders see UK Wind credit and are very happy with that and are willing to lend to us going forward. And indeed, we're in discussion right now of refinancing the next GBP 150 million that's due next year, again with our existing lending club.

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 balance sheet. Gearing remains slightly above where our target -- long-term target of 40% is at 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 looking to do anyway. And there's a natural path to getting below 40%, both with the amortization of reduction of debt principal with that project finance that I mentioned earlier on [indiscernible], but also with growing the gross asset value itself by reinvesting the excess cash flows and growing the business. So with that, I'll hand back to Matt.

Thanks, Steve. Sorry that the lights have gone out. We probably should go for 50p in the meter, but it looks to us like you can probably still see us for at least [indiscernible] so having given a bit of an introduction to the business and also to the half year results, which Steve has covered, I thought it would make sense to give a bit of context as to where EQ sits and turn the market that it sits in, both in terms of the investment trust sector, but also the broader renewable energy market.

And for those of you that have joined us on these calls before, otherwise listened to 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 view that we have that there's probably too many companies in the sector, the level of inherent demand.

This is because a lot of the investors that created this sector were multi-asset income investors and they can see can come elsewhere now. That's to that imbalance. Don't worry, we still think there's plenty of demand in space for the right products. If you look at that sector, we suggested that rationalization, consolidation and exit of companies from our sector was quite likely.

And for those of you who followed us, you'll see that's happening with increased pace. And as those companies decide to either sell their assets, wind down or are otherwise approached by activist investors, it seems to us that it's clear the distinction 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 liquidity in the shares that we buy. The self-sustaining model that generates excess cash to allow for reinvestment. I'll go into a little bit in a second why reinvestment is so important.

And finally, low execution risk in what you do and how you do it. But we 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 slide that's on the screen now. Well, we are large. We are at scale. We were the first. We do have a self-funding business model. As Steve said, over the life, we generated 1.7x more than our dividend, and that's given us GBP 1.1 billion to reinvest. And when it comes to execution risk, there's no -- we're not doing anything transformationally. So for Steve and I to go and buy more wind farms, we're simply doing what we've been doing for the majority of our working careers.

We don't require a transformational 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 advantaged and that there's a lot of companies in our sector that have to go through, frankly, a lot of transformational change to get what UK Wind already possesses.

So what I'd like to do now is just walk you through those components that I mentioned. I think scale and liquidity speak for themselves and you can 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 reinvestment 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 all this chart is showing is our EBITDA on the left, the amount of net cash that we expect to generate.

And again, that's the cash that we have at our disposal after paying for all the funds costs and all the [indiscernible] costs our dividend and what's left over. So if you look at the middle of our net cash generation range for the next 5 years, let's call that GBP 2.3 billion. Until our share price this morning, that was pretty much our market cap. So that's in effect a 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, let's just call it GBP 1 billion of cash to reinvest. And again, that's a crucial demonstration of the UK Wind business model.

Question really then becomes not whether we will have capital to allocate. I think that part is relatively assured 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 Steve said, we're one of only a handful of 32 companies to have increased our dividend every year since IPO. So that's there. But in our view, in today's sector, in this market, an attractive dividend isn't enough on its own.

Sustainable dividend is a dividend that requires reinvestment. And reinvestment in effect means that you're generating a return that's higher than your dividend. So 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 really 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 secret that the assets that we own eventually are worth 0.

So our valuation assumption, all clear, all published in our accounts is that after 30 years of operations, these assets have 0 value. Now whether that will actually be the case as we approach the end, we can certainly -- I can see some questions coming in already around life extension 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 starts to fall. That's what the green stack there shows. That shows the free cash flow that we have to do something with falling over time if we don't reinvest. Why? Well, your assets depreciating.

In fact, by the end of this 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, that's stacked 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, then 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 their shareholders. I think we've just done that and I hope very clearly because if you can't do that, then in effect, dividends are really, to some degree, coming out of capital. That's why having a model that's designed from first principles [indiscernible] over to generate more cash than you need for your dividend is really, really important to having a sustainable business.

It also partly speaks to how well manages share price discount, and we can see some questions on that, that I'm sure we'll get to. We've looked at all the short-term measures. We've, as Steve mentioned, completed GBP 200 million worth of buybacks.

In our view, long-term discount management strategy is to have a good, sustainable, proven business that can grow cash flow to shareholders. And that is why reinvestment is where we're going to spend capital that we're generating. And it's a good 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, leading to a significant demand for electrons, the 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? So that's a lot. So the question then is where is it all going to come from. We've seen the recent auctions where particularly onshore wind is one of the cheapest forms of 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 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 perhaps.

So there's a lot of opportunity for us. There's no shortage of that 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 progress [indiscernible] invest.

It just requires us to keep doing the things that we've been doing for the entirety of our careers [indiscernible] 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.

They 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 of the day and the highest price of the day is pretty significant.

And that is sort of distant 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 [indiscernible] 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 is complementary to UK 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 [indiscernible] 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. 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 the [indiscernible].

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 UK 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 [indiscernible] 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 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 [indiscernible] in our view, 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 UK Wind trading at a tighter discount to others, is UK Wind now in a position where it can act as a consolidator?

So obviously, you would expect that ourselves and the Board would be open-minded to anything that would be accretive to shareholders.

And so we have noticed, of course, the discount that some of our peers are trading at. And we have looked into whether this could make sense for UK Wind. What we have seen is that there is no other UK Wind or wind-only vehicle out there, as you all know.

And so to do so would mean to bring in new technologies. And as we discussed earlier, that sort of has the same problem that they are either not the right risk return or they'd be dilutive to UK Wind's overall shareholder offering. And that's something that we just find very difficult to get our heads around even if there is some benefit to growing the vehicle.

Ultimately, what is in the best interest of shareholders is not at the moment to diversify and take over some of these other investment trusts, much because the current portfolio and the opportunity that we have in the wider market, we see Wind as a better bet compared to some of these other vehicles.

And so ourselves and the Board, we remain open-minded as we always do. But at the moment, there will need to be some change in the environment to make it attractive for us to chase a consolidation or to invest outside of the UK Wind space.

Yes. No, I agree. I think the thing to always remember when thinking about this is, is there anything that we'd want to own whatever it is on behalf of our shareholders that's additive to our proposition.

And at present, we're saying the answer to that is no. And moreover, there's no shortage of places that we can spend our money in our own market without any risk, there's plenty to do. So the bar is pretty high.

Okay. We'll move on to politics. So do you see the recent ministerial change as a positive or just more uncertainty for investing in UK Wind?

It's obviously early days for the burn-in regime. I think the things to think about are focus on cost of living understandably.

I think it's pretty interesting to observe that the economies that have been least affected by conflicts in the Middle East are those that have the highest renewable penetration. Spain is a very good example. There's lots of solar.

So when you think in those terms, there's a link between deployment of renewables and sheltering from what otherwise could be pretty significant increases in the cost of living from energy prices. So looking at the changes that have happened, Mr. Miliband is obviously still in the cabinet and you have continuity of people with domain expertise inside business and the civil service architecture hasn't changed.

So we don't detect any change or any shift from early engagement. It is obviously early days. But we think fundamentally, the case for renewables and investment and cost of living is there and remains strong and is part of labor manifest.

Miatta Fahnbulleh, who is the new Secretary of State for Energy has been in Ed Miliband's team for a very long time from what we understand is that she's very much from that same position that the green agenda and following net zero is an important thing for her and the U.K. government and we've been in conversations with the government over the last couple of years, a couple of weeks as well.

And we've heard them continuing to pursue the agenda. So the next allocation round under the contract for difference regime, which is how the government procure renewables is still going ahead. They're talking to us about how they can design wholesale contracts for differences.

So that's a way of trying to break this link between gas prices and electricity prices. That's very much the same agenda that happened under the previous regime as well. So we actually think there's some continuity or significant continuity.

And what that said, ultimately, take it back to basics, renewables are the cheapest form of new generation available. If you want to tackle the cost of living prices and you're thinking about electricity prices, then renewables are the solution for that.

So moving on question here on curtailment sort of what percentage of wind energy generation is lost due to shortage of grid capacity. And I think maybe if you can build on that and talk around what may need to happen to alleviate some of the curtailment that we're seeing.

I think it's -- I don't actually have to hand the percentage that's lost today, but I think it's definitely a good question to think about more broadly.

I think as the question and the interest in this area is that it's often shown as a negative for wind generation in particular, right? You see it in some of the newspapers. You see it in being used politically in effect. So I think it's interesting just to dig down into what of this and how it rose. So what's happened is that wind farms got grid connections and then the grid's job was to manage those connections and then on the transmission to the broader electricity system.

So wind farms were encouraged to connect and given licensing agreements to do so. And those licensing agreements included arrangements where you have to submit capacity that you'd be willing to detail that in the future. So wind farms [indiscernible] did they connected. And then in effect, the grid didn't get built out in time to allow the flow of electrons from some of the wind dominant places to some of the user dominated places.

So that does lead to presently a cost to consumers through curtailment and prefer not to be detailed, obviously, because it's a pain to turn your turbines off and back on.

But when this is used politically, it tends to be without any context and as if there was a cost-free alternative. So the alternatives to us seems to be, well, if you just don't connect the wind farms in the first place, in which case, the electrons that they provide when they're not curtailed, which is the overwhelming majority of the time, would have to be found from somewhere else.

So where would that be? New gas plants would take at least 5 years to build new nuclear so far is taking 17 years to build. Obviously, the next ones will be quicker and probably more expensive. So you have to think of the cost of the alternative to the electrons that are being provided when not curtailed.

So that's store #2. Store #3 is that the grid did get time, frankly now, the reinforcement works are happening, and there's a decent program to alleviate the majority of the congestion constraints in the U.K. grid, particularly around Southern Scotland.

But if the grid had been built in door #3, then you'd be paying the regulated return on the CapEx that went into the grid. So there's no cost-free solution. I agree from a narrative perspective, it doesn't look great to Wind, but I think it's worth reminding people that there was no cost-free alternative unless you didn't want the electrons in the first place.

I guess that's sort of how I found it. And the other way, of course, is to have a locational marginal pricing. So that's something that the government consulted on extensively and has ruled out. And we think they've ruled that out for a good reason, which is that it may be a good conceptual and intellectual idea as you're designing an electricity system, it's a very good one when you're most of the way to building one.

And the way out of this is building the grid as should have been built in the first place. So that is underway at the moment.

You only need to look at the likes of SSE, et cetera, and they're busy building all the connections that are required such that generation capacity can reach where the demand centers are across the country. So it is happening.

It will probably take another 2 or 3 years to be realized. But over that time period, you can expect that the amount of curtailment for wind farms will reduce significantly.

We'll move on to some questions around basically power prices and revenue. So -- and there's a question here, which may help set the scene. What is the split of the portfolio between rocks, CFDs and merchant power? And how does that shift between today and, say, 2030?

Yes, sure. So today in terms of '26, about 66% of the revenues come from ROC CFDs and there's some corporate PPAs we have as well and the rest of that would be merchant power.

And that will erode slightly between now and 2030, probably down to the high 50s, low 60s, depending upon exactly where the merchant power price ends up being because obviously, that goes up or down, that can change the percentages.

I think I saw a question elsewhere about how we're managing our approach to merchant exposure. So there's many different levers we can pull on. So we talked a bit about one of them earlier on, which is we can go out and place hedges in terms of volume that we will get fixed prices for. We've done about 20% of our merchant generation this year, and we've done a further 10% since the period end as well.

So we're actively out there managing that merchant exposure in the short term. That's typically hedges for about 12 months. We then have the opportunity to enter into wider financial hedges as well, which you can go into slightly longer duration, maybe 2 to 3 years.

On top of that, you can also look at corporate PPAs. We have a number of them across the portfolio, and we're busy talking to new corporate PPA providers as well. And then sort of the more longer-term solution to merchant exposure is then to enter into CFD contracts. So we talked a bit about that at the moment. The contracts for differences, which are fixed prices. They used to be 15-year contracts under the new regime, the 20-year contracts. And we're in discussion with developers about procuring their projects so that we can help manage the merchant exposure of the portfolio over the medium and long term.

And Steve, within that, there's a question here about AI and data centers. Is that an area of focus in terms of future contracting?

Yes, very much so. So we're in constant conversation with the hyperscalers. Our sister fund, GRP has indeed entered into PPAs with hyperscalers.

There is opportunity there and that opportunity is only going to grow. They particularly like additionality. So that's with new projects rather than existing projects. But over time, we hope to be able to have such projects that we can enter into contracts with such hyperscalers. The other thing that these hyperscalers are going to do is increase significantly the demand for electricity, which is a really important fundamental of why renewables are needed because they are the cheapest form of new generation in the U.K.

Sticking on power prices, there's a question here saying, as a long-term shareholder, I've noticed the independent forecasts have tended to trend down year-on-year and have an impact on that, had any research being undertaken to back test their work?

Yes, of course. So let me tell you what doesn't happen when it comes to valuation. We don't just take the reports and say that looks fine.

So fundamentally, our job is to understand system dynamics and the key variables in what deliver power price over time. You're absolutely right to observe that power prices, particularly in the last couple of years have fallen a reasonable amount. That's partly because of the unwind of high power prices and the reaching of power based in Russia, Ukraine invasion in 2022.

And also, most of the things that end up in a shortage that start with the shortage end up in a glass, right? That's more of a short-term challenge. When you look at the long-term power price, it's really about what's the system dynamics, what does the system look like in the future and what policy underpins that system.

So when we look at consultant forecast, we're really interested to look at exactly how much capacity is assumed to be built over what period of time? And is that likely? Is that deliverable? Is it not deliverable? In the near term, it's actually relatively easy to see.

In the long term, it's a bit harder to see. So I think the way to look at it is that over the next couple of years, you've got a very good degree of certainty around what prices are, at least in the day that you prepare net asset valuation because there are live trading prices that are there.

They can be volatile because you have events. So you have, as Steve said earlier, you had a cease fire in effect for a decent period of time at the end of June. So at that point, near-term power price is stable. And then, of course, with the subsequent resumption of facilities, they've gone up. Then if you look at the sort of medium term, 3 to 5 years, you've got a pretty good idea of what system composition is going to be because if something is included in this composition, it's probably being built already or it probably has an award of contract that means that it's going to be built.

And then if you look over the longer term, that becomes a bit less certain. So I think there's always room and space for power price forecast to move around. The fundamental point for long-term owners of these shares is how much of that or what it is that unwinds into your pocket.

And this is where focusing on dividend cover and net cash generation is the right metric to look at. So you can see movements in NAV over time goes up and it goes down and NAV certainly went up for power prices from '21 to '23 and you see periods where it goes down. What matters most is what you're harvesting this year, and I pay more attention to the front 5 years [indiscernible].

Okay. And noting we're getting to the end of time, I'll ask this as the last question, which may allow us to sort of reiterate some of the points we were trying to make at the beginning.

But net cash generation is trending towards the top of guidance. So how is the Board weighing further buybacks against debt paydown and against reinvestment? You mentioned various options. But just to be clear, is there a hierarchy or is it [indiscernible]?

So very pleased that we can say that we are towards the top of the guidance the first point to make. And in terms of our capital allocation priority, we think it's very clear.

And the first one is, obviously, as Matt said earlier, is to pay the dividend. And as I also said earlier, we've actually got enough cash already for the full dividend for the whole year already. In terms of what we'll do after that dividend, we've repaid some debt already, GBP 54 million this year, GBP 30 million of our revolving credit facility and GBP 24 million associated with our project finance at Hornsea 1.

In terms of further debt reductions, there will be further repayments under the project finance agreements at Hornsea 1. And then the next priority for the business will be to reinvestment. So the remaining cash will go for reinvestment opportunities.

If we can find the right opportunities out there for the business, we're not going to spend the money just because we said we will. We're going to make sure we're very disciplined and we find the right projects and the right deals that fit the UK Wind portfolio, both in terms of maybe some earlier stage assets taking maybe a bit of construction risk, which Matt and I have got a lot of experience of dealing and so as a wider Schroders Greencoat business, but also as been discussed throughout this presentation around some of the later-stage assets where there's repowering or maybe life extension opportunities as well. That's definitely the focus of our available capital over the coming months.

It's probably a pretty good segue to give some concluding remarks because I think what you said just leads back into a couple of things that will differentiate us as a business.

First of all, it's actually having the capital to allocate without having to do much more than operate our wind parks. We don't have to sell any assets. We don't have to borrow any more money. We don't have to raise any equity. We have capital to allocate inherently.

And as we said, we believe in the longer term, having a business that is sustainable, has sustainable dividend and is attractive to not only existing investors but new investors is you only get there through reinvesting that money well.

And fundamentally, we'll be reinvesting that with discipline in an area that we understand very well. So that in essence is why we feel that we're different and distinguished from much of the rest of our sector and well positioned to be [indiscernible].

Fantastic. Thank you very much indeed for updating investors today. Could I please ask investors not to close the session to now be automatically redirected to provide your feedback in order the team can better understand your views and expectations.

This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team of Greencoat UK Wind PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all.

Good morning, and welcome to our 14th half year results presentation. Thank you for joining us online today.

First, some housekeeping. We'll run for around 20 or 25 minutes, and we'll allow some time for Q&A at the end. John Musk will moderate that, and the operator will explain how to lodge a question. There's a disclaimer at the end of the presentation, which we draw your attention to, but encourage you to read on your own time.

So Stephen and I will now take you through the results. But before we do so, I wanted to give an overview of the areas that we'll cover and make some remarks about the market and the sector.

So the first half of 2026 has shown the strength of UK Wind's business model. Operational performance has been robust with generation 4.9% ahead of budget. Cash generation has been strong, and we benefited from favorable power prices.

Dividend cover was 1.9x, and we continue to strengthen the balance sheet through refinancing, which Steve will take you through and further repayment of debt.

Most importantly, the company continues to generate surplus cash beyond the needs of its dividend as it has done over its life. In today's market, we think that's an important distinction, and let me explain why.

In our last 2 sets of results, we highlighted the imbalance between the number of listed renewable infrastructure vehicles and the level of investor demand for the sector. We suggested that further rationalization was likely. And since then, we've seen that taking place through asset sales, strategic reviews and other corporate activity across the sector. And as those developments unfold, the distinction between business models has become clearer.

We believe the strongest propositions combine 3 characteristics: an attractive investor proposition at meaningful scale, a self-sustaining model that generates excess cash for reinvestment and low execution risk. Increasingly, investors are distinguishing between companies that already possess those attributes and those that need a transformational pivot or access to external capital, significant asset rotation or other features to get there. And those features often come with significant execution risk.

In our view, UK Wind has a relatively advantaged position in that landscape. We already own a large portfolio of operational assets generating cash flow today. We already have scale. We're already able to fund investment organically. We've generated GBP 1.1 billion to reinvest alongside paying GBP 1.5 billion in dividends to our shareholders.

So UK Wind has a clear pathway to enhancing its future shareholder cash flows without relying on external equity or a transformational pivot or undue execution risk. Put simply, we feel that many in our sector have quite a lot to do and in some cases, with quite some risk to achieve outcomes that we already have today.

And that matters because the opportunity ahead for us at least is significant. Electrification continues to grow in the UK, and that demand will more than likely be met by a lot of deployment of renewables, especially wind. And we also see increasingly opportunities within our own portfolio for us to invest in.

Businesses that have capital to deploy, existing operational assets and the ability to fund investment organically are particularly well placed to benefit from that environment. We'll come back to those themes later in the presentation. But the key point is a simple one. UK Wind remains a self-sustaining proposition, capable of funding both distributions and reinvestment from internally generated cash flow.

Now to the results, which Steve will talk through.

Thanks, Matt. So I'll talk through the financial and operational performance of the business in this first half year period. It's been a very positive start to the period with GBP 222 million of net cash generation, which is a 36% increase on last year. That's predominantly been driven by above budget wind speeds and also some higher power prices received.

Dividend cover has been 1.9x, a very solid result. And actually, with the cash already received during July, the dividend is more than covered for the whole year period, which I think is a great result for shareholders.

NAV growth has been modest but stable, and we have a portfolio IRR of 11.5%, levered IRR. And that implies a net return to shareholders of above 10.5% after taking into account our fee structure of 0.8%.

So where does that leave us for the rest of the year? So in terms of our guidance on the next slide, this positive start to the period means that we can be happy to say that we're on course to be at the top end of our guidance for net cash generation and the dividend to be on course to be at least 1.7x. We think that's a really good result for the business and leaves us with a significant amount of cash to deploy over the coming months.

So about that cash on to net cash generation. Now UK Wind always has been and always will be a high-margin business. That means revenues are really important. And that's good news because in this half year period, revenues have been very, very strong with a 15% increase from this time last year. Again, that's predominantly driven by higher [indiscernible] generation, where we have seen a reversal of the trend from minus 14% this time last year to plus 4.9%. Higher realized power prices have also played their part.

Just picking out a couple of other points on this graph would be to look at the tax position. It looks like we paid more tax in this period. And from a cash point of view, we have. But actually, this is just a result of some payments that should have been made late last year actually fell into early this year as well.

The other point to note here is that you're starting to see the change in our fee structure to be on the lower of market cap and NAV starting to take account in terms of the cash savings to shareholders with a significant reduction in the fee paid to the investment manager.

So moving on, we generated GBP 222 million net cash this year, and that's part of the GBP 2.6 billion worth of cash that we have generated for shareholders since IPO.

And firstly, a quick observation. UK Wind has a structurally high dividend cover. That allows us to have the cash available to allocate in order to grow the business going forward. We compare this to lower dividend cover models. We don't have to go and sell assets. We don't have to place more debt. We don't have to raise equity in order to have the cash available to allocate to grow the business. We think that's a substantial advantage to the UK Wind business model.

So what do we do with the GBP 222 million? Well, firstly, we paid GBP 114 million in dividends over this first half year period, and we've repaid GBP 54 million of debt as well. You can see here on the chart on the right-hand side, we've also made some share buybacks, and that basically marks the culmination of our GBP 200 million share buyback scheme. We have in place a new share buyback program, but we'll be using that more tactically rather than an enduring mechanism going forward. All in all, this means that we have an extra GBP 73 million worth of cash on the balance sheet to allocate over the coming months.

So as we mentioned, a very solid 1.9x dividend cover for the period and GBP 60 million more net cash generation compared to this time last year. And the key point to really pull out on this graph is that within the business, we have around GBP 0.25 billion worth of cash to allocate going forward. We think this puts us in a really strong position to evaluate some of the investment opportunities that we see in the marketplace and which Matt will touch on later on.

So moving on to the dividend track record. So earlier this year, we announced our 13th consecutive increase in inflation -- increase in dividend by inflation by 3.4%, which marks CPI to 10.7p per share. This sustained increase in dividends makes us one of a handful of FTSE 250 companies to achieve such a feat over this time period. We're really proud of that record.

In addition, we have what we believe is to be a clear and unambiguous dividend policy. We increase it with inflation on an annual basis and shareholders can rely on that statement.

In terms of what we paid to shareholders since IPO in terms of dividends, we paid GBP 1.5 billion and the historic dividend cover ratio has been 1.7x. And over the next 5 years from '27 to 2031, we forecast a 1.8 dividends time cover. And that will give us an additional GBP 1 billion worth of cash to allocate to grow the business. Again, we think that puts us in a very strong position going forward.

So in terms of the net asset value, it's been a stable period for NAV, as we've mentioned, we're very pleased to see that, and we look forward to hopefully having NAV growth in the future. And looking at the graph on the left-hand side, what you can see here, which is part of the UK Wind business model is that the net cash generation has exceeded the depreciation and dividends in the period, i.e., we've generated cash in excess of the way that we are paying out dividends and the business is depreciating. It's a really key factor for the UK Wind business model.

Looking to the right-hand side of the chart that you can see the key points to pick out would be inflation and discount rates. So quickly on discount rates, we increased these earlier in the year, and we believe that appropriately reflects the rate and risk climate for UK Wind assets.

In terms of inflation during the course of this period, we've seen a spike in inflation predominantly due to the hostilities in the Middle East. As we finalized the period on the 30th of June, a ceasefire had been in place for around about 20 days. Obviously, with the news over the last couple of weeks and even this morning, that ceasefire seems to have ended. That is likely, and we agree with many market commentators to feed through to higher power prices, which eventually will feed through to higher inflation later in the year.

So moving on to power prices. Just to recap the way that we come up with our power price forecast. Over the first 2 years, we use the futures market. That's the actual price that people are buying and selling power in the marketplace. You can't get a better proxy than that. After that, we bring in a long-term curve from our expert market consultant that also blends in futures pricing in the front end. So that means that it's not just a model. As you can see in the short term, power price is slightly elevated for the reasons we've already discussed. And in the long term, there's not a real significant difference. And you can see that power prices are decreasing in real terms.

Now a quick reflection. Over the last 4 years, we've seen 2 significant disruptions to power markets, with Russia's invasion of Ukraine and the current hostilities in the Middle East. That makes us wonder whether that's rather a structural feature of the power markets rather than just episodic. And if you were to believe that and you look at our smooth curve here from the 2030s onwards, you wonder whether that's appropriate. Or put another way, will there be further price spikes in the future, which a business like UK Wind can take advantage of?

Another point to point out on power prices is the active asset management that we've been undertaking. During the first half of this year, we've hedged around 1 terawatt hour of power for around about 1 year. That's about 20% of our annual merchant volume. That leaves us with fixed revenues for the rest of the year of around 66%. And actually, during the course of July, we've gone further, and we fixed another 0.5 terawatt hours or around 10% of the annual volume of our merchant risk during that period. And again, you can expect to see more of that from UK Wind as we look to continually take advantage of positions in the marketplace and manage the merchant risk on behalf of our shareholders.

Last point to point out on this chart is something we always publish, which is the dividend cover sensitivity. And we think this is really important to give shareholders confidence in the dividend going forward. And you can see here that even down to prices such as GBP 30 per megawatt hour, are way below where prices are today and way below where the future prices are forecast to be, the dividend is more than fully covered.

So on to wind resource. And this is perhaps the most pleasing or encouraging point of the whole half year presentation today. It really feels like there's been a reversion to the mean. We've been saying it for some time, and you can see it in the numbers here. We've been above budget this first half year period, 4.9%. And actually, over the last 12 months, we've been above budget as well. And of course, you can see the results of net cash generation that, that brings. We're very pleased with that position.

In terms of availability, we're slightly below budget. We had a couple of wind farms -- offshore wind farms where availability was restricted mainly because of high winds, which meant we couldn't get out to fix the faults that were there and also an inter-array cable fault within a turbine, within a wind farm, which took a while to diagnose, procure the appropriate cables and then fix. All of those issues are now sorted.

So moving on to the balance sheet and a reminder of the structure. So we have about 10% of the debt associated with our revolving credit facility, 20% associated with Hornsea 1, and amortizing debt profile there. And the rest is evenly spaced term debt with maturities that are spaced over the coming years that we believe helps derisk the proposition, both in terms of the liquidity and rate climate when we come to refinancing. We like this structure because it gives us low-cost, high optionality debt and allows us to decide how and where to allocate capital.

Key highlight of the balance sheet management this half year period is we refinanced GBP 200 million of our term debt that was due to expire later this year. And we've managed to place 6-, 7-, 8-year maturities to replace that, all within the existing lending group, which we think is really positive that within our existing lender group, there's very strong support for UK Wind and its credit. And indeed, we're in discussions at the moment to refinance a further GBP 150 million due to expire in May next year, again, within the existing lending group. And you can expect to see more news on that towards the end of Q3 or early Q4.

We've also repaid GBP 54 million worth of debt, and that brings the total repaid or debt principal reduction over the last 18 months to GBP 222 million, again, showing the prudent allocation of the balance sheet on behalf of our shareholders.

Gearing stands at 41.7%, which is slightly above our self-imposed limit of 40%. And a quick note to say about that, that imposes no restrictions on UK Wind at all other than that we cannot draw on more debt, which is something we wouldn't look to do in the circumstances anyway. And we can see a clear glide path back to below 40% with the natural amortization of Hornsea 1's debt, along with growing the gross asset value by reinvesting excess cash flow into new assets as well.

So that wraps up the financial and operational performance. And I'll now hand back to Matt, who will conclude -- will talk -- go into some more detail in his opening remarks before we move on to Q&A.

Thanks, Steve. So I thought it would be a good idea just to look at the criteria that we spoke about at the beginning of this meeting and then just look at how UK Wind relates to that.

So first of all, just a reminder of UK Wind's business model. It's a very simple model. It's been operational for 13 years. It's proven and it works for us. Buy wind farms, 49 of them, generate electricity and that generates net cash for our shareholders, GBP 2.6 billion so far, more than our present market cap. GBP 1.5 billion of that has gone out to our investors by way of dividend and GBP 1.1 billion has been available for us to reinvest. And all of this comes from an existing operational asset base.

In effect, excess cash flow arrives by design, not coincidence. So when we think about accelerants to the capital that you can allocate, these are reaccelerants for us. Those are asset sales and capital raising. They're accelerants. They're not existential requirements for us to have capital to allocate in the first place.

And just before turning to how we look at capital allocation, just a look at the next 5 years. So this is, of course, based on assumptions, and we've got a range there. But if you look at our expected net cash generation over the next 5 years, the middle of the range is around GBP 2.3 billion, again, roughly our market cap. And after paying a further CPI-linked dividend over those years of GBP 1.3 billion, that will leave us with roughly GBP 1 billion, let's say, as the middle of that range to reinvest back in the business.

So I think the question for us really becomes not whether we will have capital to allocate, but how we will allocate it when it arrives. So to look at capital allocation. First, as always, as it has been since the beginning of UK Wind, the dividend, which has given us 13 years of increase by inflation or better. But in our view, an attractive dividend in today's world is not enough. Just having that feature alone just isn't enough. A sustainable dividend requires further reinvestment, and we'll look at that in a minute. And that's why excess cash generation was part of our design. The return from this business is far more important than the dividend yield.

So look, we have self-sustaining cash flows in our view. We then just have to think about how we allocate that. And we'll look at in a minute the market opportunity that we have. I think you also need to think about when people are allocating capital, what risk are they taking. Fundamentally, if the pathways for Steve and I to reinvest in assets that we already understand in a growing market, we're basically just doing what we've been doing for the rest of our careers. So it doesn't require an undue amount of risk. It just requires the usual investment discipline.

So just to underline the importance of reinvestment. So it's no secret that the assets that we own are finite. We think our assets will last for 30 years. And at the end of that, in our model, we don't value them at anything. So if you don't reinvest in that portfolio, then over time, the amount of free cash flow, and this is shown in the chart on the slide that you can see there, it will reduce over time. We don't think that's any kind of secret.

But if you reinvest, you get a vastly different outcome. And again, this is why we were designed this way. And all the blue bar on this chart does is assume that the cash that we generate each year that isn't used to pay our dividend is then reinvested back in the business at the average portfolio discount rate. So nothing particularly exciting or racy about that. And so therefore, we've included the payment of the dividend and the reinvestment of excess cash flow beyond that.

So really then the risk of reinvestment comes back to what I said earlier. It comes back to, well, are there enough opportunities in the market? And are we well placed to execute? Well, investing in wind farms for Steve and I doesn't require any sort of transformational pivot or reimagining of strategy or career. It's basically what we've been doing for most of our working careers.

Just to look then at the opportunity for reinvestment. And we covered this in detail in many of our past results presentation. So electrification in the UK continues at pace, depending on which forecast you take, you're going to need another 50% to 100% of electrons over the next 20 to 30 years. It's vast. It's a huge amount. And as you can see from the chart on this page, wind is going to do the heavy lifting. It's scalable, it's deployable, and it will probably actually be more than 75% of the new electrons that are created. So that's a market that's going to go from our estimate, around GBP 100 billion of asset value today to about GBP 200 billion probably in the next 5 years. So when you grade against that GBP 1 billion that we estimate we could have to reinvest over the next 5 years, we obviously don't need to capture a significant potential of the market to be able to deploy the money that we have to reinvest.

And also, we have opportunities within our own portfolio. We have 49 assets. There are a variety of things that we feel that we can invest in there. That could include the ability to extend those assets over life or ultimately to prepare some of them for repowering, although as we've said before, that isn't a one-size-fits-all answer. So really, there's plenty of opportunity for us to reinvest in. Really then it's just about Steve and I applying judgment and discipline in an area that we're very well founded in.

So just to bring that to a conclusion before we open up to some Q&A. We've spoken at length before about the sector, the rationalization that's ongoing, the retirement of paper in this sector, corporate actions and so on and so forth. And we think that is fundamentally healthy for this sector. And against that backdrop, we feel that the successful propositions are going to have an attractive investor proposition of scale, a self-funding model and low execution risk. We think those characteristics matter more than ever in today's market. And crucially, these aren't characteristics that we're trying to create for UK Wind. They're characteristics that were part of our design and that we've shown we can deliver on over the 13 years that we've had since IPO. And we believe investors are increasingly making that distinction, and that's why we believe that UK Wind occupies a relatively advantaged position in the sector.

Thank you for your attention for the last 20-odd minutes. We're now going to open up the line to Q&A, which John will moderate.

[Operator Instructions] We'll take our first question from Joseph Pepper from RBC Capital Markets.

Just 3 from me, please. You spoke about scope for reinvestments and I guess ultimately reducing gearing through NAV growth, but any excess cash that goes towards reinvestment rather than debt repayment will ultimately slow the degearing profile even if the denominator is increasing? Just curious to know how we should think about what you really see as a stable state for the gearing profile for UK Wind in the long term? And then also how quickly we should expect it to decline from here?

And then the second one, linked to that, I suppose, on reinvestment. But in terms of the opportunity, it would be great to get your latest thoughts in terms of where you see the best returns are across construction, operational and also reinvestment in current assets.

And then finally, this is perhaps slightly more of a medium-term question. But just thinking about the opportunity for repowering and the end of asset lives in terms of the latest thinking in terms of the IRR potential for instance, I think you've seen some projects in France that have struggled to repower due to no availability of new small turbines and then there's also been planning issues blocking larger projects and whether you think the government needs to step in order to potentially incentivize repowering projects in coming years? Or you think the economics are attractive on a stand-alone basis?

Thanks for your questions, Joe. I think we've brought them all down. I wonder, Steve, if you'd like to talk a little bit first about the pathway to degearing and the importance of keeping the cash in the business and growing the gross asset value. And perhaps then I can address your questions about opportunity investments in repowering specifically.

Yes, sure. So in terms of the pathway to degearing, as I mentioned earlier, Hornsea 1 has an amortizing profile. So there's already sort of an inherent process to degear the business that exists. It's around about GBP 45 million a year, give or take, depending upon the year because the profile is already sculpted. So there is that natural sort of level baseline of degearing there.

And then with the excess cash that we're generating, we've talked about during the presentation, using that to grow the gross asset value is the other pathway, which we see as best fitting the strategy to degear the business. And that also has the benefit of that -- it's a growth business, and we believe that's going to help retain our current shareholders and attract new shareholders into the register who want to be part of this growing marketplace.

Thanks, Steve. I mean just to add to that, we haven't been prescriptive about a target date and a target range. The reason for that is it depends pretty much on what the gross asset value is as much as the debt that you repay. And we've repaid GBP 222 million, as Steve said, over the last 18 months. Unfortunately, because you know in the last year, our NAV declined, that amplifies the percentage gearing ratio, but in absolute terms, our debt is reducing significantly.

I think a sustainable pathway for the business is to get back below 40% and mid-30s to 40% as a sort of an ongoing range seems appropriate for the assets that we have. Certainly, in private markets, you could see businesses geared far more heavily than that. And we're certain that if we did change, which we have no plans to do, our self-imposed gearing limitation, the debt will be there, evidenced by the strength of our refinancing recently.

And perhaps just one further point on the refinancing that we concluded earlier this year and that we hope to do a further refinancing. We have significant support from our current lender base. So the level of gearing that we have, whilst we do want to reduce, as Matt just explained, we have low anxiety about our ability to refinance going forward, and we have significant support from our existing lender group.

So Joe, to your question around the opportunities that we see in the market, as you know, the sort of range of things that we can invest in our construction opportunities, and we have done that previously, standard operational assets and perhaps as this emerges a bit more, older assets that have the potential for repowering.

Frankly, how we look at all of those assets is with discipline and portfolio fit in mind. So there isn't any one particular answer as to what's the right opportunity, how well it's priced and how competitive the market is. As you can see from our results, we've been quite busy appraising new investment opportunities. We haven't concluded anything yet, and that's an expression of discipline rather than lack of opportunity. So I would expect you'd be able to hear more from us on that in the next quarter.

And when it comes to repowering itself, I think the first thing to say is that you can't assume that it works for every site because it won't. There are some sites where you've mentioned some of the challenges that you've experienced in other jurisdictions, perhaps -- it's about what you're trying to do. So a relatively small wind farm that isn't in a particularly windy area that perhaps the economics worked because there was a good subsidy regime at the time, and that's unlikely to be economically competitive when it reaches its life.

The other thing to remember is that when you have an asset that suits repowering, you're already valuing the cash flows that stand between you and the date that you repower it. So you have to do a calculus of when it makes most economic sense. That said, what one can do is secure the option for repowering through negotiating land leases and ultimately by submitting planning applications. And this is an area where we think it makes sense for us to invest in the near future.

And maybe just to conclude on that, Joe, you asked around whether the government needs to step in, in terms of helping projects to be repowered. And we've been in discussions with the government even over the last couple of weeks where this is actually on their mind, both in terms of helping assets that life extend, but also in terms of repowering as well. So I think the government has is on its radar, and we believe that the government is sensible, which we believe there will be, there will be appropriate support for both life extension and repowering of projects going forward.

We are now taking our next question from Conor Finn from Barclays.

A couple from me, please. So firstly, a question on the debt. Obviously, you've done the refinance in the period. The margin has gone up slightly. I guess the question is, what are banks saying around kind of appetite for lending, maybe, say, for longer-term facilities where obviously, there's going to be say, maybe increased merchant risk when these facilities come to maturity?

And then secondly, on the dividend, if you go back to the time of launch, obviously, you're paying, say, closer to, say, 6% NAV at that time over kind of the period since then, it's grown to 8%. I guess what question would you be comfortable with that kind of rising to further?

Thanks, Conor. Maybe, Steve, if you want to address the debt point and then I can come back to the dividend.

Yes, sure. So as I mentioned earlier, we've refinanced this current maturity of GBP 200 million with our existing lending group. We actually have banks knocking our doors wishing to join that lending group, but we're very happy with the current lending group that we have. Margins have gone up very, very slightly. The overall cost of debt has gone up. That's more a reflection of where swap rates are, which isn't a measure of the business' risk. It's just where rates are at the moment.

So in terms of the way that they're looking at the longer term and the exposure to merchant revenues, I think they're comfortable where the business is now, but it also plays into what we're talking around reinvestment. Reinvestment is key to this and managing that merchant exposure is also key as well. We've also got many tools in order to manage merchant exposure. We talked about some of them earlier today.

We've hedged 1.5 terawatt hours over the course of this year to date, significantly reducing merchant exposure, but there are other mechanisms as well. So we can put in place longer-term fixes or [indiscernible]. We can enter into corporate PPAs, of which we have several in the portfolio, and you might well see us do more as current PPAs expire.

And there's also, of course, reinvestment into new assets with a CFD for 15 or 20 years, which again helps manage that merchant risk in order to make sure that we've got the lenders to carry on lending like this. We have low anxiety around the position we are at the moment, and we think we've got all the tools available in order to manage the merchant risk over the short, medium and long term.

And to your point on dividends, Conor. So you're right to observe where our dividend is as a percentage of NAV, but the expression of our forward comfort in that can be found in the numbers and the dividend cover sensitivity that we have. We're very comfortable with that dividend. This is why reinvestment is crucial, right? So reinvesting back in the business sensibly will grow the future cash flows, and that will support a dividend at this level.

[Operator Instructions] We'll take our next question from Iain Scouller from Canaccord.

I've got 3, if I may. Firstly, just on inflation, can you give us a bit more color on that because that was obviously quite a big gain. I mean how much of it was from the reporting period? How much is related to the future forecasts?

And then secondly, on the NAV bridge, there's a negative 1p for other. Can you give us a bit of a breakdown on that?

And then thirdly, I mean, obviously, debt remains high. I didn't see any comment on sort of potential disposals. Can you give us your thoughts on that?

Yes, happy to, Iain. Thank you. So I can -- I'm happy to talk about inflation. Steve, maybe if you want to address the point on the other line on that, and then we can come to debt and disposals.

So when it comes to inflation, to directly answer your question, Iain, this all comes from the next 2 years of inflation pricing, the movement. So you'll note that in Q1, our inflation assumption went up. And in Q2, it went down. The net is still up.

So how do we price that? Well, we look at an RPI swap index. That's the swap that's traded frequently. We get that quote from elsewhere in our building. And we then moderate that to get to a CPI and CPI inflation expectation. We have not changed our expectations for inflation for '28 onwards, and they're all published in the half year results.

So simply, the drop from Q2 versus Q1 in inflation is an expression of where expectations for inflation for the next 6 to 12 months stood on the 30th of June. And as Steve mentioned earlier, that was a more benign environment. There was a ceasefire. Power prices have come down significantly, and they're a driver of inflation. So this is really just a mark-to-market. There's no subjectivity in what we've applied. It's entirely objective.

And as Steve suggested earlier, that's likely to pick back up if we see the power prices at levels that they are today sustained, and that will feed through into inflation. But that's really a matter for us to address when we get to the next valuation cycle.

Okay. So in terms of the 1p of other costs, so we're constantly looking at our assumptions over the medium and long term and looking to refine those. And so this reflects the ongoing review of where we're seeing contracts where we're seeing the market. So it's principally to do with long-term assumptions around operational costs for the business that we use data that we see in the marketplace, but also try to bring in forecast as well. So we think it's a margin increase. We think it's prudent, and we think it's the right thing to do in terms of the NAV bridge.

And when it comes to debt, I think there's 2 things to look at, right? So there's the gearing percentage, which is certainly a valid metric to look at and then the absolute amount of debt in the business. The latter has gone down significantly over the past 18 months, as Steve mentioned.

I think the other thing to think about degearing is it's a self-imposed limit. As we've said before, banks are quite happy to lend more. And I think you raised a good point around disclosure on what that means from a financing perspective, and we've put that in our half year results. It frankly has no consequence or bearing. In fact, our lenders see us as less geared than the 41.7% because they exclude Hornsea 1 as a project, both equity and debt. So as the lenders see us, we're far less geared.

We don't have, as Steve said, anxiety either about the level of debt that we have at the moment or the ability to refinance that in the future as demonstrated by this year's refinancing.

When it comes to disposals, we don't see the need to sell assets to retire debt. As we said, we have a pathway over time for debt to reduce below our self-imposed limit. But even when it does, we're not particularly planning to borrow a lot more because we can sustain and fund our business through organic cash flow. So that's our approach.

And frankly, the money that we have is better invested in operational wind farms than it is reducing gearing. It serves a better return for our shareholders.

Or optically, we have GBP 240 million on the balance sheet. Obviously, not all that's usable. Some of that is SPV working capital and remains so, but we could optically have repaid some of the RCF and taking gearing down. But actually, the cost of that is pretty marginal to have the RCF drawn because we're earning interest on the cash that we have in the bank. So we're really only paying the margin on the RCF. And having the optionality to then have the cash to make the kind of quality investments Steve and I are looking at, we feel is a better approach from a treasury management perspective.

It appears there are no further questions from the conference call. I'd like to hand back to John for webcast questions. Please go ahead.

Thank you. We do have a number of questions online, and I'll try and group them together. So a couple here on power prices. So firstly, energy prices have risen strongly in July post period end. How can you help us look at how this will impact cash flows and NAV? Is there a rule of thumb to use?

And then secondly, how much merchant power price exposure would you be comfortable with hedging in aggregate? You used to be -- or used to talk about a 50-50 mix of fixed and merchant. Would you be happy to go much higher than that?

Thanks, John. Steve, do you want to talk about a good rule of thumb for power prices?

Yes, sure. So the question is absolutely right that we have seen an increase in power prices since we marked this NAV at the end of June due to the resumption of hostilities in the Middle East, the unfortunate resumption of hostilities in the Middle East.

In terms of a rule of thumb, if you look at the dividend cover table on Slide 11, it shows sort of what GBP 10 per megawatt hour does onto the dividend cover, and it's roughly just over 0.1x, give or take. So that's probably a good enough rule of thumb to think about that.

If we were to mark the NAV as of yesterday's power prices, it would be around about 2p higher per share. So there's a lot of chop in the power prices at the moment as well. So I think you need to just monitor where things look in terms of the way that we've fixed some of those prices. We've already locked some of those in. Some of them remain merchant, and Matt can talk more about that now in terms of our long-term view of how we manage that.

Thanks, Steve. Yes. So overall, our desired blend of fixed and floating cash flows on a DCF basis remains around the 50-50 mark. It obviously varies depending on what's happening to power prices. So if power prices go up appreciably as they have in the last 6 months, you naturally look as if you have more floating revenues than fixed, you haven't done anything. That's just the way that it breaks down.

So we look at the hedging activities that we've entered into from a couple of perspectives. One, if there's a decent price that's available that we can take advantage of, that allows us to secure dividend cover for the year and is sensible, is NAV accretive, dividend cover accretive, then that makes a lot of sense. And that's what Steve and I have been up to. And as Steve said, there's 1.5 terawatt hours there that have been hedged since we -- since the beginning of the year.

And then if you look forward, really, again, it's about balancing the revenue composition through reinvestment. Again, I think we'll probably look to the 50-50 ratio. If the circumstances are right in terms of near-term power price hedging, we could go above that. And then if you increasingly think about hedging as a way of looking at the next 2 years of exposure, you can continually refresh that over time.

So fundamentally, our approach hasn't significantly changed, but our ability to be tactical and secure dividend cover on a short-term basis is something that we'll continue doing.

Okay. And we have a linked question here as well, sorry. Are you seeing any change in demand from corporates looking to secure renewable power through PPAs, particularly from energy-intensive industries and data center operators?

Thanks, John. Not significantly at present is the answer. I think there are a couple of push and pull and barrier factors. The first is that traditionally, those in the tech industry prefer to have brand-new projects to put long-term corporate PPAs against. That feeds into the argument around additionality is in this project now exists because of our PPA. When you have a portfolio of wind farms that none of which are new, that option is a bit less available to you. That said, we do have a number of corporate PPAs with retailers and others. So there is still a market for us that we see as good.

I guess the countervail to the desire to have typically younger or construction projects is that this isn't the only route to market that a developer has, right? So you've got a pretty attractive Allocation Round 6, 7 and 8 to come. So I think you might start to see, although I'm obviously not in charge of corporate power procurement at any of these companies, you might start to see some erosion of the idea of additionality when it comes to PPAs. And given that we have significant scale, we've got roughly 2 gigawatts and 6 terawatt hours a year, that could be good for us. We are exploring further corporate PPAs to add to those that we already have in our book.

And I think it'd be fair to say that whilst there's not been a pickup in demand that we've particularly noticed in the corporate and industrial demand for PPAs, there is a steady state of demand out there in the UK and that's only going to grow with the rise of data centers as the question correctly pulled up. There are a significant number of data centers in planning across the country, and that's only going to lead to a rise of power and opportunities for companies like UK Wind to take advantage of. And you only need to look over to Ireland and look at the significant growth in demand from data centers for power over there, whereas more than 20% of the annual power demand goes to data centers nowadays. That's a significant growth opportunity for UK plc and for UK Wind in particular.

Okay. And moving on to some questions on investments. Can you give some more specific color and examples on the opportunity set you are reviewing, whether that be by technology or development stage? And how big a check would you write to fund them over the next 3 years? And adding one more into the mix there. Have you considered investing into batteries on-site or off-site to enable further revenue from generation during periods of low demand?

Thanks, John. Steve, do you want to talk about the things we're appraising and how we're thinking about it?

Yes, sure. So I mean, as I think we've already tried to outline, there's a whole sort of host of opportunities that exist. So within our own portfolio of 49 wind farms, there's opportunities to buy further stakes. There's opportunities for extensions. There's opportunity to look at repowering. There's opportunity for upgrades as well. So we're constantly looking at that portfolio, and there's definitely significant opportunity there for us.

And then sort of adjacent to that is the growth in the marketplace that we're seeing. We have Allocation Round 6 and 7 that are out there, and we're talking to developers at the moment who are looking to sell such assets. Allocation Round 8 is coming up later in the year. Again, that will create a huge amount of new opportunity for us. So they would be construction or very late-stage development projects that we'd be looking to invest in. And what we really want is a blend. We don't want to go all into one or the other. We want a blend of opportunities there and invest that cash as well.

You asked about the check for the next 3 years. I mean, we've talked around having almost GBP 0.25 billion on the balance sheet today and over the next 5 years from '27 to 2031, an extra GBP 1 billion, that's roughly equal. So you're talking around over the next 3 years, something like GBP 0.5 billion to GBP 600 million of cash flow that would be available to invest in such opportunities. And again, we'd like to blend that across all the opportunity sets that we see to make sure we've got the appropriate mix of investment for UK Wind and its shareholders.

So when it comes to technology, UK Wind is still UK Wind. And as Steve said, there's an abundant market for us to invest in without [indiscernible] or without changing technology.

I think when it comes to how one thinks about from a portfolio construction perspective, the involvement of other technologies, I think you first have to look at what does it add to what you already have to your proposition. If it's a hedge in some way, that could be appealing. So if there were a technology that was completely anticorrelated to wind in terms of its capture price and its generating profile, that would be attractive. In our view, there isn't. So there is not that.

And then when you look at batteries, yes, this is a question that we face frequently. I think from a high level, it's easy to think that batteries just make money when it's very windy, and that's when wind loses value because power prices are lower because there's a lot of wind on the system.

When you actually dig a little deeper, actually, there's almost no correlation between battery revenues projected both now and over the long term from a merchant trading perspective and wind revenues. This is characterized by when wind prices and capture prices are lower, it's typically for a very long period of time. And the best revenue opportunities for batteries is where there's a scarcity or a shortage of supply and a pretty significant intraday gap between the bottom and the top. Those don't really align with wind capture risk for us.

So I think to answer the question, does that hedge our portfolio in some way? We don't believe that it does. Then the question becomes, is it just a good thing to invest in. And again, we look at this and say, well, I don't think there's any -- I don't have any sort of conceptual problem with batteries. I think the grid is a better place for having them. But there's also a lot of wind that we can invest in. I think the exception I would carve out is this can change over time. And secondly, batteries can make sense for any generator where they help to liberate a constraint that exists because that is genuinely lost economics that you can't get to market. But in our view, neither of those conditions prevail today.

And maybe just another way of summing that up, we think that the risk return balance of wind investments is better than the risk return balance that we get from other technologies as well. And therefore, that's where we see today where we should allocate our capital.

And one more on a similar subject in terms of reinvestment. Does the commitment to CPI-linked dividends over the coming years, even as ROCs roll off, mean that you are more inclined to explore reinvestment in CFD assets?

To give a very short answer, yes. One can also engineer corporate PPAs that have an element of inflation inclusion. I think if you think about the opportunities that Steve mentioned, the broad stack of operational assets already have CFDs, they have CPI linkage. New projects that are being created are typically AR6, AR7 and AR8 to come, having 15 to 20 years of CPI linkage. And if ultimately, noting that, of course, it's a way away to actually repower an asset in the UK, the outcome there would likely be participation in some version of an auction round at the time, which I would expect would carry inflation, too. So yes is the answer.

Okay. Noting we're getting towards the end of time. I've got a couple more questions. I'll do them separately. So the first one, there has been some political interference over the past year. How is engagement going with the revised government? And in particular, what are your thoughts around the proposed wholesale CFD and how that may impact the risk return of the portfolio?

Thank you. So it's obviously early days for the Burnham government, and you have seen a cabinet reshuffle. I think crucially, when it comes to looking at designates, you now have a minister in place who's been in that department for a decent period of time, and that's definitely constructive.

So if you think about what that means for the near-term policy, the things that we have on the table are wholesale CFDs, which I'll come to in more detail in a second. You have the RO fixed price certificate review and you have reform of the national market. I expect they will carry on broadly within the time frame that they're envisaged to.

I feel generally no reason to believe that the new regime is going to be fundamentally different from the old regime when it comes to the way you look at power. And I think if you need any example of how renewables help with the cost of living, you should look at markets that haven't had disproportionately high power prices since the outbreak of the conflict in the Middle East, Spain, for example, notably high renewable penetration, low dependency on marginal gas.

When it comes to the wholesale CFD itself, this was, just to remind everybody, one of the 5 ideas that featured in the original review of electricity market arrangements. It was discarded. We and others have spoken extensively to government to put that back on the table because we feel it can do 2 things if it's properly implemented.

First, if properly implemented, you could get a fixed price for the sale of your power over a decent period of time to give further certainty to dividend cover and have another mechanism for fixing power prices. That certainly would be a good thing for investors to have another tool to do that.

And then on the other side, it's obvious that we would take a lower fixed price for removing the risk of power prices. So that can be a benefit to consumers. So this is why we believe that if it's implemented well, the wholesale CFD is a win for both investors and consumers. And moreover, it demonstrates a message that I think has gotten lost over time that renewables can actually help and do help and have helped in the peak pricing periods that we've had over the last 4 years.

And new build renewables remain the cheapest form of new generation that will be needed to meet the rising demand over the coming years. Onshore wind closed in the last Allocation Round just over GBP 70 per megawatt hour. If you compare that to new build gas, it's around GBP 140 a megawatt hour.

So if you want to have low-cost new generation on the system, onshore wind is where it's going to be at, offshore wind as well. And I think that's where the government will look at and they will look to continue Allocation Round 8 as they've already said that they're going to commit to. So we're pretty confident that there will be no wholesale change. And as Matt mentioned, Miatta Fahnbulleh, who's now in charge as Secretary of State for Business, we think that she is going to continue that process for the renewable energy industry.

Okay. Thank you. Let's make this the last question and then if you have any concluding comments.

So congratulations on a good set of results and pleasing to see a recovery in wind. But could you say a bit more about wind resource versus forecasted modeled resource over the past few years? And any thoughts around climate change?

Do you want to talk about the wind over the past couple of years?

Yes, sure. So as we've said consistently, there is an interannual variability of wind speeds. And you do have periods where wind is below and above the average. The last few years have seen below average wind speeds. But the last 12 months, as we mentioned earlier, have been pretty much on budget in terms of the wind speed to long-term average and UK Wind has been above budget over the last 12 months. In this first half year, have been 4.9% above budget. This is really quite normal in terms of wind speed generations. So we're not surprised by this. We hope it continues, of course, but this is really quite normal.

In terms of climate change itself, we have looked into trying to forecast what climate change could potentially do to wind speeds over the medium and long term. We engaged a third-party consultant who's an expert in this last year. And we looked at a bunch of different climate models under different temperature scenarios. And effectively, the climate models come up with results which are so uncertain with such high error bars, it's difficult to draw anything conclusive today.

Now we do believe that those climate models are going to get more and more accurate. So this is not something that we've put in the drawer and we won't look at again. We will continue to look at this. And as climate models improve, we think that we will be able to look at things in a more accurate way.

But it's worth noting that at the moment that under certain temperature conditions as it rises, there's not a perfect correlation with wind speed. At certain temperature increases, wind speeds can go down. Certain other temperature increases, wind speeds go up. That doesn't give us enough certainty in order to be able to say this is what it's going to look like in the medium and long term. But we will remain close to that, and we'll keep the shareholders informed with our thinking and results that come up as we look at this over the coming months and years.

No, I agree with that. Look, it's something that we're obviously very interested in, and we'll keep a close eye on. But as yet, the data from the modeling, there's too much uncertainty to make any conclusions. Positively, though, as Steve said, wind resources up over the past year for us, and that is part of the cycle of wind over the long term.

So I'll bring this to a close now. I just wanted to conclude by thanking you for your attention during our presentation and for some very thoughtful questions. For those of you who would like to see us on the roadshow, you can contact our brokers to do that. We're around for the next 2 weeks. There's no holiday for us. And if you have any further questions or things you wish you've asked, John's contact details are on the presentation. And if you send your questions through, we'll endeavor to answer them in good time. Thank you for your time.

Thank you.

Good afternoon, and welcome to the Greencoat UK Wind PLC Full Year Results Investor Presentation. [ First, a recorded meeting ] [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. [ After, the company will ] review questions submitted today and publish responses where it's 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 team at Greencoat UK Wind. Good afternoon.

Thank you, Paul. Welcome to this webinar. Bit of housekeeping first. We'll probably run the presentation for about 20 or 25 minutes, and we'll hand back to Paul. And then we'll allow some time for Q&A, which I think John will oversee. There is also a pretty lengthy disclaimer in this presentation, which we encourage you to read in your own time. We won't start by reading it out now.

So first of all, we wanted to just give a bit of backdrop and an introduction to UK Wind's business model. The clue is somewhat in the name. We invest in U.K. wind farms. We are the largest listed U.K. renewable investment trust. In terms of the amount of wind that we own, we're the largest nonutility owner of wind farms in the U.K., owning about 6% of all U.K. wind farms, and that generates around 2% of the U.K.'s electricity every year.

For reference, that powers around 2,000 homes and in 2025, avoided the emission of 2.2 million tonnes of CO2. We've been going for 13 years with our relatively simple model, an annual dividend that increases in line with inflation as well as reinvestment in the business. And you can see here in the chart, it just shows what a simple business we have and how it works.

So we own interests in 49 different wind farms in the U.K. Over time, they've generated 34.4 terawatt hours. So what on earth does that mean? Just for reference, that's roughly 12% of the average U.K. annual demand for electricity. That renewable energy turns into cash, and that's after paying all of the operating costs for our wind farms, paying landowners, paying to maintain turbines and so on and so forth. That, over our operating history, has given us GBP 2.4 million -- GBP 2.4 billion of cash that we can choose to do something with. And GBP 1.4 billion of that, which is -- was a staggering number to read out, has gone out to our investors in dividend form with 12 consecutive years of growing the dividend in line with RPI or better.

And crucially, the distinct thing about our business is that we've reinvested the additional money, GBP 1 billion, back into new wind farms to keep the business model going. We've always demonstrated sector leadership, having created the sector through IPO in 2013. Obviously, it's been a challenging time in recent years for renewable energy investment trust, but we've been at the forefront of addressing those challenges, firstly, by being the first to launch a material share buyback program by leading a material number of disposals of our shares. And we are the first and only company in the sector to change the way that the investment managers pay fees. Those fees are now paid on the lower of market capitalization and net asset value. Nobody else has matched that. So we're fully aligned with the shareholder experience. If the share price is down, so is the revenue that we have.

It's a point that's worth emphasizing because as an investment trust, we are the managers, but the Board controls the company. And we have a highly experienced Board and highly active that's equipped with strong expertise across all of the relevant domains to run UK Wind. And that is a really important feature of this business, is the strength of this Board, the alignment of us as a manager and our commitment to do the right thing for shareholders over the long term.

So now just to give you some context to the results. The broader backdrop for the renewables market in the U.K. is positive. You may have seen the government's most recent auction round called Allocation Round 7, or AR7 for short, has procured record-breaking capacity for new renewable energy deployment of around 15 gigawatts. That's to state the demand for electrons that's coming. So we estimate that by 2040, we'll need about 50% more electrons than we need today. It could be as much as 100%.

Renewables are the quickest way to get there. There are other options, but they tend to take longer and cost more. And we'll address that later in the presentation. That contrasts somewhat with the renewable investment trust background, which has been a bit more challenging with falling NAVs across the sector, which we'll address in a second, and below budget performance. It remains clear to us that this is a sector that is too large. It grew substantially during the years where money was cheap, and we think there is space for it to rationalize down to fewer companies that are larger. And we think that will be beneficial for us in terms of rerating as the founder of the sector and the largest company in it.

So against that backdrop, we've been very active. In this presentation, we will cover how we have generated capital to use over 2025 and what we've used it for, buying shares back, reducing debt and so on.

So we'll now look forward at the results for 2025, which we published last week. Steve will take you through those, and then I'll return to talk through the broader renewables market and our capital allocation priorities going forward.

Thanks, Matt. So yes, I'll take you through the financial operational performance during 2025. So if we look at the financial highlights, what you can see here is a very strong and robust GBP 291 million of net cash generation. So that's the cash that this business has generated after paying all the costs that it needs to operate the business itself. That is the cash, therefore, that is available to allocate to shareholders. We had a dividend cover last year of 1.3x, and that's despite the fact that during 2025, we had some of the lowest wind speeds in the whole of this century, had a bearish impact on our generation, which led us to be about 8.5% below budget, but yet we still had our dividend covered quite healthily.

A couple of other points worth highlighting here. So you can see at the top, we've published our EBITDA numbers. That would allow you to compare us against some of our broader peers in and outside the investment trust sector. And I think you'll see that, that would put us at a pretty good valuation compared to others. And then in terms of our returns of 11% portfolio IRR at our net asset value, if we just focus in on the yield itself, it's almost 8% on NAV and close to 11% on share price, which we think provides a very compelling opportunity for investors, especially when you look at our very high structural dividend cover.

Moving on to net cash generation in a bit more detail. So as I said before, GBP 291 million of cash generated in 2025. That's grown from last year. One of the reasons for that growth is there's a strong CPI linkage in our cash flows, which helps the growth of the business year-to-year. In terms of some of the other points that's worth highlighting here, I think you can see, and Matt has already mentioned it in terms of the fee structure that gets paid to the investment manager, there was a GBP 6 million saving to the business in 2025 following our market-leading change in investment manager fee structuring. That's a cash saving. On a P&L basis, it would actually have been higher, about GBP 10.5 million. And going forward, the ongoing charges ratio, so that's the cost that you pay for us to manage your business, will fall to about 70 basis points over the coming year if the discount to NAV remains consistent. Again, we think that's market leading and a very compelling opportunity for investors.

So in terms of dividend cover itself, so this is the amount of times we can pay the dividend from the net cash generation. As I've mentioned before, it's 1.3x despite the difficult circumstances of 2025. And as you can see, in 2025, we paid a dividend of over GBP 227 million to our shareholders.

You can also see here some of the aspects of capital allocation. We've had a busy year allocating capital and doing the right things for shareholders. So we made GBP 181 million worth of disposals. That's selling assets at the net asset value, helping prove that, that fair value or net asset value is robust and realistic. We spent GBP 109 million buying back our own shares at a discount to NAV. That's been about 95 million shares and added some value to the business. And finally, we've reduced the amount of debt that the company has by GBP 168 million as well. All things, we hope, that are adding value to the shareholders on an ongoing basis.

So moving on to the next slide, just a couple of quick points on here. So this is -- 2025 is the 12th consecutive year of paying an inflation-related dividend at or above RPI. We're very proud of that, puts us in a handful of FTSE 250 companies who've managed to achieve that fact. And we've announced the dividend target for 2026 at 10.7p, a 3.4% increase on 2025's dividend. Historically, our dividend has been covered at 1.7x, and going forward, we're forecasting 1.8x over the next 5 years. And obviously, that 0.8 gives us significant amount of capital over the coming years to allocate in the best interest of shareholders. That will be around about GBP 1 billion.

Moving on to net asset value itself. We've talked a little bit -- looking left to right, talked a little bit around the difficult year we've had in 2025. So we were forecasting at the beginning of 2025 a 1.8x dividend cover. It ended up being 1.3, as I've already said. About 0.2 of that differential is due to below budget generation. About 0.2 has been also due to power prices falling during the year, principally as a cause of fall in the price of gas, which up until beginning of this week has been largely a normalization post the war in Ukraine. We'll come on to power prices in a bit more detail in the next slide. And 0.1 is a variety of other factors as well.

What I think is also worth pointing out here is some of the government impacts as well, which we can talk about in more detail later on, about 3p per share reduction as a result of some smaller government interventions, specifically around the renewables obligation moving from RPI inflation to CPI inflation.

So in terms of power prices, you'll see on this slide on the top left-hand side here, our power price forecast. This is the annual price that we can see in each of these years. Obviously, there's a lot of volatility in power pricing intra-day, intra-month. As we've seen with the unfortunate events over the weekend, there's been a spike in power prices this week.

How we actually forecast our power prices, what we do for the first couple of years is that we take the futures market's pricing that people are actually buying and selling power for in the market. So it's the most accurate reflection of the power price at any one time. And then after that, we use an expert consultant who builds up the whole generation stack, so what type of nuclear, wind, solar, gas is on the system, and it matches up to the demand in the system as well. And we think there's a very strong case for demand growth in the U.K., principally from the increased use of artificial intelligence, which leads to massive build-out in data centers.

You can look across the island at the moment, where about 24% of their electricity demand over the course of the year comes from data centers alone. That's from around about 0 only 4, 5 years ago. And we also see increasing demand from electrification of heat and transport, too. We think that gives some significant upside opportunities there in terms of power prices.

So over the last 12 months, we've reduced our power price forecast. Between now and the end of the decade, it's about 10% lower, and in the 2030s, it's about 5% lower. As I said, that's mainly due to a fall in gas or a normalization of gas prices post the highs from -- following Russia's invasion of Ukraine. We've actually seen that reverse a little bit in the very recent times given what's going on in the Middle East. And that shows you that having some judicious exposure to power prices can reap its benefits.

And notwithstanding that, we're very active in terms of our way of managing power price risk. About 60% of our cash flows over the next 5 years are fixed and the vast majority of that is linked to CPI as well, so inflation linked. We think that's a strong feature of the business. And we also have the ability to improve on that either through ways of hedging power physically or financially, so we're going out and adding fixed prices in terms of the way that we sell our power. There's also insurance products available as well, again, to help manage that power price exposure where it's in the best interests of shareholders.

Now again, the dividend is a core part of our proposition, and we've set out here, on the bottom left-hand side, some sensitivities to what the dividend cover would look like at some pretty bearish power price scenarios. And I think you can see that even after paying an inflated dividend over the next 5 years, we can still cover our dividend comfortably even down to low power prices such as GBP 30 per megawatt hour.

So moving on to wind resource. I mentioned 2025 was a difficult year, especially during that first part where we were under budget for 5 of the first 6 months. That's principally because wind speeds were abnormally low, some of the lowest wind speeds this century. There's been a big normalization in the second half of last year, which has continued into this year as well. And we're now above budget for the beginning of this year, plus some positive tailwinds from cash being generated towards the end of the next year and received in our bank accounts in January and February this year.

An important part of managing real assets like this is making sure that the assets are available to generate when the wind blows. Pleased to say that last year, we were on target in terms of our availability assumptions. And so therefore, when the wind was blowing, we were available to capture it as well, maximizing the revenue for our shareholders.

Just a couple of words on balance sheet. So we have a mix of different debt products. Majority of it is term loans at the holdco. We also have some debt, which gets repaid annually as well associated with one of our projects. We think this is an interesting debt structure because it allows us to decide how to allocate our capital because we don't have to necessarily repay it all every single 6-month period or yearly period. We think that gives us the flexibility to use what cash we've got in the best interest of our shareholders in the long term.

So that wraps up the conversation around 2025 performance. I'll hand back to Matt now to talk about the renewables market and further strategic capital allocation priorities for the business.

Thanks, Steve. So I mentioned at the beginning that we wanted to give a bit of broader context for renewable energy and the U.K. electricity system. So the first thing to note, as I said earlier, is that all forecasts are unified and seeing a significant increase in the amount of demand for electricity out through 2040 between 50% to 100%, depending on which forecast you take and depending on which range and the same forecast you look at.

All demand for electrons is obviously good for us. We generate electricity. We sell it. And increasingly, a lot of that demand is smart demand, so it's price responsive. So think of an electric vehicle. If you have a smart cable and you have a half hourly meter, you're able to charge your car in the cheapest half hours for you. And frankly, I don't mind when my car is charged as long as by 7:00 in the morning, it's charged to 80%.

That is even further constructive for intermittent generators like us. We don't choose when to dispatch the wind, it's windy or not. We generate the electrons anyway. So having an underpinning for demand when there might not otherwise be a lot of demand on the system is really helpful for intermittent generators. So we see that from electric vehicles. You mentioned heat pumps earlier, so both creating heat and creating cold. Data centers are also becoming increasingly adaptive in how they use power. So all of these factors are good if you're selling electricity and very good if you are selling intermittent electricity.

So we expect the demand for electrons to be there. It's simply a question of how much they will be. The question that naturally arises, well, where will the electrons come from if we accept that we need them. There's no need to look at the sort of the charts in the bars here. The most important thing is that renewables, why are they going to be the winners who provide the new electric capacity that we need over time.

Well, first of all, speed. Renewables are actually relatively quick to deploy. Once they're consented and have all the permits in place and successfully get through an auction like this that gives a route to market or a fixed price for a period of time, they're relatively quick to deploy. Onshore wind could take 12 to 18 months to build. Solar, perhaps half of that depending on the size of the site. Offshore wind naturally takes a little bit longer to build given the complexity.

And it's interesting, just to contrast that against the other sources of potential new electrons in the U.K. Nuclear, I definitely think has a role to play. But you look at the time horizon from awarding Hinkley Point a contract, so a route to market that I mentioned earlier, that was 2013. So then 2030, when [ that produces ] first electron. That will obviously be quicker for newer plants, other plants that are being built along the same design that isn't instantaneous. The same is true around creating new gas capacity in the U.K. There's a peak in global demand for gas turbines, so there's roughly a 5-year waste at moment. So for now, renewables are relatively quick to deploy. They're also secure. Once you've built it, it's there. It generates electricity. You don't have to worry about what's happening in Qatar per se.

Cost is another feature, and we set out here the prices that the auction participants have been awarded here. They're all materially lower than the government's cost expectation of what one would need to build a new gas plant. The government estimates that at about GBP 150 a megawatt hour, whereas the cheapest solar is about GBP 65 a megawatt hour.

So I think fundamentally, if we look at the backdrop for the market for renewables, it's constructive and positive. It's supported by the government with this allocation round. And there'll certainly be a lot more capacity for people like us to invest in going forward. So we've seen there's a need for significant investment. We see lots of opportunities, and we wanted to just contextualize that with how we've been allocating capital this past year, 2025, what we expect to do in '26 and beyond.

So capital allocation is just a fancy term for where you get the money from and what you do with it, right? So we've shown here, we generate, as we said before, excess net cash every year. We can sell assets if we choose to. We've sold GBP 222 million worth of assets in the last 14 months, all at the prevailing fair valuation of those assets. And in 2025, we used the money that we generated either through disposals or organically through our portfolio to, as Steve said, satisfy a dividend of GBP 227 million being its fourth consecutive year of increasing at RPI, better.

We also repaid or distributed a significant amount of debt, GBP 168 million, and spent GBP 109 million buying our shares back. That, of course, is quite a big demonstration of the board of managers' commitment and activity over 2025. It seems perhaps, thus far, unrewarded in terms of share price performance. So there is a need to do more.

So let's look ahead at what we expect to do over 2026 and beyond. So again, we've shown this in a sources and uses kind of way. On the left-hand side, where will the money come from? Well, our central case for net cash generation this year is GBP 380 million. We put a range there because there is variability in power prices [indiscernible]. We have a bit of excess cash on balance sheet as well, and we could well pursue further disposals to give us more capital to allocate.

Where is that going to go this year? So we've committed to a dividend that now increases in line with CPI. It's a very clear signal for investors. We have a 12-year track record of paying a dividend that's increased in line with RPI or better. Going forward, that will be CPI. As I said, it's a clear unequivocal commitment. It's not the word progressive, which could mean that the dividend doesn't go up at all. And that's always been a strong hallmark of UK Wind's capital allocation priorities. We also expect that, that dividend should be well covered in the next 5 years, and we'll look at that in a second.

Our immediate priority will be to reduce gearing in the business. That isn't because we have an inherent problem with the amount of gearing that we have. On the contrary, the banks who lend to us would be happy to lend us more money. We view that as giving us optionality for the future. And this year, we expect to make a disciplined return to reinvesting. That is something that UK Wind has done a lot over its time at the beginning. You'll recall, I mentioned that UK Wind has generated -- organically invested GBP 1 billion back in this business over time. This year, I think, that will be characterized by relatively low cost but high optionality investments that already exist inside our portfolio.

Looking beyond 2026 and the landscape forward. We've set out here the excess cash that we expect to generate and have our ability to use over the next 5 years. We've shown EBITDA. We've shown net cash generation and GBP 1.2 billion in CPI-linked dividends for the next 5 years. And that leaves us on a sensitized range between GBP 800 million and GBP 1.2 billion to allocate.

As we said before, in its past, UK Wind has successfully reinvested in its portfolio, and we thought it worth illustrating the power of reinvestment. So if you were to look at the chart on this page, when you invest in finite life assets -- and we think our wind farms will last for 30 years -- obviously, if you don't replace them, they get older every year and so on and so on and so on until, at the end, they have no value. We think there probably will be a residual value for our wind farms at the end of 30 years, but we don't price that into our net asset value.

But over time, you can see, if a portfolio that is an average 9 years old gets older, then the cash flow that comes off of it -- and this is the free cash flow available to us to do something with. That's the green stack here -- it's going to reduce over time. Naturally, it would. These are depreciating assets. But over time, UK Wind hasn't had that experience because it's reinvested in the business, and this green chart just shows what happens if you don't generate any excess cash beyond your dividend; and if you did generate cash, you don't do anything with it.

Well, if you reinvest it with discipline as we have historically, you get to grow the cash flow that's available to investors over time. That's why the blue stack on top grows over time. And that gives us yet further free cash flow beyond our dividend to reinvest back in the business and maintain UK Wind's status as a permanent capital vehicle.

So just to summarize before we hand back to Paul and then John for Q&A. Management and the Board recognize that it's been a challenging year, but we do see some of the signs of rationalization in the sector that we think will favor fewer larger products, ourselves included in that. We continue to be active. We've shown you the activities we've been up to in 2025 and our plans going forward. And there is a market opportunity here and cash flow available to us to invest in that opportunity. So in many respects, with the return to disciplined reinvestment, the future can be quite positive for UK Wind PLC.

Going to hand back to Paul now and then John for Q&A.

[Operator Instructions] Just like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via your investor dashboard. We've received a number of questions, both pre-submitted and throughout today's meeting from investors, so thank you very much for that. John, if I may just hand over to you just to read out the questions where appropriate to do so, and I'll pick up from you then.

Thank you, Paul, and thank you, everyone, for your questions. We've got quite a few. And I'm not -- because they've come in quite quickly here, I'm not necessarily going to be able to group them all together, so we may jump around a little bit. But let's start with this one. The company's in [ commented ] expert miscalculation in wind speeds has led to a decline in net asset value over recent years. Given the turbine workload has been lower than expected, should the estimated -- should this see an estimated gain to NAV through increased plant longevity?

Thank you, John. So I wouldn't characterize our estimations of wind speed as miscalculations, if you like. Wind is a volatile resource on an intra-year basis. Standard deviation of energy output from wind speed over 1 year is around 10%, but over 30 years, it's around 2%. So one should expect properly calculated wind speed estimates looking forward to have some variability.

And indeed, if one looks back to 1996, which is when data was harmonized in the U.K., it is characterized by 3- to 5-year periods of over and underperformance in terms of wind. So we and the Board are very confident that the process that we went through at the end of 2024 to realign our budgets going forward for the long term was the right process done with a third party and scrutinized by the Board. And we have, as Steve said, seen somewhat of a normalization of wind in the last half of last year and are on budget to date.

To get to the nub of your question, yes, if you have less workload through your turbines than anticipated, then, generally speaking, that equipment will probably last longer. But that isn't the only factor in asset longevity. One has to make sure one has planning permission to operate for more than the 30 years that we expect and also land rights. But those last 2 are the sort of things that Steve and I work on securing for the future of the portfolio. But less physical load through the turbines does mean that their status and maintenance and equipment duration should be longer.

Yes, I think that's right. And the only probably other thing to add is you could potentially run your turbines a bit harder as well. So when it is windy, you can let them run a tiny bit harder to get some more energy out of the wind as well. And that's something that we're continually looking to do in order to enhance the portfolio day to day, either through software and/or hardware updates in order to extract as much energy and therefore, revenue out of the wind as we possibly can.

Okay. Thank you. Next question here is from [ Alex C. ] on disposals. It's good to see disposals at or near NAV, especially when the shares are trading at a discount to NAV. It would be helpful to understand if these disposals are representative of the portfolio or somewhat unique or cherrypicked.

Thanks, John. Yes. So as we said, we've disposed of interest in a number of our assets over the past 14 months at NAV to deliver GBP 222 million of gross sale proceeds. How do we select those assets? Well, I characterize the onshore wind farms that we sold as, in effect, middle of the road for our portfolio. And the way that we sold them was through bilateral process rather than launching a broader sort of auction process. We felt that was the best way to give certainty to delivery, and we divested to partners that are known to our business before that many of us have worked with, where you're pretty clear that you're going to have a meeting of minds and that you'll get to the level of pricing that you want.

So the onshore wind farms that we sold were middle of the road in our portfolio. The offshore wind farm that we sold an interest in is our largest single asset, and we felt that it was sensible to deconcentrate the business in that asset. That is the only asset, by the way, that has debt downstairs in it, so SPV level debt. So by selling an interest in that asset, you automatically degear the business a little as well. So that was why we were attracted to partial sale of that asset.

Okay. Thank you. We've had a few questions on batteries, but I'll go with this one from [ David D ]. Does the reduction in battery costs offer an opportunity for adding storage near turbine sites?

I think at present is more of an opportunity for solar sites in my opinion. So colocation of solar and battery has a lot more synergy than wind and battery in our minds. So certainly, you have a very predictable daytime peak. You would have seen that yesterday, somewhere between 11 and 1, 10 to 12 in the summer. And that suits the characteristics of a battery in terms of charge and discharge.

The challenge with wind is really in terms of sizing. So wind, it tends to be windy for 24, 48 or 72 hours at a time. So the magnitude of battery that one would need to capture any meaningful energy from a wind farm when it's windy, which, of course, is typically the time when power prices go down a bit, is so big that you wouldn't be using it. If you did size it to suck down a lot of that power, then the other 90% of the time, you'd have to use it in the arbitrage market, which is, generally speaking, how batteries make money.

So we don't really see the appeal of wind and batteries on a colocation basis at present, but the question points out likely that the cost of battery CapEx is falling. So that's one that we will stay close to. On a stand-alone basis, for us, batteries, when one looks at the risk return of a purely merchant battery model versus the fixed cash flows that are available from investing in wind farms, the return premium isn't really there at the moment. But as batteries get cheaper, it's something that we'll think about and look at.

Thank you. Next question from [ Sam ] talks about capture discount, so the price we achieve on our electricity sales versus the baseload price. That was 13% last year. Should we expect that to widen further over the next decade?

Yes. Good question. Thanks, [ Sam ]. So the way that we forecast capture rates actually does show an increase in that capture rate over the next few years. It's obviously a difference between the balance of the demand at any one time versus the generation from intermittent resources. And we think that is going to increase over the next few years. So that's in our production forecast. It's in our net asset value. So it's fairly represented in our balance sheet, and we're comfortable with that position.

There is some uncertainty on there. If the build-out of wind is faster than demand, then capture rates could go up but also vice versa. If demand starts to accelerate like we've seen in other markets, especially around data centers, we've also seen that.

The other thing that I think we're going to see over the next few years in terms of the electricity market is a real change in terms of the dynamic use of power. And I think things like Matt mentioned earlier on in terms of heating and cooling, air is a very good way of storing energy, be that in the form of cold or in the form of heat. Electric vehicles are another great way of storing energy as are batteries more generally.

So I think you'll see a lot more dynamic usage of power, especially when power starts to become a bit lower, which will end up increasing or decreasing depending which way you're looking at the capture rates that we see and therefore, maximizing revenues for a company like UK Wind.

So this is a follow-up question or a somewhat linked question from [ Sandy ]. Can you help me understand why in the context of rising forecast demand, perhaps more dynamic demand? Is it that we expect power prices to fall over the forecast period? Is it because -- is it that supply is forecast to exceed the forecast power consumption increase?

It's fundamentally because renewables are cheaper than other forms of generation that are on the grid now. And you can see that in the Allocation Round 7 results. If you look at the gas price that the government are forecasting, it's around GBP 150 a megawatt hour. Offshore wind is coming in at GBP 90 per megawatt hour. So the more renewables you push on to the system, the cheaper the overall system becomes.

Then, it becomes that balance between demand and supply, we've just been talking about there. So that's why we're forecasting and so most forecast is a reduction in electricity price over the next 5 or 6 years because more and more renewables are coming on to the market, dampening the price of renewables, which ultimately is what consumers see in their bills when it comes to paying that every month.

Moving on to a separate topic. So if the continuation vote were not to pass at the AGM, which is scheduled for May, is it a -- is the NAV, sorry, a reasonable assumption of the value of the assets that could be sold in the current market? And how long would it take to sell 49 assets?

Yes, that's what net asset value is. It is the fair valuation of the business as we see it and as our auditors validate, as our Board validates.

How long would it take to sell that number of assets? I think it's always challenging to tell until we start a process. And I think a decent proxy will be another fund in the sector that is presently undergoing a sale process. So I think you'll learn and see quite a lot from that.

It's like anything, I mean, the way that assets sell in this market, there's a price duration curve. If you wanted to sell all of the assets tomorrow, I'm sure we would get a price, but it would be NAV. If you took a 6-, 12-month strategic approach and found the right kind of capital to come in and buy the assets, then I think you could achieve NAV over that time period. So it would take time for sure. But that is the point in asset value. That's what it is meant to represent.

Okay. Thank you. A question from [ Vasco ] on the current spike or recent spike in oil and gas prices. Is there a corresponding expected increase in electricity prices? And are you expecting this to increase profitability?

So yes, good question, and thank you. Yes, there has been an increase in electricity prices in the U.K. following what happened on Saturday and what's been unraveling in the Middle East since prices have increased by anywhere between GBP 10 and GBP 20 per megawatt hour over the next couple of years. We haven't seen pricing beyond that duration move substantially. But over the coming 12 to 24 months, pricing has increased and UK Wind has some exposure to that. Some of that, we've actually hedged away this year and settled some fixed price contracts, and some of that will be exposed to going forward in terms of taking advantage of those higher prices that we're seeing at the moment given the unfortunate situation there.

I think it's really, Steve, as you mentioned, it's a function of how long this conflict lasts. It's the marginal units of gas coming from Qatar that is going to drive price differentials in Europe and in the U.K. At present, we're not seeing that really have a significant impact on power prices a couple of years ahead. But for this year, as Steve mentioned, at present, power prices have increased appreciably. Such is the nature of volatility in the sector that, of course, it could all end with one tweet. So we have to be measured when thinking about that.

But it's -- part of our job is to manage that exposure to power prices and be able to take those quick reactions in order to secure upside where we can increase probability.

A slightly linked question here. So how will wind power be priced when the connection to gas prices is broken, assuming that is something that we can do eventually?

It's a really good question, actually, and it's one that the government, in some degree, is grappling with through its review of electricity market arrangements at least at the beginning of the genesis of that process. So if you think about it, where every unit on the system has a relatively low marginal cost, the marginal cost isn't 0. We, of course, pay operating costs on a pounds per megawatt hour generated basis. So whilst we don't have to pay for a resource, you do have to pay for maintenance. It's clearly unsustainable if the commodity that you produce is only ever dispatched at your cost of production.

So the way that we see this working in the future is by having, if you like, a voluntary CfD system that's sometimes referred to as Pot-Zero, you can read about it online, where, in effect, generators who are fully merchant or where there's no linkage to gas price and the selling power in the market can bid into a mechanism to secure a price for a long period of time that gives both them certainty as to what they will receive going forward and that it's worth continuing to maintain the assets we have and also give consumers and government price visibility for a decent period of time. Now that's yet to emerge. And I think we're quite some way away from the scenario that you described, but it's a really thoughtful question.

Okay. Moving on to some other areas and just to prove that we're not softballing all the questions. If the share price is such good value, why aren't we seeing it supported by highly paid directors buying shares?

It's a completely fair question. I can't speak to the directors' personal circumstances, but that is often a question that is raised at our AGM, which investors are welcome to attend in May this year. I think the point speaks more broadly to alignment. There's a couple of things there that are important.

I mentioned that we are the only manager in the sector who's paid solely on the lower of market cap and NAV rather than NAV. That means our fees are a lot lower than they used to be. That's fine. It's the right thing to do for shareholders. It also means that we're fully aligned to improve the situation for shareholders.

Another point to note is that management are paid a significant amount of the management fee and shares at any given moment. Our employer, Schroders Greencoat LLP holds around 6 million shares. I personally hold a large number of shares, and some of my compensation has been turned into shares for UK Wind. So I think there's no lack of alignment around the table for manager or Board in terms of addressing the situation that we find ourselves in.

Similar question on performance. My investment since the 2021 share offering is sitting at a capital loss of 28.4% and both the NAV per share and the share price are falling significantly. What is causing these deteriorations? And what are you doing about it?

It's a very fair question, and my own personal investment journey is almost exactly the same. I think I bought my shares in 2022 actually. So there's a number of things here. We've addressed that power prices have been falling. Power prices rise. Power prices fall. They rose appreciably in 2022 and '23, and that was highly beneficial to the fund. Since then, they have fallen. And that, as the person who asked the question pointed out, has led to NAV falling. It's also corresponded with 2 years, and this does happen, of relatively low wind speed generation.

The broader context is that the renewable energy investment trust sector, in my opinion, grew too big when money was cheap. So all the way through to the end of perhaps '21, money was very cheap. There were lots of products in the sector. And much of that expansion was supported by investors that were seeking income, certain types of institutional investor who, post the Liz Truss budget, have other areas where they can get income.

That means you have a lot of sellers. You have more sellers. I mean they're always the same number of sellers and buyers, right, otherwise shares [ would be clear ]. But the point is if you have more selling sentiment than buying, then that drives discounts down. We find that our share price is the largest vehicle in the sector and having done the most significant buyback in the sector has been perhaps a bit of a [ -- been used as ] liquidity for others.

And I think you also need that situation to resolve itself with fewer larger companies in the sector for a return to health as well as working hard to deliver on that metrics and cash generation, which is what Steve and I focus on every day. Those to me are the 2 parts to correction in this sector. I understand how you feel about your personal investment journey. We're entirely aligned to make things better for the business.

So following on from something you mentioned there around the supply and demand in the sector. So the question is you mentioned the need for consolidation. What are the drivers for this? Is it synergies, mergers across different technologies, diversification, other factors?

I think it's a combination of things. I mean it's consolidation itself, as Matt outlined, won't necessarily be the answer. We think the sector needs to shrink. So putting together different funds and not shrinking the sector without there being some type of material hand back of capital to shareholders probably won't work. So I think that you've got to look at it in the round in that way.

In terms of the other factors that would make a theoretical merger work, yes, there would need to be synergies. There might need to be some diversification benefits, but it would have to work in order for our shareholders for us to even consider this. And the bar is pretty high. We think our portfolio is very strong. We have the ability to invest in our portfolio, invest in further onshore, offshore wind assets in the U.K., especially with an Allocation Round 6 or Allocation Round 7 contract, which will give us 15 or 20 years of fixed revenues for the business and allow us to be confident to cover the dividend very strongly and carry on reinvesting excess cash flows.

So the way that we would look at it was what is in the best interest of our shareholders. And unless it was clearly in the best interest of our shareholders, we'll continue with our current investment objective.

And move on to a few more operational, let's call them, questions. So over the next 5 years -- this is from [ Tim ]. What portion of CapEx will be needed to fund the repair or replacement of existing wind farms as they age?

So the way that we look at this is probably quantify it more as operational expenditure rather than capital expenditure. But I can see why the question has come through that way. Effectively, you've got the turbines. There's some major components within the turbine. You have the generator. You have the blades, and you have some other aspects, which on -- over time, sometimes need replacing.

In terms of the costs that we saw as an overall business last year, it's about GBP 227 million. Of that, it's something like 30% to 50% in any 1 year, which goes towards the overall operations and maintenance of the turbines directly themselves. And that will be funding the physical hardware, which is used to replace failed hardware, also refurbished hardware as well as well as paying for some of the risk management along with the staff that are obviously on the wind farms doing the actual work themselves.

As we go forward and we look to repowering, even though that's some way away for us, that will be a different conversation at a different time. The cost for onshore wind and offshore wind have reduced over the last 10 years. So we expect that if we were to invest in new projects, required genuine CapEx, that those costs would be pretty competitive, and as you see, much more competitive than the cost of gas.

Question from [ Stephen ] on wind speed. So why do we have below budget wind generation almost every year? Can we improve the budgeting process?

Thank you for the question. It's a very fair one to address. So we did a holistic review of our wind speed estimations in 2024, as we said before, using a third-party consultant. We took the -- that exercise very seriously. Our Board was heavily involved in it. And we felt we did exactly the right exercise that led to a reduction in our long-term expectations of energy generation of about 2.4% every year.

We've even looked at whether there are any climatic effects that one could speak to as to wind speed variability going forward. As yet, there are no conclusions from that. There's a reasonable degree of uncertainty given the climate modeling.

So if you look back over the data set, as I mentioned earlier, back to 1996, it is characterized by periods of time where you have over and underperformance of wind speed versus the long-term mean. So going forward, our expectation of our central case estimation remains to be assessed in 2024. We're as interested as you are in having a budget that is deliverable, but as it comes to the science and the industry practice and standards that we've applied, I think we've done that, exactly the right exercise, and we've done it quite prudently. As we said earlier, the last 6 months of last year were a more normalized wind climate and beginning to this year, it is relatively strong, too. So perhaps that is a year where you will see a reversion to mean.

Another question on generation and wind speeds, I guess. Is curtailment a problem? And how does it affect impact -- sorry, affect income?

So curtailment is an issue for the interim. It's principally a factor that the grid is not being built out in the way that was foreseen for the distributed energy system that we have now. You might see, if you look at the likes of RWE and SSE, there is significant -- and National Grid, significant investment in the grid coming up over the coming years, which will alleviate that problem in order to make sure that the grid is there for when generation generates, it can be transported to the right area.

In Northern Ireland, where we hold a number of assets, it's slightly different, where there is no compensation for grid curtailment there. That's subject to change in the future, but that's all factored into our fair value with what we think are prudent estimates. In the U.K. for some of our assets, there's something that you might have heard of called the balancing mechanism. And that's a factor whereby if a wind plant is curtailed, it can bid into this mechanism and be compensated somewhat for the loss that it has from not being able to generate. And that helps National Grid balance the overall position in terms of supply and demand. But the key to this is investment in grid. Investment is coming.

Okay. Just taking note of the time, we'll try and get a couple more questions in, and then we'll have to draw things to a close. There's 2 here that are quite similar. So what is the net gain to the company of buying back shares versus using the same funds to reduce gearing and therefore, the cost of debt?

Thank you. So on an economic analysis, if you buy a share back at a, say, 25% discount, then the return on that is whatever you think your return is at NAV divided by 0.75. So that, at present, is a relatively high return. The return from paying off debt is you then stop paying the interest on that part of debt that you've repaid. So taking the cost of our revolving credit facility as an example, that would be around 6%. So the return on buying a share back is undoubtedly higher than buying -- retiring the debt.

But as we said, for the long term, if the company continually buys its shares back, it will shrink itself into not existing. It will, of course, add some value to the pence per share in terms of NAV. But our expectation is in the medium to long term that we'll be reinvesting back in the business to create future cash flow. The good thing about that future cash flow in and of itself and growing NAV is that it inherently reduces your gearing. I also think, by the way, that retiring some of our debt doesn't really affect the cost of any new debt that we take. That's really a matter of the market at the time, where interest rates are and perception of credit. And that isn't anything that we've really been challenged with at all. We did a GBP 750 million refinancing in September 2024, which was very competitively bid and worked out very well for us.

So maybe we'll end with this question. Would it be prudent to diversify into other renewable assets or even buy another investment trust at a big discount to NAV to help secure future revenue growth?

So we were very clear to signal in our results that there is a dislocation in the market at the moment. And that could present opportunities for a business like UK Wind. We have to see how that develops over the course of the coming years. So to hypothetically answer your question, yes, it is in theory possible, assuming that one could actually make it happen, to buy another company using one's own shares. But we would look at it as we look at all new investment for the business. Is the thing that you are buying additive to the return profile that your business presently has? Does it outperform the things that you could inherently already invest in? And is it in the long-term best interests of the shareholders of the business. Those would be the principles that we would be guided by in your theoretical question.

So I think that concludes the Q&A session, and I can hand it back to Paul for -- to close today's session.

Thank you, and thank you for taking all those questions. Could I please ask investors not to close this session. You'll now automatically be redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete and is greatly valued by the company.

On behalf of the team at Greencoat UK Wind PLC, we would like to thank you for attending today's presentation. That concludes today's session, and good afternoon to you all.

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.