Committing to its twelfth energy recovery facility (ERF) at Avonmouth was just one piece of news in the latest results announcement from waste and water group Pennon (PNN). A total of £252m will be invested by the company with the site due to be completed in the 2021 financial year. Fuel equivalent to more than 50 per cent of capacity has already been agreed, with 35 per cent through Somerset Waste Partnership, a contract lasting the life of the plant. Chief financial officer Susan Davy calls these deals a step-change given its other sites had been opened without contracts in place. Viridor's ERF portfolio is on track to deliver £100m in cash profits this year, in spite of delays to the opening of its Glasgow site.
A new retail venture has also been launched between Pennon Water Services, its non-household division, and South Staffordshire and Cambridge Water. Pennon will own 80 per cent of the joint venture, which will be the fourth largest retailer with 8 per cent of in the non-household market when it launches in April. Operationally, cash profits rose at both South West Water and Viridor, in spite of revenue being 3 per cent lower at the latter business.
Analysts at Deutsche Bank expect pre-tax profit of £216m in the year to March 2017 leading to EPS of 39.9p compared with £206m and 39.5p in FY2016.
| PENNON (PNN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 822p | MARKET VALUE: | £3.40bn | |
| TOUCH: | 821.5-822p | 12-MONTH HIGH: | 958p | LOW: 761p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 259p* | NET DEBT: | 188% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 689 | 107 | 16.8 | 10.46 |
| 2016 | 686 | 102 | 17.7 | 11.09 |
| % change | -1 | -4 | +5 | +6 |
Ex-div: 2 Feb Payment: 4 Apr *Includes intangible assets of £450m, or 109p a share | ||||
