Private equity giant Terra Firma pocketed £234m after selling a 30 per cent stake in Infinis Energy (INFI), Britain’s largest producer of renewable energy, last November. £37m of IPO-related costs plunged the landfill gas (LFG) and wind farm operator into the red last year. But underlying cash profits actually grew by 18 per cent to £148m, and the company remains on target to add a big chunk of additional capacity by 2017. It looks set to fulfil its dividend promise, too, which would give a prospective yield of 8 per cent.
Sixteen onshore wind farms were the driving force behind these better-than-expected numbers. Five chipped in full-year figures for the first time, another two were acquired, and the Tedder Hill site was built in September, taking installed capacity to 274 megawatts (MW). An especially windy winter helped them all, powering divisional revenue up 55 per cent to £67m and profit by nearly two-thirds to £54m.
Management remains confident of bringing an extra 130-150MW of projects on-stream by 2017. Two sites in Scotland should deliver 98MW in 2016, and others both there and in Wales offer protection against government opposition to wind farms in Tory-held southern England. Uncertainty ahead of September’s Scottish referendum is, however, unhelpful for Infinis, which admits that the level of regulatory support for renewables in the event of a ‘yes’ vote “is unclear”.
Electricity generated by the company’s 121 landfill gas sites made £108m last year, almost three-quarters of group profit. Output may be undergoing a slow, natural decline, but an ongoing switch to contracts under the more lucrative Renewables Obligation (RO) regulatory support mechanism capped the decline in divisional profit at 6 per cent.
Weaker power prices following a mild winter have persuaded broker RBC Capital to trim forecasts for 2015. It now expects adjusted cash profit of £144m, giving adjusted EPS of 14.2p (from 13.7p).
INFINIS ENERGY (INFI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 232p | MARKET VALUE: | £ 696m | |
| TOUCH: | 230-232p | 12-MONTH HIGH: | 277p | LOW: 197p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | NA | |
| NET ASSET VALUE | 104p* | NET DEBT: | 175% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 226 | 2.9 | 3.0 | nil |
| 2014 | 242 | -27.8 | -3.9 | 6.63† |
| % change | +7 | - | - | - |
Ex-div: 30 Jul Payment: 28 Aug *Includes intangible assets of £483m, or 161p per share †Final dividend only | ||||
