The Lemon Fool

richfool wrote:Thanks for the link Ian and on the Shares board, so I can comment more generally/freely.

I don't currently hold any Utilities (directly anyway) and don't plan to until the election outcome is known. After that, if we knew what would happen to PNN's dividends beyond 2020 and if JC doesn't become PM I might be attracted to buying some Pennon. I like that it has exposure to waste disposal as well as water.

The key elements for South West Water's Final Determination include:

· a post tax real cost of capital for the industry of 2.92% on a CPIH basis (1.92% on an RPI basis)

· a totex allowance of £2bn (wholesale and residential retail) - consistent with South West Water's Draft Determination in April 2019

· outcome delivery incentives reflecting the priorities of our customers - aligned with South West Water's Draft Determination in April 2019.

richfool wrote:.....I might be attracted to buying some Pennon. I like that it has exposure to waste disposal as well as water.

77ss wrote:Today's Sunday Telegraph has an article saying that Pennon is selling the Viridor business:


It will be interesting to see what Monday brings us.

I originally bought PNN because of its waste disposal arm. Now worth £4bn?! Well, that's about the same as the whole market capitalisation of PNN on Friday, so may be a tad over-optimistic.

77ss wrote:....

Today's Sunday Telegraph has an article saying that Pennon is selling the Viridor business:

https://www.telegraph.co.uk/business/20 ... d-viridor/

....

77ss wrote:......
Things have gone a bit quiet, but, but yesterday's Bloomberg article is of interest:

https://www.bloomberg.com/news/articles ... veolia-eqt

Key highlights

· Group performance for 2019/20 in-line with management expectations

· We are doing all we can to support our employees and customers through this unprecedented COVID-19 epidemic, with the Group being well positioned with strong funding and liquidity to weather current uncertainty

· South West Water has outperformed in K6 (2015-20) on TOTEX and financing and will end the five year period to 2020 in a net reward position on Outcome Delivery Incentives (ODIs)

o Revenue for 2019/20 has reduced, driven by prolonged wet weather with rainfall 50% more than the levels seen last year and higher than long-term averages. Year on year shortfalls in revenues (compared with the Final Determination) are subject to a revenue true-up mechanism in future years

o Operationally the business has performed well, ensuring minimal impact to customers at times of extreme wet and stormy weather

o Water resources now over 95%

· Viridor continues to perform well - focused on operational excellence and driving ongoing efficiency

o Growth in energy recovery with ramp-up of existing plants. Avonmouth Energy Recovery Facility (ERF) is now in commissioning and contributing to earnings, operational ramp-up expected during 2020/21

· Announced on 18 March 2020, the sale of Viridor to Planets UK Bidco Limited, a newly formed company established by funds advised by Kohlberg Kravis Roberts & Co. L.P. for an Enterprise Value of £4.2 billion. The transaction is expected to complete in Summer 2020

· Following the sale of Viridor, Pennon will focus on its sector-leading water and wastewater businesses and will continue to pursue growth within the UK water industry.

idpickering wrote:Full Year 2019/20 Trading Statement


https://www.investegate.co.uk/pennon-gr ... 00079582H/

77ss wrote:Steady as she goes. No indication of any dividend issues (due 3/4/2020) - not that I expected any, but every little bit of reassurance is welcome these days!

idpickering wrote:Full Year Results'

Here; https://www.pennon-group.co.uk/system/f ... esults.pdf

Also posted on HYP Practical for HYPer chat.

77ss wrote:

idpickering wrote:Full Year Results'

Here; https://www.pennon-group.co.uk/system/f ... esults.pdf

Also posted on HYP Practical for HYPer chat.

I've done well with Pennon, but I shall now be looking to trim. A decent increase of 6.7% in this year's final - as expected, but the future looks less rosy. The notional dividend for the continuing group (ie - less Viridor) is 21.11p - as compared to 43.77p. Expected of course, but how easy will it be to replace the income (if that is what is wanted) with the capital that I assume will be paid to shareholders.

Possibly more interesting is the change in dividend policy, long signalled, from annual increases of RPI+4% to CPIH+2%. This is quite a harsh drop - as RPI/CPIH stand at the moment.

It will be interesting to see what the market makes of it.

77ss wrote:

idpickering wrote:Full Year Results'

Here; https://www.pennon-group.co.uk/system/f ... esults.pdf

Also posted on HYP Practical for HYPer chat.

I've done well with Pennon, but I shall now be looking to trim. A decent increase of 6.7% in this year's final - as expected, but the future looks less rosy. The notional dividend for the continuing group (ie - less Viridor) is 21.11p - as compared to 43.77p. Expected of course, but how easy will it be to replace the income (if that is what is wanted) with the capital that I assume will be paid to shareholders.

Possibly more interesting is the change in dividend policy, long signalled, from annual increases of RPI+4% to CPIH+2%. This is quite a harsh drop - as RPI/CPIH stand at the moment.

It will be interesting to see what the market makes of it.

Pennon will now review the most efficient and effective method of returning value to shareholders, alongside considering earnings accretive market opportunities. Any potential investment will be assessed in terms of value creation and the impact on shareholder returns, income and growth, as well as the impact on customers and other stakeholders. Any use of capital to pursue an investment opportunity will be compared with the alternative of returning that capital to shareholders, maintaining our strong focus on financial discipline. We aim to update shareholders on this review at Pennon's half year results announcement in November 2020.