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Pennon Group Full Year Results 2020/21 posted on Company News Board.

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idpickering
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Pennon Group Full Year Results 2020/21 posted on Company News Board.

#416958

Postby idpickering » June 3rd, 2021, 7:14 am

Here; viewtopic.php?p=416957#p416957

The item includes this bit on dividends;

Dividends

The Group continues to deliver on its commitments to customers, shareholders and stakeholders, as our investments drive tangible, positive and sustainable results. Around two thirds of Pennon's shareholders are UK pension funds, savings, charities and individuals with over half of South West Water's employees being shareholders.

Pennon's sector-leading dividend policy, of growth of CPIH + 2% per annum, reflects the Board's confidence in the Group's sustainable growth strategy and is underpinned by continued RORE outperformance, driven by totex and financing outperformance, in South West Water.

In line with this policy, the Board has recommended a final dividend for 2020/21 of 14.97p per share, subject to shareholder approval at the Annual General Meeting on 22 July 2021. Together with the interim dividend of 6.77p, this will result in a total dividend of 21.74p per share, an increase of 3.0% on the re-based 2019/20 dividend of 21.11p[15]. Pennon offers shareholders the opportunity to invest their dividend in a Dividend Reinvestment Plan (DRIP).

Subject to shareholder approval of the proposed share consolidation, the final dividend will be re-based to 22.46p per new ordinary share. For comparative purposes the total dividend for 2020/21 of 21.74p will equate to 32.61p post consolidation.

The Bristol Water acquisition[16] is expected to deliver further dividend growth for the Group. The Board expects that Bristol Water will deliver dividend growth on a pre-consolidation and post-consolidations basis of 2.0p and 3.0p per share respectively.


I believe some HYPers hold these in their HYPs, so this item may be of interest to them.

Further to the above, a special dividend might be forthcoming;

See; viewtopic.php?p=416959#p416959

Ian.

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#416967

Postby Arborbridge » June 3rd, 2021, 8:22 am

Subject to shareholder approval of the proposed share consolidation, the final dividend will be re-based to 22.46p per new ordinary share. For comparative purposes the total dividend for 2020/21 of 21.74p will equate to 32.61p post consolidation.

Directorspeak is alive and well :roll: Rejoice!

Arb.

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#416972

Postby daveh » June 3rd, 2021, 9:06 am

Arborbridge wrote:Subject to shareholder approval of the proposed share consolidation, the final dividend will be re-based to 22.46p per new ordinary share. For comparative purposes the total dividend for 2020/21 of 21.74p will equate to 32.61p post consolidation.

Directorspeak is alive and well :roll: Rejoice!

Arb.



They are doing a rather large special and consolidation of shares 2 new for 3 old hence the re-calculation of the future dividend. I've yet to calculate how much the divi cut is wrt the dividend pre the sale of Viridor. The special is massive* (£3.55 per share) and will return a significant portion of my capital back to me. I've yet to decide whether I will reinvest it into Pennon or move it elsewhere. Can't complain as I was asking that Pennon returned the Viridor proceeds to me if they couldn't find a good use for them - and they have.

* I'll be receiving just under half my standard holding size back in cash (~1/3 of my Pennon holding as it is slightly overweight). I'll also have to decide how I'm handling the special for my records. Generally I've included specials in with normal dividends for my annual dividend calculations - but this one is so large it will rather skew the results this year.

Details
https://www.investegate.co.uk/pennon-gr ... 00076585A/

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#416973

Postby mike » June 3rd, 2021, 9:08 am

Some dates of interest

Final Dividend of 14.97p
Ex-dividend 22 July
Paid 2 September

Special Dividend of £3.55
Ex-dividend 1 July
Paid 16 July
Consolidation will be 2 for 3

The Board has now determined that a proportion of the Net Proceeds should be returned to shareholders by way of a proposed special dividend of c.£1.5 billion in aggregate, representing £3.55 per Existing Ordinary Share (the Special Dividend). The Board is proposing to pay the Special Dividend to shareholders on the register of members of the Company as at 6.00 p.m. on 2 July 2021.

As is common when an amount representing a significant proportion of the market capitalisation of a company is returned to shareholders, the Board is recommending that the Special Dividend is combined with an associated share consolidation on the basis of 2 New Ordinary Shares with nominal value of 61.05 pence each for every 3 Existing Ordinary Shares (the Share Consolidation). The effect of the Share Consolidation will be that the Existing Ordinary Shares will be replaced by the New Ordinary Shares so as to reduce the number of shares in issue and reflect the amount of cash to be returned to Shareholders. The result of the Share Consolidation will be to reduce the number of Ordinary Shares in issue by approximately the same percentage of market capitalisation returned via the Special Dividend (for these purposes, the market capitalisation used is that as at market close on 2 June 2021). It is anticipated, therefore, that the market price of each Ordinary Share should remain at a broadly similar level following the Special Dividend and the Share Consolidation. The current ISIN (GB00B18V8630) in relation to Existing Ordinary Shares will be disabled in CREST as at 6.00 p.m. on 2 July 2021. A new ISIN (GB00BNNTLN49) in relation to the New Ordinary Shares will come into effect at 8.00 a.m. on 5 July 2021.

The Company currently operates a Dividend Reinvestment Plan (DRIP) under which eligible shareholders may use their dividends to buy additional shares in the Company. The DRIP cut-off time and date is 6.00 p.m. on 2 July 2021 (the DRIP Cut-Off Time). Accordingly, those eligible shareholders who do not as of the DRIP Cut-Off Time participate in the DRIP may not apply to participate in the DRIP in respect of the Special Dividend. The Special Dividend payable to shareholders who are participants in the DRIP as of the DRIP Cut-Off Time will, unless such participation is revoked, be reinvested in additional New Ordinary Shares.

Subject to (i) shareholder approval of the Special Dividend and the Share Consolidation and (ii) admission in respect of the New Ordinary Shares, the Special Dividend is expected to be paid to shareholders on 16 July 2021.

https://www.investegate.co.uk/pennon-group-plc--pnn-/rns/bristol-water-acquisition-and-shareholder-return/202106030700076585A/

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#416986

Postby daveh » June 3rd, 2021, 10:00 am

Now I'm not sure what's happening with the final dividend:

Dividends

The Group continues to deliver on its commitments to customers, shareholders and stakeholders, as our investments drive tangible, positive and sustainable results. Around two thirds of Pennon's shareholders are UK pension funds, savings, charities and individuals with over half of South West Water's employees being shareholders.

Pennon's sector-leading dividend policy, of growth of CPIH + 2% per annum, reflects the Board's confidence in the Group's sustainable growth strategy and is underpinned by continued RORE outperformance, driven by totex and financing outperformance, in South West Water.

In line with this policy, the Board has recommended a final dividend for 2020/21 of 14.97p per share, subject to shareholder approval at the Annual General Meeting on 22 July 2021. Together with the interim dividend of 6.77p, this will result in a total dividend of 21.74p per share, an increase of 3.0% on the re-based 2019/20 dividend of 21.11p[15]. Pennon offers shareholders the opportunity to invest their dividend in a Dividend Reinvestment Plan (DRIP).

Subject to shareholder approval of the proposed share consolidation, the final dividend will be re-based to 22.46p per new ordinary share. For comparative purposes the total dividend for 2020/21 of 21.74p will equate to 32.61p post consolidation.

The Bristol Water acquisition[16] is expected to deliver further dividend growth for the Group. The Board expects that Bristol Water will deliver dividend growth on a pre-consolidation and post-consolidations basis of 2.0p and 3.0p per share respectively.


So they say they are paying 14.97p. But from Mike's post it is being paid after the share consolidation and in the quote above is being rebased to 22.46p.

So my reading of this is: the final dividend is 14.97p per old share (ie the shares we hold now), but if (when) the consolidation goes ahead the actual dividend paid will be 22.46p per new share. Am I right?

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#416990

Postby Gengulphus » June 3rd, 2021, 10:08 am

This is going to be of considerable practical significance to HYPers who own the company, since they're going to find that each 3 shares they own today are replaced by 2 shares plus 3 * £3.55 = £10.65 cash. I.e. other than for tax purposes, what's going to happen is equivalent to the company compulsorily buying back one third of their shares for £10.65 each (which is very close to yesterday's closing share price of £10.685, in keeping with the aim of such consolidations of avoiding big share price jumps). So as daveh has said, there are decisions coming up for those HYPers (who include me) about what to do with the cash - reinvesting in Pennon to approximately restore one's holding is the obvious simple answer, but there are plenty of other possible answers!

Anyway, results RNSes of HYP companies are generally important enough to HYPers to merit direct links, and this is a more significant one than most, so here's that direct link: https://www.investegate.co.uk/pennon-gr ... 00076586A/

mike wrote:Some dates of interest

Final Dividend of 14.97p
Ex-dividend 22 July
Paid 2 September

Special Dividend of £3.55
Ex-dividend 1 July
Paid 16 July
Consolidation will be 2 for 3

Those dates clarify the 'directorspeak' mentioned earlier in the thread ("Subject to shareholder approval of the proposed share consolidation, the final dividend will be re-based to 22.46p per new ordinary share. For comparative purposes the total dividend for 2020/21 of 21.74p will equate to 32.61p post consolidation."). The point is that they're doing the special dividend and share consolidation before the AGM confirms the ordinary dividend - but the share consolidation is subject to shareholder approval, and the directors cannot be absolutely certain that approval will be forthcoming.

So they're recommended an ordinary final dividend as 14.97p per share, but also said they'll change that recommendation to 22.46p per share if the share consolidation is approved. That change is actually a slight increase, but only a very slight one: if the consolidation isn't approved, a holder of 300 shares gets 300 * 14.97p = £44.91; if it is approved, they'll be down to 200 shares and get 200 * 22.46p = £44.92... So up to a very small rounding error, they're basically saying they intend to recommend the same total dividend payout regardless of whether the share consolidation is approved or not.

Edit: This post of mine and daveh's 'crossed', with me missing his while I was writing / previewing mine - but it basically answers his question: yes, he's right.

Gengulphus

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#417062

Postby mike » June 3rd, 2021, 1:10 pm

Here is a short explanation in graphic form (is that the right expression ?!) from Pennon of the process

https://www.pennon-group.co.uk/sites/default/files/attachments/pdf/pennon-special-dividend-and-share-consilidation-overview.pdf

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#417085

Postby daveh » June 3rd, 2021, 3:13 pm

OK it looks like the historic dividend yield for Pennon is about 2% taking account of the just announced final dividend and will be similar going forward, according to the results announcement. Therefore I won't be reinvesting the special back into more Pennon shares. Not sure yet where it will go. Could choose another water company (either top up United Utilities or a new purchase of Severn Trent), or it could go into a quasi REIT, either one of the battery storage companies are in my sights or perhaps JLEN, to sit with TRIG. Or into an IT/ETF (but I'll say no more on that here).

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#417161

Postby kempiejon » June 3rd, 2021, 8:40 pm

I hold PNN in 2 ISA accounts and I think I'll let the corporate actions shake out naturally and take my special shopping elsewhere. At PNNs lowish yield there's better options for income seekers though for my retained holding CPIH plus 2% is a good deal, I like a company that guarantees to beat inflation.

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#417218

Postby Mercury » June 4th, 2021, 6:04 am

Assuming all the necessary approvals are received, the forward looking (2021/22) yield for PNN will actually be ~3.3%, which may still leave it down top-up tables for some, but moves it closer to their peer group (UU/SVT at 4.3%, 4.1% respectively).

Consolidated share price moves current dividend from 21.74p to 32.61p and they’ve committed to increase by 9% from next year onwards (+3p), so this becomes 35.61p or 3.3% at closing price of 1088p.

PNN has committed to grow the dividend above inflation rates (unlike peers) and will likely have a higher dividend cover than peers, so may be a suitable reinvestment choice for some depending on HYP candidate screening criteria.

I’m actually impressed that management took some time to consider how best to use the Viridor proceeds and have reached what seems like a sensible conclusion - relatively small value-accretive acquisition, strong shareholder return and a share consolidation that restores a reasonable forward yield with sector leading growth policy.

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#417238

Postby Arborbridge » June 4th, 2021, 8:37 am

Plugging in my projected holding with the yield at 3.3% brings PNN up to 18th in my topup table from its current 31st. With that yield it would be unlikely to be topped up even were it in the top 12.
So, that suggests I would take the significant dollop of cash and topup something else, or perhaps buy a new partial size holding.

Getting cash back and then topping up the same company to bring it back up to strength somehow feels like a completely pointless exercise thrust upon us - but at least we have the choice of deploying somewhere else.

Arb.

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#417270

Postby Gengulphus » June 4th, 2021, 11:08 am

daveh wrote:OK it looks like the historic dividend yield for Pennon is about 2% taking account of the just announced final dividend and will be similar going forward, according to the results announcement.

By the time the corporate actions have played out, it can be expected to be about 3%, regardless of whether the share consolidation is approved. Basically, look at the two possibilities:

* If the share consolidation isn't approved, each share will receive a 14.97p final and has already received a 6.77p interim for the company's 2020/2021 financial year, for a total historical dividend of 14.97p+6.77p = 21.74p. And the share price can be expected to drop by about 355p as the special dividend goes ex-dividend, taking it down to about 730p from its current level, making the historical yield about 3%.

* If the share consolidation is approved, each consolidated share will receive a 22.46p final and has already received 1.5 shares' worth of the 6.77p interim for the company's 2020/2021 financial year, for a total historical dividend (adjusted for the consolidation) of 22.46p+1.5*6.77p = 32.61p. And the share price can be expected to remain about the same as its current level of 1085p, making the historical yield about 3%.

Basically, one way the share price needs to be adjusted for the special dividend + share consolidation, and the other way the dividend needs to be adjusted for it. One only gets a historical yield of about 2% by making neither of those adjustments.

Gengulphus

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#417273

Postby Gengulphus » June 4th, 2021, 11:22 am

Arborbridge wrote:Getting cash back and then topping up the same company to bring it back up to strength somehow feels like a completely pointless exercise thrust upon us - but at least we have the choice of deploying somewhere else.

The exercise has a point: it's to prevent the cash languishing in the company's possession, earning the company very low rates of interest and/or saving it low rates of interest paid on its debt, and instead giving shareholders the opportunity to invest it for higher rates of return. For shareholders who want a quiet life, it would be preferable if the company did such investing, of course, and they have done that to some extent by acquiring Bristol Water - but they're limited in their ability to do such investing within their area of expertise, and major shareholders (especially fund managers) are likely to reckon that they themselves are more qualified to make investment decisions outside that area of expertise than Pennon are!

Gengulphus

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#429224

Postby Arborbridge » July 21st, 2021, 7:35 am

I've ended up confused again :oops:

Should we be expecting a special of 355p a share plus a final dividend of 22.46p - or is that part of the 355p?

I still find it ambiguous.

Arb.

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#429243

Postby Gengulphus » July 21st, 2021, 9:51 am

Arborbridge wrote:I've ended up confused again :oops:

Should we be expecting a special of 355p a share plus a final dividend of 22.46p - or is that part of the 355p?

I still find it ambiguous.

No, you should not be expecting a special of 355p per (pre-consolidation) share - because you should already have received it: it was paid on July 16th (last Friday).

You should be expecting a final of 22.46p per (post-consolidation) share (*), though that's not completely certain yet - it's subject to confirmation by the AGM (which happens tomorrow, Thursday 22nd) and as was observed in April last year, no dividend is completely certain until it is actually paid. It would of course be highly surprising if either the AGM voted it down or anything else interfered with its payment.

But don't hold your breath while waiting for the final to be paid - its declared payment date is September 2nd.

(*) Note that the main figure which appears in the final results is 14.97p - but that's per pre-consolidation share because those results were released before the shares were consolidated on July 5th. Also note that some secondary data sources haven't yet adjusted for that - e.g. https://dividenddata.co.uk/ex-dividend- ... chTerm=pnn still gives the 14.97p amount at the time I write this.

Gengulphus

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Re: Pennon Group Full Year Results 2020/21 posted on Company News Board.

#429245

Postby Arborbridge » July 21st, 2021, 9:57 am

Gengulphus wrote:
Arborbridge wrote:I've ended up confused again :oops:

Should we be expecting a special of 355p a share plus a final dividend of 22.46p - or is that part of the 355p?

I still find it ambiguous.

No, you should not be expecting a special of 355p per (pre-consolidation) share - because you should already have received it: it was paid on July 16th (last Friday).

You should be expecting a final of 22.46p per (post-consolidation) share (*), though that's not completely certain yet - it's subject to confirmation by the AGM (which happens tomorrow, Thursday 22nd) and as was observed in April last year, no dividend is completely certain until it is actually paid. It would of course be highly surprising if either the AGM voted it down or anything else interfered with its payment.

But don't hold your breath while waiting for the final to be paid - its declared payment date is September 2nd.

(*) Note that the main figure which appears in the final results is 14.97p - but that's per pre-consolidation share because the shares hadn't yet been consolidated at the time those results were released. Also note that some secondary data sources haven't yet adjusted for that - e.g. https://dividenddata.co.uk/ex-dividend- ... chTerm=pnn still gives the 14.97p amount at the time I write this.

Gengulphus


Thanks. Perhaps my tenses were incorrect, but yes, I have the 355p paid on the 16th.
The mix up in my mind was concerning the final, which I thought due in July - but it was the decision at the AGM which was due, not the payment.
thanks for putting me right.

Arb.


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