Pennon Group PLC (PNN)

[mattman74]

Arb,

Thanks for that. It might explain the current upswing in the price, nice that it is.

Like you say, keep thinking about the yield.

I'm happy with things as they are but lets see what happens.

Matt

[idpickering]

Pennon Group plc Half Year Results here; https://www.investegate.co.uk/pennon-gr ... 00146138U/

Also posted on HYP Practical for HYPer chat.

Ian.

[richfool]

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.

[idpickering]

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.

You're welcome. I'm as equally nervous as you regarding the JC risk, but still hold UU. and NG. That doesn't mean I might not drop them immediately should JC get the keys to No.10 though. I'm hoping that the need to sell either doesn't come to pass.

Ian.

[idpickering]

Final Determination for South West 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.

https://www.investegate.co.uk/pennon-gr ... 00099067W/

[77ss]

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

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

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

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.

[daveh]

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.

Well no announcement/RNS so far this morning, but the price is up 8% so clearly the market thinks something may be happenning and it is Pennon specific as United Utilities is only up a couple of %.

[mattman74]

Pennon is gently rising at the moment (now £11 plus)

I love it when a plan comes together (it makes up for the many, many times I’ve messed up. Latest foul up is SQN Asset Management and anaerobic digestion)

Market Cap is £4.7 billion and some folks reckon Viridor is worth £4 billion

Anyone want to buy SW water for £700 million?

Matt

[77ss]

....

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

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

....

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

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

[77ss]

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

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

The sale of Viridor is now a done deal - subject to the usual formalities:

https://www.investegate.co.uk/pennon-gr ... 06466703G/

One of the few bright lights of my holdings. Up 9.56% YTD!

Completion some time in the summer; I shall probably move my shares into an ISA as soon as next years allowance becomes available.

[idpickering]

Full Year 2019/20 Trading Statement

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.

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

Also on HYP Practical for HYPer chat.

[77ss]

Full Year 2019/20 Trading Statement


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

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!

More importantly, no negative indications about the Viridor sale.

One has to wonder exactly what 'opportunities' for growth within the UK water industry Pennon has in mind. It occurs to me that the boot may be on the other foot - with the rump of Pennon being a growth opportunity for others!

[AJC5001]

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!

From the linked announcement https://www.investegate.co.uk/pennon-group-plc--pnn-/rns/full-year-2019-20-trading-statement/202003300700079582H/
"On completion of the sale of Viridor, Pennon will continue to focus on its sector-leading water and wastewater businesses and will consider further growth opportunities that create value for customers, employees and shareholders. A further update, alongside a new dividend policy will be provided at the Full Year Results on 4 June 2020." (My bold)

So nothing exact, but it certainly will be different

Adrian

[idpickering]

Full Year Results'

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

Also posted on HYP Practical for HYPer chat.

[77ss]

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.

[idpickering]

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.

Cheers for your input. Someone over on HYP Practical is thinking along the same lines as you.
I used to hold Pennon Group years ago, and now only have UU. in that sector.

Ian.

[monabri]

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.

Yes, that was my take on it, too.

[idpickering]

A fairly muted opening for the share, with it being down just 2% as I type.

Ian,

[mike]

The Viridor sale has now formally completed.

As far as use of the proceeds for shareholders, we'll know the details at the half-year results

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.

https://www.investegate.co.uk/pennon-group-plc--pnn-/rns/viridor-sale-completion--board-changes-and-agm/202007081310154282S/

The Pennon website states the half-year results are due on 24 November.

[monabri]

https://www.investegate.co.uk/pennon-gr ... 10154282S/

"Pennon Group plc ("Pennon") is pleased to announce that it has completed the sale of Viridor to funds advised by Kohlberg Kravis Roberts & Co. L.P. for an enterprise value of £4.2 billion."

"Of the current £1.2 billion Pennon company borrowings, up to £900 million will be retired in the months following completion. £36 million will be injected into the Pennon Group pension scheme, which will move the scheme closer to being fully funded on a technical provisions basis."

"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. "