Pennon Group PLC (PNN)

[monabri]

I wonder for how long Pennon will get away with paying a dividend of 42.73p per share (up 10.9%) against EPS of Nil against the backdrop of the water companies in general?

Dod

In addition, Pennon debt to equity is ~184%

I note that the CEO & CFO sold off £282k & £74k of shares respectively on 3rd July 2023. CEO now holds £592k of shares and the CFO £66k. The CFO sold off more than half his holding. Not exactly indicating a confidence in the business!


(And as for United Utilities...their debt to equity at 339% ( ) is even worse).

[Dod101]

What was that expression? Uninvestable I think. That does not apply to many shares but I think it does to all the quoted water companies at the moment. I suspect that those still paying dividends will not be doing so for much longer.

Dod

[monabri]

Severn Trent Water...Surely with a debt to equity ratio as high as this, how can the company be a going concern?

source : https://simplywall.st/stocks/gb/utiliti ... res/health

[idpickering]

Acquisition of Renewable Energy Projects.

We are pleased to announce the acquisition of three further renewable energy generation projects, in line with the Group's long-term sustainable growth strategy in UK environmental infrastructure and our target to accelerate the achievement of our 2030 Net Zero commitment. The three projects are located across the UK, include sites in Buckinghamshire, Aberdeenshire and Cumbria and are expected to generate over 95 GWh of electricity on an annual basis from solar PV. Added to our recently acquired Dunfermline project and our existing internal generation, once operational these projects will significantly increase our total self-generation capacity to around 40% of our electricity usage, bringing us closer to our 50% target.

The acquisition and expected build costs for the three projects total c.£85 million. It is anticipated the projects will commence generation during 2025. The acquisition of these projects will provide attractive commercial returns, whilst also benefiting the Group by increasing energy security and resilience through reducing exposure to future volatility in wholesale power markets.

https://www.investegate.co.uk/announcem ... ts/7624336

Ian (No holding).

[Dod101]

Pennon. One of those highly indebted water companies investing in producing its own electricity by the sounds of it. I thought their priority was that other utility, water. £85 million is of course a modest increase in debt for them, a drop in the ocean you might say.

Dod

[daveh]

Pennon. One of those highly indebted water companies investing in producing its own electricity by the sounds of it. I thought their priority was that other utility, water. £85 million is of course a modest increase in debt for them, a drop in the ocean you might say.

Dod

Where does it say that it being paid for out of debt?

I would have thought that generating their own electricity to run their water treatment and sewage treatment facilities was sensible, though by the sounds of it they will be selling it to the grid and buying from the grid as they don't (as far as I know) have any water/sewerage facilities in Aberdeenshire.

[Dod101]

Pennon. One of those highly indebted water companies investing in producing its own electricity by the sounds of it. I thought their priority was that other utility, water. £85 million is of course a modest increase in debt for them, a drop in the ocean you might say.

Dod

Where does it say that it being paid for out of debt?

I would have thought that generating their own electricity to run their water treatment and sewage treatment facilities was sensible, though by the sounds of it they will be selling it to the grid and buying from the grid as they don't (as far as I know) have any water/sewerage facilities in Aberdeenshire.

Of course they do not and it is a drop in the ocean but why on earth would a water company (with plenty on its plate in its main business), want to spend money it does not have up front on buying into electricity generation. Buy it from the grid (green if they like) like everyone else.
It is like banks buying their own office blocks. Most have given up on that as it takes up too much time and effort. Anyway, leave it to the experts in that field.

Dod

[daveh]

CFO replacement:
https://www.investegate.co.uk/announcem ... n-/7672824

Pennon Group PLC - Chief Financial Officer Succession

Pennon Group today announces that Paul Boote has informed the Board of his decision to step down from his role as Chief Financial Officer at the end of the calendar year. Paul's decision, made for family reasons, comes as part of a planned relocation away from the South West.

The Board also announces that following a rigorous internal and external search and selection process, Steve Buck will be appointed to the Board in November 2023 and will take up his role as Chief Financial Officer (CFO) for Pennon Group and its subsidiaries at the end of December 2023.

[idpickering]

TRADING STATEMENT AND BUSINESS PLAN UPDATE.

Key Highlights

· Trading in line with management expectations

· Water resilience investment delivering demonstrable improvement in the water resource position across the South West - all Temporary Use Bans now lifted

· On track to deliver significant K7 environmental investment plan with capex of over £400 million for 2023/24

· Strategically well positioned to continue to deliver a cumulative doubling of RORE base returns over K7 to 2023/24

· Investment in renewable energy generation progressing in line with expectations - accelerating our Net Zero 2030 commitment

· Submitted South West Water's ambitious, deliverable and financeable business plan to Ofwat, outlining capital investment of c.£2.8bn[1] over K8 (2025-30) to secure improvements to the benefit of the environment, customers and communities

· Gearing expectation for K8 remains within our well-established range of 55-65%.

Susan Davy, Group CEO said:

'In our South West Water 2025-30 business plan, we're set to tackle the challenges that matter most in our region head on, with progress already underway. We plan to invest £2.8bn in water quality and resilience, with a pledge to fix storm overflows at beaches and eradicate pollutions, whilst delivering on our Net Zero 2030 promise to the planet. Our robust balance sheet underpins our ambition.

This plan will create 2000 jobs in our communities, alongside our plan for 1000 apprenticeships and graduates. At the same time, we will do more with less, as we drive efficiency and innovation, with a nature first principle, keeping unwelcome bill increases as low as possible.

We have tested our plan with thousands of customers, and they are confident this is the right deal for right now.'

https://www.investegate.co.uk/announcem ... te/7789256

Ian (No holding).

[idpickering]

Half Year Results 2023/24.

· Statutory and underlying revenue up 5.4% driven by inflationary tariff increases which are moderated through regulatory adjustments, minimising the impact on customer bills. Pennon Water Services generating ongoing revenue growth from contract wins outside of our wholesale supply regions

· £9.1 million underlying profit before tax - reduction compared to H1 2022/23 due to higher inflation driven costs. Compared to H2 2022/23 underlying profit before tax improved, a trend expected to continue in to H2 2023/24

· Net non-underlying cost items before tax of £5.9 million - includes one-off costs of business transformation, drought and renewable energy acquisitions

· Statutory profit after tax of £1.8 million (H1 2022/23: £18.5 million profit after tax)

· Adjusted earnings per share of 3.6 pence, down from 7.9 pence in H1 2022/23

· Statutory earnings per share of 0.5 pence after net non-underlying costs

· Delivering on established K7 (2020-25) dividend policy - interim dividend per share up 8.3% (CPIH +2%) to 14.04 pence.

And later;

The proposed interim dividend (14.04p) has not been included as a liability in this condensed half year financial information. The proposed interim dividend for the year ending 31 March 2024 will be paid on 5 April 2024 to shareholders on the register on 26 January 2024.

https://www.investegate.co.uk/announcem ... 24/7908888

Ian (No holding).

[idpickering]

PROPOSED EQUITY CAPITAL RAISE

Pennon today announces its intention to raise gross proceeds of up to £180 million by way of an equity capital raise (the "Equity Capital Raise"). The Equity Capital Raise will include a non-pre-emptive placing of new ordinary shares of 61.05 pence each in the capital of the Company ("New Ordinary Shares") (the "Placing Shares") to both existing institutional shareholders and new institutional investors (the "Placing").

In conjunction with the Placing, the Company intends to make an offer of New Ordinary Shares (the "Retail Offer Shares") via the PrimaryBid platform at the Offer Price (as defined below), to provide retail investors with an opportunity to participate in the Equity Capital Raise (the "Retail Offer"). A separate announcement will be made shortly regarding the Retail Offer and its associated terms. In addition to the Placing and Retail Offer, certain directors and executives of the Company intend to subscribe for New Ordinary Shares at the Offer Price (the "Subscription Shares") to contribute approximately £150,000 in aggregate to the Equity Capital Raise (the "Subscription")

https://www.investegate.co.uk/announcem ... se/7982450

Ian (No holding).

[idpickering]

PENNON ACQUISITION OF SES WATER

Pennon Group plc ("Pennon", the "Group" or the "Company") is pleased to announce that it has today acquired 100% of the issued capital of Sumisho Osaka Gas Water UK Limited ("SOGWUK"), the holding company of Sutton and East Surrey Water plc ("SES Water") and certain other ancillary businesses, for £89 million from Sumitomo Corporation and Osaka Gas, with a total enterprise value of £380 million (the "Acquisition").

Pennon is also announcing its intention to issue new Ordinary Shares to raise up to £180 million (the "Equity Capital Raise") in connection with the Acquisition, in order to ensure that the pro forma leverage and capital structure for the enlarged Group following the Acquisition remains consistent with Pennon's well-established water business gearing range of 55-65%(1).

https://www.investegate.co.uk/announcem ... r-/7982297

Ian.

[idpickering]

TRADING STATEMENT

Key highlights

· The acquisition of SES Water is progressing through the Competition and Markets Authority (CMA) review, as expected

· Four renewable energy generation sites acquired, Dunfermline solar construction commenced

· Record levels of K7 (2020-25) water and wastewater investment - expectation of c.£850 million capex to 2025

· 90% strategic reservoir capacity achieved ahead of 1 April 2024 target

· Targeted for 2023 to retain EPA[2] performance gains delivered in 2022 (EPA 2*)

o 50% increase in rainfall over the long-term average has impacted headline levels for storm overflows and wastewater pollutions

o 78 interventions at storm overflow sites underway to improve water quality at 49 of 151 beaches through our WaterFit programme to 2025

· Supporting our customers - over £95 million customer support unlocked to date

o Innovative water efficiency campaigns launched across Devon & Cornwall

· Well positioned to deliver on our ambitious business plan for K8 (2025-30)

o New K8 capital delivery partners mobilised on over 1,000 schemes

o The Group is well positioned with liquidity for the current regulatory period - over £700 million funding secured since March 2023.

https://www.investegate.co.uk/announcem ... t-/8103667

Ian (No holding).