I know that the mode for these threads tends to be smaller cap stocks but Pennon is looking so good at present I was interested to see if anyone else out there is holding or thinking of buying. The SP is on a fantastic run, it pays a nice fat dividend and even if the water regulators decision on prices was not what any of the water companies were looking for, Pennon is probably the least affected and the most favoured by analysts. Seems to me to be a winning combination!

Guess that I must be the only holder then. Pity, because there's money to be made here along with a great dividend and takeover potential.

Thanks queen1

Looks interesting.

I Need to research it.

Would be interested to hear what you think, apple. Hope it goes well.

Up another 25p today so far on no new news. I hope you got in on the action apple...

And still going up. Ah, the sweet taste of waste water!

Doing a little research this morning saw your thred out all day come back and PNN up 4.5% .Oh well can't win em' all, but well spotted Queen1. can It go further? who knows but worth keeping an eye on.

Regards

Stan

Thanks Stan - there seems to be consolidation fever in the air as Pennon, AWG, and Severt Trent to name but three all had nice rises today on the back of corporate rumours. Even though the price of PNN is getting higher I still think a good purchase based on the yield and initial bid interest earlier in the year (although at a measly 800p which was rightfully rejected!)

After a bit of a lull, new highs have been reached again. Results are tomorrow and while the current positive run may see a pullback as a result of profit taking the trend is onwards and upwards. Shame no-one else on MoneyAM seems to be on board or interested.

Am short now. Got out at 10 and thinking it's heading back towards 8. Great stock for the last couple of years but utilities may not be flavour of the month for the short-term.

Bid Rumours. Lots of denials

How about FCC.MC Spanish Waste Management Group on the aquisition trail then???

I can not see any others capable of mounting a bid. IMHO

If they do (which I doubt they will) 16.00 + is almost certainly about right. IMHO

Half Yearly Report.

FINANCIAL HIGHLIGHTS

Profit before tax up 11.6% to 107.4m

- South West Water up 8.5% to 76.2m

- Viridor up 7.0% to 30.6m

Underlying earnings per share(1) up 11.9% to 23.5p

Dividend

- Interim dividend per share up 9.6% to 8.22p

Group capital investment up 41% to 99.9m

Strong liquidity and funding position

- 251m new/refinanced facilities since 31 March 2011

- 918m cash and facilities at 30 September 2011

Group businesses remain well positioned in current difficult economic conditions



GROUP OVERVIEW

Revenue up by 8.3% to 642.6m.

Operating profit up by 7.4% to 143.1m.

Net interest payable down by 4.6% to 37.2m.


Profit before tax up 11.6% to 107.4m.

Underlying earnings per share up by 11.9% to 23.5p. Basic earnings per share increased from 24.7p to 26.1p.

Group capital investment up 41% to 99.9m.

Investment in joint ventures of 4.2m (H1 2010/11 - 7.2m).


Net borrowings 1,930m, a decrease of 4m since 31 March 2011. Gearing (1) was 72% (H1 2010/11 - 74%).


The Group has substantial cash resources and committed facilities to fund future investment - well placed in current financial market conditions.

South West Water net debt to RCV was 58% (31 March 2011 - 57%).

Net interest cover (2) was 3.7 times (H1 2010/11 - 3.4 times).

Average debt maturity 22 years.

Pennon Group expands its Waste Management business

Pennon Group Plc announces that its subsidiary, Viridor Waste Management Limited, has acquired Community Waste Holding Limited and Community Waste Recycling Limited, a specialist materials recycling and paper trading business based in Milton Keynes, from Community Waste Holdings Foundation, Ms C Cutts and Ms G Cutts. The total consideration on a debt-free basis was 15.75m (comprising cash of 8.775m and Pennon Group Plc loan notes totalling 6.975m). The acquisition is in line with the Group's strategy of expanding its waste management activities, particularly in the recycling sector.

The acquired business operates in the south east of England. It has a number of medium and long-term municipal contracts and a total current annual volume of 90,000 tonnes. Its main operations are: a Materials Recycling Facility (MRF) in Milton Keynes, Bedfordshire, processing co-mingled dry recyclables; an MRF in Enstone (northwest of Oxford) processing municipal and commercial recyclables; and a trading arm located in London.

Commenting on the acquisition, Colin Drummond, Chief Executive of Viridor said, "The UK's waste strategy demands ever increasing levels of recycling whilst the world has an increasing demand for raw materials including recyclate. Recycling is a fast growing part of Viridor's business and accounted for around 31% of the Company's profit contribution in the first half of financial year 2011/12. Community Waste's operations in Bedfordshire and Oxfordshire fit well with our existing operations and strategy in the south east, and also provide additional volumes for our international trading arm. The acquisition is expected to be earnings enhancing in its first full year."

One year chart looking very tradeable, ten year chart looking less attractive.
Coming up for divi (8.22p) on wed 1st feb.

..Questor share tip: Pennon offers an uncommon mix of defensiveness and upside

By Garry White | Telegraph – 1 hour 10 minutes ago

Friday's announcement that China Investment Corporation (CIC) has bought a stake in Thames Water failed to set the sector alight. This is the market acting sensibly and not expecting a wave of takeovers in the sector.

Pennon

639p

Questor says BUY

The UK water sector remains a safe haven in a world of uncertainty and the sector has performed strongly of late and Pennon is one of Questor's preferred sector plays because of its ownership of the Viridor waste disposal and recycling business, as well as South West Water.

Any economic slump will, of course, result in less business activity which will translate into less waste for Viridor to process. But, conversely, when the recovery does happen there is cyclical upside in the shares too.

This is an uncommon mix of defensiveness and upside, which is why the shares remain attractive to Questor.

The company performed well in the first half of its financial year, with pre-tax profits up almost 12pc to £107.4m.

They are trading on a March 2013 earnings multiple of 15.2, falling to 13.9 in the next year. They are yielding a prospective 4.1pc in 2013, rising to 4.4pc, having moved off a recent peak of 727p a share.

The shares are a buy.

..

Ex dividend tomorrow 8.22p (3.53%)

INTERIM MANAGEMENT STATEMENT

Overall Group financial performance since 30 September 2011 remains on track to meet management expectations.

South West Water South West Water is continuing its strong performance against the 2010-2015 (K5) regulatory contract, with capital investment increased substantially over the prior year.

The 9,300km sewer network increased by approximately 50% from 1 October 2011 following the adoption of private sewers and lateral drains. It is anticipated that shareholders will receive appropriate returns for K5 private sewer expenditure spent efficiently through the regulatory pricing mechanisms.

The water resource position is at a similar level to this time last year despite record breaking low rainfall last spring. During last autumn and early winter South West Water used its pumped storage facilities to help to refill Colliford, Stithians and Wimbleball Reservoirs and installed new distribution pumps in East Devon to optimise use of its boreholes.

Viridor

As flagged at the Half Year results announcement, Viridor has experienced a reduction in recyclate prices over the winter months reflecting world economic conditions. At the same time a higher level of activity year to date associated with its growing pipeline of long-term projects has led to an increase in bid costs. Full year profits are therefore expected to be a little below those of last year.

Since 1 October 2011 Viridor has made significant progress in developing its pipeline of long-term projects including:

-- confirmation as the successful participant for the 25 year contract for the treatment of Glasgow's residual waste;

-- becoming preferred bidder for the 25 year contract to treat the South London Waste Partnership's residual waste; and

-- the successful resolution of the legal challenge for the Ardley Energy from Waste (EfW) plant with the Oxford PPP Notice to Proceed issued.

Viridor has also further developed its business activities through the acquisition of:

-- Community Waste Holding Limited and Community Waste Recycling Limited for GBP15.75m, which operate Materials Recycling Facilities in Bedfordshire and Oxfordshire;

-- JWS Churngold Limited for GBP14.25m which provides transport and logistics solutions to the Lancashire Waste PFI; and

-- trade waste collection interests of Veolia in Cornwall, Devon and Somerset for an aggregate GBP8.2m.

Group

Since 1 October 2011 South West Water has signed a GBP60m facility with the European Investment Bank (EIB). This represents the second tranche of a GBP125m loan approved by the EIB towards K5 funding. South West Water has also signed an additional GBP40m revolving credit facility and GBP140m of finance lease facilities.

..Questor share tip: Pennon waste concerns overdone

By Garry White | Telegraph – 11 hours ago


......
This week it was announced that the Prince of Wales, J Sainsbury and financier Jacob Rothschild are investing in the production of energy from organic waste. Pennon already does this.

Pennon 697p -3p Questor says BUY

Anaerobic digestion involves using micro-organisms to convert organic waste into gases such as methane in the absence of oxygen. The gas can then be burnt to produce energy.

However, last week's trading update from Pennon was badly received by the market and the shares fell more than 3pc. The issue was with waste unit Viridor, which operates Pennon's energy from water (EfW) sites.

Pennon notes that Viridor had experienced a reduction in recyclate prices over the winter months. At the same time, a higher level of activity associated with its growing pipeline of long-term projects has led to an increase in bid costs. "Full-year profits are therefore expected to be a little below those of last year," it said.

Questor is relatively unconcerned. Recyclate prices may be falling now, but with landfill taxes on the rise, burying waste is not an option. Recyclate prices fell in the post-Lehman panic, but Viridor was still profitable. Analysts have pointed out that in 2009 recyclate margins only fell to 10pc.

So, Questor reckons that concerns about Viridor have been overdone and the EfW business is going to be a key driver of earnings growth over the next five years. Viridor is planning to build a further 4 plants.

The regulated South West Water side of Pennon's business performed well and the company is on track to meet full-year estimates.

Pennon remains unique among the major water companies because of Viridor and the real growth in earnings the operation is likely to bring.

Pennon also has a relatively generous dividend growth policy. The stated policy is to raise its dividend by the retail price index (RPI) plus four percentage points all the way to 2015. Most other water companies plan to increase the dividend by RPI plus two percentage points. Investors should note RPI is expected to weaken this year.

It should also be noted that the yield on Pennon shares is 3.8pc, which is lower than at other water companies. The current-year yield on United Utilities (Santiago: UTILITIES.SN - news) , for example, is 5.3pc. However, Viridor offers solid growth prospects.

The shares are trading on a March 2012 earnings multiple of 16.7 times, falling to 15.3. Last tipped at 639p in January, the shares are up 9pc. Buy.

..

Final Results.

FINANCIAL HIGHLIGHTS

· Profit before tax up 6.4% to £200.5m

- South West Water up 9.8% to £141.5m

- Viridor down 8.4% to £57.6m

· Earnings per share before deferred tax up 11.8% to 47.3p(1)

· Dividend

- Full year dividend up 7.6% to 26.52p

- Recommended final dividend per share up 6.7% to 18.30p

· Strong liquidity and funding position

- £566m new/refinanced facilities since 31 March 2011

- £1,084m cash and facilities at 31 March 2012

· £257.4m invested in key infrastructure

· Group businesses well positioned for the future

(1) Basic earnings per share were 48.1p

Residual Waste Treatment Services Contract

Pennon Group Plc is pleased to announce that its subsidiary, Viridor (Glasgow) Limited, has signed the 25 year Glasgow City Residual Waste Treatment Services Design, Build, Finance and Operate ('DBFO') contract with Glasgow City Council. The contract requires the recycling and treatment of Glasgow's residual municipal waste through the financing, construction and operation of a new Recycling and Renewable Energy Centre at the Council's own site in the south of the city. The contract requires the treatment of between 175,000 and 200,000 tonnes p.a. of waste and is designed to achieve around 90% landfill diversion.

Ex-divi wed 8th Aug '12 (18.3p)

Over 2%, a possible Divi play.

A recent elevation SP bonus to the Ft100 may mean PNN is now ready for a further dip, so may give this one a miss for now.

I felt about the same, so went elsewhere for divi & growth (BT.A, GNK, BRW). Nevertheless, utilities are a pretty safe haven atm.

Yes agree about Utilities being a relatively safe haven at the mo, but my comments were more of a short term view of PNN as regards recovering after tomorrows Ex. Divi expected drop. Depending on market sentiment recovery may take some time.

Morgan Stanley have reiterated their Equal weight stance and TP of 740p.

Interim Management Statement

Overall financial performance at Pennon Group since 31 March 2012 remains in line with management expectations.

Half Yearly Report

H1 2012/13 OPERATIONAL HIGHLIGHTS


South West Water:

· Strong performance against 2010 - 2015 regulatory contract

· PBT up in spite of atypical weather

· Average funding cost 4.0%

· Strong operational performance

. Preparing for PR14

· Unable to accept Ofwat Section 13 licence proposals but responded constructively on how concerns can be addressed

Looks like these have been replaced by TT. in the FTSE. FTSE 100 Constituent Changes

Back on the up.

Interesting one skinny & I have the ex-divi date as historically 1st week in Feb.

EDIT: ex-divi 30th Jan 2013 (8.76p)

Also slightly worrying is PNN is currently on a Beta of 0.5, which is fine if the markets continue upwards, but..............

Harry - where are you getting the 0.5 from (I have 0.45). Having said that, I was looking more for a capital gain when the regulators walk the line and possible promotion back to the FTSE.

My figure comes from Digitallook.
I should rephrase my comment 'worrying' to read 'disconcerting', as PNN has done the opposite of the UK indices recently. I know it will lag the index but not really quite sure why it has been so comparitively negative. (theoretically it should be 50% less volatile than the market).

Director sell 2,588 @£6.53p

Director/PDMR Shareholding

Interim Management Statement

Bang on the 50 day atm.

SocGen on PNN today:
"While recent press reports have suggested Pennon could be the subject of a potential 775p per share bid approach from the Abu Dhabi Investment Authority (which on our estimates would represent a 23% premium to South West Water’s 2013 adj. RCV), in general the level of bid speculation in the sector has subsided from the last round of United Utilities related bid speculation prevalent in February. Historically Pennon has been viewed as a less likely M&A target given its large non regulated waste activities (Viridor), however the recent press report suggested the Viridor would be subsequently divested. While we note that the separately owned Masdar Capital fund in Abu Dhabi has historically expressed an interest in the UK waste sector2, its funds under management ($540m) are relatively small in comparison to the scale of Viridor (est. £1.5bn EV).
Without existing ownership of a large existing waste management business from which material synergies could be extracted, we would view a SWW / Viridor separation as problematic in the near term given the balance sheet support the Pennon parent company provides (supported by the regulated South West Water activities) in funding Viridor’s Energy From Waste investment programme and the likely loss of £300m of balance sheet “equity” which could result from a change of control induced redemption of the hybrid bond issue.
Although the recent performance of the United Utilities equity price suggests that bid speculation has diminished, we note that UU CDS remains at a near record level (175bps) reflecting debt market concerns regarding a potential leveraged take-out which is not mirrored to the same degree in the equity price (either in the equity or the option implied volatility).
While the United Utilities CDS market has limited liquidity, it is unlikely that this divergent view between the debt market and equity market will be sustained. We believe the current share price does not reflect any bid premium to the estimated fundamental fair value estimate (796p), effectively offering a free call option on any potential M&A activity.

Finals out today: http://www.moneyam.com/action/news/showArticle?id=4600519

Going Ex divi this week paying just under 3%-2.83p.

Stan - I have the dividend tomorrow as 19.70p ?

Yes sorry your right Skinny 19.70p or 2.83%.

Norges Bank increase holding http://www.moneyam.com/action/news/showArticle?id=4669740

Half Yearly Report

H1 2013/14 FINANCIAL AND CORPORATE HIGHLIGHTS

· Profit before tax(1) up 3.5% to £110.9m

- South West Water up 7.6% to £87.3m
- Viridor down 28.8% to £15.3m

· Viridor PBIT plus joint ventures down 15.8% to £23.4m

- Viridor PBIT plus joint ventures up 31% compared with H2 2012/13

· Adjusted earnings per share up 2.6% to 23.8p(1) (2) (3)

· Dividend

- Interim dividend per share up 7.2% to 9.39p

· Capital investment(4) up 9.0% to £205m

· Strong liquidity and funding position

- £210m facilities secured/renewed since 31 March 2013

- Total of £1,132m cash/committed facilities at 30 September 2013

· Pennon Group achieved top 10% position in FTSE350 Carbon Disclosure Project participants for quality of disclosure

GROUP OVERVIEW(1)

· Revenue up by 5.3% to £667.0m
· Operating profit up by 2.6% to £139.7m
· Net interest payable reduced by 5% to £29.6m
· Profit before tax up 3.5% to £110.9m
· Adjusted earnings per share up by 2.6% to 23.8p(2). Basic earnings per share increased from 25.4p to 29.4p

· Capital investment(3) up 9.0% to £205.1m
· Net borrowings £2,098m, an increase of £89m since 31 March 2013. Gearing, being net borrowings to (shareholders' funds plus net borrowings) was 65% (2012/13 - 65%). Net debt includes £549m for EfW plants under construction (Runcorn II, Exeter, Oxford, Cardiff and Glasgow)

· Substantial cash resources and committed facilities of £1,132m(4) to fund future investment - well placed in current financial market conditions

· South West Water net debt to RCV was 56.1% (31 March 2013 - 54.9%)

· Net interest cover (excluding pensions net interest, IFRIC 12 contract interest receivable and discount unwind on provisions) was 5.2 times (H1 2012/13 - 4.6 times)

· Average debt maturity 22 years

· Fair value of debt £261m less than book value

Ex-divi wed 29th Jan 2014 (9.39p)

Hoping for 700p before the divi date.

Hoping for 650p before divi date. :-)

Hmmmm......looks like you will get your wish skinny. Bloody shorters! ;o)

:-)

Well, you've had your run skinny, now it's my turn! 660p......more please.

Harry - I wasn't short - I was looking for an entry - which I have as of yesterday.

So I agree - more please.

Pushing ahead and not far off the 200 DMA. Might be confronted by the dilemma of taking profit pre-divi date.......hopefully!

"We (J P Morgan) retain our Overweight recommendation for PNN and our Neutral recommendation for UU, although we have reduced our price targets for both companies by 6.0% and 1.7% respectively to 700p and 735p."

I can live with that! :-)

What do you reckon skinny? A concerted push through the 200 DMA on the cards?

Yes - 680 looks quiet pivotal - like you , I'm unsure whether to hold for the dividend or trade it.

Divi isn't really that great, so if the sp gets close to 700p I will probably take profit. (hopefully before you cash in and move the sp!)

Nicely through the 200. Approaching decision time.

Goldman Sachs Neutral 688.50 684.00 - 758.00 Retains

Nearing your TP Harry (ex tomorrow), these and SVT strong today though!

Deutsche Bank Hold 691.00 650.00 650.00 Reiterates

Sold a few days ago with a moderate profit and punted all into QPP. No regrets.....so far!

StockMarketWire.com
Waste and water firm Pennon Group said its financial performance remains on track to meet expectations, with South West Water outperforming.

South West Water
South West Water is continuing its robust performance against the 2010-2015 regulatory contract and is well placed to outperform its assumptions. Despite the exceptional weather and resultant flooding in the South West, the company continues to deliver effective operational performance and high standards of customer service, underpinned by strong financial performance.

On 2 December 2013, South West Water submitted to Ofwat its Business Plan for the next five year period, 2015-2020 (K6). The plan reflects the most extensive customer/ stakeholder engagement and research ever undertaken by the company and feedback indicates it has achieved 84% acceptability from customers. Details of the Business Plan and an investor summary can be found on the South West Water website, http://waterfuture.southwestwater.co.uk/investor-summary.

On 19 December 2013, Ofwat published a revision to the ongoing K6 price review process. As part of this revision on 27 January 2014 Ofwat published risk and reward guidance for the industry. This included guidance on key financial parameters, including the cost of capital for the K6 period. The company is currently reviewing this guidance.

Viridor

As stated previously, this is a transitional period for Viridor. The company has made excellent progress in establishing its Energy from Waste ("EfW") business which will transform Viridor into a leading player in the UK renewable energy sector. Notwithstanding the adverse weather and difficult trading conditions, Viridor is successfully holding operational performance broadly in line with management expectations and operating contribution is slightly ahead of last year. PBIT plus joint ventures is still expected to be broadly similar to last year but has been impacted by increased pension costs as a result of auto-enrolment and by the outage previously flagged at Lakeside.

Since 30 September 2013 Pennon Group Plc has:

· Drawn down £60m from the EIB and a further £130m facility being progressed

· Renewed and increased a £60m term loan to £100m

· Drawn down a £30m Revolving Credit Facility (RCF)

The Company intends to announce its Preliminary Results for 2013/14 on Tuesday 3rd June 2014.

StockMarketWire.com
Analysts at Deutsche Bank believe the recent announcement from OFWAT on financial parameters and incentives is helping improve regulatory visibility, specifically on returns, and should enable UK water companies to outperform, going forward. The broker believes another likely outcome of the review will be to provide companies with flexibility over cashflow which, in turn, should support steady dividend growth. Deutsche has therefore upgraded its recommendations for Severn Trent (LON:SVT) and Pennon (LON:PNN) to "buy" from "hold" and reaffirmed its existing "buy" rating on United Utilities. Target price have been increased across the board with SVT rising to 2,000 pence per share (from 1,550 pence), PNN to 800 pence (from 650 pence) and UU to 1,000 pence (from 800 pence). "Within a year we believe the sector will have regulatory and dividend visibility and a resumption of bid speculation is possible," the broker said in a note to clients. "These factors could drive a re-rating of listed water stocks to levels comparable with UK and US regulated peers." Given an implied upside of around 30 per cent to its upgraded target price, Deutsche highlights United Utilities as its top pick in the sector.

StockMarketWire.com
Pennon Group said its South West Water subsidiary has accepted Ofwat's invitation to adopt the principles of the regulator's risk and reward guidance published on 27 January 2014.

"The company has submitted an updated business plan to Ofwat reflecting these principles and awaits Ofwat's confirmation on 4 April 2014 that these new proposals are acceptable to the regulator and are in line with its guidance," Pennon said.

South West Water was the only water and sewerage company to have a 2015-20 business plan that pre-qualified for 'enhanced' status together with one water only company.

South West Water submitted its five-year business plan to Ofwat in December 2013, following its biggest ever consultation; a public approval rating of at least 84 per cent; and the support of the independent WaterFuture Customer Panel.

Ofwat has stated that it will publish draft determinations for enhanced companies on 30 April 2014.

Final Results

FINANCIAL HIGHLIGHTS

· Profit before tax(1) (2) up 9.1% to £207.3m

- South West Water up 10.8% to £162.5m

- Viridor down 19.5% to £27.6m

- Viridor PBIT + JVs down 4.6% to £43.6m

- Viridor EBITDA down 1.8% to £76.3m

· Net exceptional charges £48.6m (post tax £39.7m)

· Earnings per share(1) (3) up 5.7% to 42.6p

· Dividend

- Full year dividend up 6.5% to 30.31p

- Recommended final dividend per share up 6.2% to 20.92p

· Strong liquidity and funding position

- £640m new/refinanced facilities since 31 March 2013

- £1,303m cash/committed facilities at 31 March 2014

- Average cost of debt reduced to 3.8%

· Substantial progress in delivery of major capital programmes

- South West Water capex up 22% - target efficiencies delivered

- Viridor - 70% of spend now complete on EfW projects under construction

· Group businesses well positioned for the future

Is that drop in the chart right Skinny?

Just checked, and no it isn't.

Credit Suisse Underperform 760.25 783.50 645.00 645.00 Reiterates

RBC Capital Markets Outperform 760.25 783.50 810.00 810.00 Reiterates

Pennon Group PLC.

Break up on the cards on the chart. Speculation that this one is a takeover target.

Deutsche Bank.
Pennon reported FY 2013/14 results slightly ahead of expectations. The
company highlighted excellent progress in developing its energy from waste
pipeline and reiterated its target for the projects to add £100m of EBITDA. It
highlighted the success of its water business in achieving enhanced status for
the 2014 regulatory review, although said nothing new about the scope for
outperformance over the 2015-20 regulatory period, or on its future dividend
policy. We retain a positive view, with an investment in Pennon’s shares
offering attractive returns compared to low risk regulated peers in our view.

The company reported results slightly ahead of expectations, with profits from
the water business ahead of expectations, but profits at Viridor slightly below
expectations. It reported group EBIT of £257m (DB forecast £250m, last year
£246m), PBT of £207m (DB forecast £194m, last year £191m), and EPS of
42.6p (DB forecast 38.6p, last year 41.0p). It announced a 6.5% increase in FY
DPS to 30.3p, in-line with its policy to growth DPS by RPI inflation + 4% p.a.

The company reiterated its target for energy from waste projects to add
c.£100m to Viridor’s EBITDA and said that its rollout of projects was
progressing well. Runcorn 1 and Exeter are burning waste; Ardley is in the
process of commissioning; and Runcorn 2 and Cardiff are expected to enter
commissioning shortly. The company said it has contracted c.80% of waste
inputs required at opening of projects, of which c.60% is from long-term
contracts. It said that cost cutting and mix improvements had led to a partial
recovery of margins in the recycling business, although said it remained
cautious on the prospects for recyclate prices. It announced a further c.£43m
write-down of its landfill assets, following on from large write-downs last year.

We retain a positive view on the UK water stocks, as we think that sector
offers attractive returns compared to low risk UK and US fully regulated peers.
We also think that there is the potential for more bids once the 2014 review
completes, which will set prices through to 2020. An investment in Pennon’s
shares offers a prospective economic return of c.8% p.a., compared to
National Grid and US utilities offering typical returns of c.6.5% p.a.. Although
we still worry that there may be long-run overbuild of energy from waste
capacity, short-term returns should be very attractive from these projects, and
drive strong group earnings growth over the next three years.

INTERIM MANAGEMENT STATEMENT
Overall financial performance of Pennon Group since 31 March 2014 remains in line with management expectations.

South West Water
South West Water is continuing its strong financial performance with robust operational delivery and high standards of customer service and expects to complete the successful delivery of the K5 (2010-2015) regulatory contract.

2014/15 profits will be impacted by the 2014/15 tariff freeze already announced. However, the revenues foregone are included in the Draft Determination for K6 (2015-2020) on an NPV neutral basis.

Following early receipt of its Draft Determination for the K6 regulatory contract in April this year, South West Water is able to accelerate a number of key projects (eg bathing water improvements) ahead of significant legislative changes. With the company's track record of efficiency and outperformance, South West Water is well placed to deliver its business plan in K6 and will have an opportunity to outperform the assumed returns on equity.

Viridor
Viridor continues its transformation from being predominantly a landfill operator to being one of the country's leading recycling, renewable energy and waste management companies.

As flagged at the Preliminary Results, Viridor's H1 2014/15 EBITDA will be materially lower than in H1 2013/14. However with five Energy Recovery Facilities (ERFs)(1) scheduled to come on stream this year H2 EBITDA is expected to increase significantly and result in 2014/15 full year EBITDA exceeding 2013/14.

Year to date performance has primarily been impacted by the expected continuation of the decline of the landfill business. Also, as expected, landfill gas generation has declined from peak and the recycling business has been moderately affected by near term weakness in recycling prices.

Viridor has been investing to improve the productivity of its assets and quality of its recyclate products. The Rochester plastics plant is expected to come on stream in the next month and the Scottish glass separation plant shortly thereafter. The strategic focus on improving the productivity of recycling assets and recyclate quality is expected to enhance future margins.

The Lakeside ERF joint venture is performing strongly and is ahead of expectations. Other highlights of the ongoing development of the Viridor Energy business include:

· Takeover of Exeter ERF was achieved on 28 July and plant operation is exceeding design parameters

· Ardley ERF commenced burning waste at the end of June and synchronised to the Grid on 25 July

· Runcorn I commenced burning waste in March and is undergoing an extensive commissioning process. Issues arising are being addressed to ensure the long term performance and consequently takeover is now expected to be in Q3/Q4 2014/15. Runcorn II is still expected to be taken over towards the end of Q4 2014/15

· Cardiff ERF is now in cold commissioning and remains on track for takeover in late 2014/early 2015

We believe ERFs are central to the UK's waste and renewable energy strategies as the long-term low-cost alternative to landfill for disposal of residual waste. Since the year end Viridor has secured additional waste inputs for the opening of its ERF plants, and now has c85% of the required waste input for the opening of the committed ERFs.

(1) Previously referred to as Energy from Waste (EfW) facilities.

Group
Since 1 April 2014 Pennon Group Plc has secured/renewed £205m funding comprising:

· £80m term loan
· £75m of Revolving Credit Facilities (RCFs)
· £50m finance lease

The £125m Convertible Bonds due 2014 have all converted resulting in the issuance of 20,908,635 Pennon shares.
The Company intends to announce its Half Year Results for 2014/15 on Friday 28 November 2014.

Sharecast - Things may be looking up for Pennon. The utility group is close to finalising work on five new waste incinerators that would more than double cash profits over the coming three years, to more than £100m - marking a successful turn-around of its landfill and recycling subsidiary. That unit, called Viridor, was hit by higher 'green' taxes and heightened competition. A slowdown in Chinese demand for recycled material also impacted negatively upon it. For its part, South West Water, its main unit, is performing well and now has regulatory certainty for the next five years, even if after a price freeze. Nevertheless, at 21 times' earnings the stock is expensive so it may be wisest to wait until the incinerators are up and running. 'Hold', says The Daily Telegraph.

StockMarketWire.com
Goldman Sachs has downgraded its recommendation on water and waste management group Pennon (LON:PNN) to "sell" from "neutral" in a note to clients, today.

The broker pointed out that its new twelve month price target of 740 pence a share (previously 743 pence) implies 7 per cent absolute downside potential.

"We estimate the share price implies a 35% premium to RAB, well above both the 27% premium we believe is realistic for an infrastructure fund bid and the c.20% premium for UU and SVT," analysts added.

Conversely, assuming a 20% RAB premium for Pennon's water business (in line with peers), implies a market valuation of £2.2 bn for Pennon's waste business Viridor, equivalent to 36x EBIT and 19x EBITDA on our 2014 estimates and c.25% higher than our valuation for the business.

Interestingly, 63 per cent of brokers rate the shares as an "add" or better, according to Broker Forecasts consensus data, versus 25 per cent which rate them as a "sell"

Half yearly Report

Highlights

· Pennon

- results in line with management expectations and previous guidance

- H1 revenue up 3.8% to £692.3m; H1 PBT(1) down 9.8% to £100.0m

- dividend up 6.3%, reflecting the continued underlying strength of the business and management's expectations for long term growth

· South West Water

- performing strongly against 2010-2015 regulatory contract and well placed to outperform assumptions

- robust operational performance improving standards of service

- maintained broadly stable operating profit despite tariff freeze, due to continued cost efficiency

- early receipt of Ofwat's Draft Determination allowing accelerated delivery of key projects

· Viridor

- reached point of inflexion in the strategic re-orientation of the business around 'Energy' and 'Recycling & Resources' divisions

- strong progress in the development of ERF(2) asset base; five ERFs coming on stream in 2014/15

- full year EBITDA(3) expected to exceed 2013/14 figure

PRE-CLOSE TRADING STATEMENT AND GROUP DIVIDEND POLICY 2015 - 2020

Pennon Group

· Pennon is pleased to announce a continuation of its current dividend policy of year-on-year growth of 4% above RPI inflation to 2019/20
· Overall financial performance of Pennon Group since 30 September 2014 remains in line with previous guidance
· Strong liquidity and funding position
· Group businesses well positioned for the future


more....

StockMarketWire.com
Pennon Board is proposing to raise up to £100.3m gross, or about 3% of its market cap at April 15. Details of the placing price and number of placing shares will be announced soon.

Pennon has separately said it has completed the acquisition of Sembcorp Bournemouth Water Investments Limited. Net proceeds of the Placing are intended to be used to replenish the cash resources of the Company in respect of the cash consideration for the Acquisition.

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of 40.7p each in the capital of the Company including the right to receive all future dividends and distributions declared, made or paid after the date of sale.

The Placing is being conducted through an accelerated bookbuild (the Bookbuild) which will be launched immediately following this placing announcement. Credit Suisse Securities (Europe) Limited (Credit Suisse) and Morgan Stanley & Co. International plc (Morgan Stanley) have been appointed as joint bookrunners in respect of the Placing.

StockMarketWire.com
Pennon has improved its FY pretax profit to £197.0m, from £158.7m a year earlier. Revenue was £1.36bn, from £1.32bn. Dividend was 31.8p a share, from 30.31p.

"The Group has delivered a resilient set of results for 2014/15. South West Water's EBITDA was higher than last year despite the tariff freeze, thanks to a strong focus on cost efficiency, and as expected Viridor's EBITDA exceeded last year," said chairman Ken Harvey in a statement.

"Viridor has made excellent progress in its Energy business bringing five new Energy Recovery Facilities on stream in the year. Pennon is well positioned to continue to deliver profitable growth and consistent, sustainable cash returns to shareholders.

"The Board was pleased to announce in March the continuation of the current dividend policy, targeting 4% year-on-year growth above RPI inflation to 2020."

StockMarketWire.com
Pennon Group said it is on track to meet FY expectations for 2015/16. It said a continued good performance across the group underpins the 2015/16 delivery of its sector-leading dividend policy of 4% year-on-year growth above RPI inflation.

It enjoys a strong liquidity and funding position. It is also increasingly well positioned for the future as Viridor's Energy Recovery Facilities (ERF) come on stream.

CMA clears Bournemouth Water acquisition and subsequent merger with South West Water

Following the Competition and Markets Authority (CMA) provisional findings published on 30 September 2015, Pennon is pleased to note that the CMA has today unconditionally cleared the acquisition of Bournemouth Water by Pennon and the subsequent merger of Bournemouth Water with South West Water.

This efficient, combined water business will deliver tangible long-term benefits to both customers and shareholders as the water industry works towards market liberalisation in 2017. Based on our analysis, there is a 94% probability that the combined company will set the efficiency frontier at PR19(1).The combined water business will achieve efficiencies and service improvements through:

· merging wholesale and retail operations
· combining central support functions
· creating common systems and processes
· driving supply chain efficiencies
· delivering even better customer service
· working to bring together best practice from both businesses

Pennon will retain the valuable Bournemouth Water brand and will continue separate regulatory reporting for Bournemouth Water until at least 2020 to aid Ofwat with comparisons between companies.

South West Water aims to merge the two businesses by the end of 2015/16 and in doing so will adopt a new licence for the combined entity. The operational integration of the two businesses will be complete by the end of 2016/17.

The CMA's press release can be viewed here:
www.gov.uk/cma-cases/pennon-group-sembcorp-bournemouth-water-investments-merger-inquiry

Chris Loughlin, Executive Director of Pennon & Chief Executive of South West Water, said:
"We are pleased to note the CMA has cleared the Bournemouth Water acquisition. We will now set about merging Bournemouth Water with South West Water to deliver service improvements and efficiencies for customers and shareholders."

StockMarketWire.com
Pennon Group has hiked its H1 pretax profit by 6.8% to GBP106.8m, from GBP100.0m, adding that, with results likely to be weighted towards H1, it is on track to meet management expectations for FY 2015/16.

"The Group has delivered a strong earnings performance in the period with EBITDA up compared to the first half of 2014/15 as operational Energy Recovery Facilities (ERFs) contribute increased earnings," it said.

"South West Water's EBITDA was also marginally higher with the effect of the anticipated revenue reset mitigated by higher than expected customer demand and a first time profit contribution from Bournemouth Water, acquired in April 2015."

Interim dividend was 10.46p a share, from 9.98p. Group EBITDA was GBP231.7m, from GBP200.0m. However, revenue was marginally lower at GBP689.1m, from GBP692.3m.

Ex-divi thurs 28th Jan (10.46p).

StockMarketWire.com
Pennon Group said it is on track to meet management expectations for the 2015/16 year, with an expected H1 weighting. It added that new group initiatives underway are seen delivering future annualised cost savings of about GBP11m.

"Higher Group EBITDA expectations for 2015/16 are driven by the full year effect of the five new ERFs brought on-stream in 2014/15 and the contribution from Bournemouth Water," the company said.

"South West Water's revenue reset for K6 (2015-2020) has been mitigated by higher than expected customer demand in H1 and its ability to achieve outperformance on K6 Total Expenditure (Totex) commitments, as a result of efficiency initiatives," it said in a statement.

CEO Chris Loughlin said Viridor, South West Water and Bournemouth Water are all performing well and results for the full year 2015/16 are on course to meet management expectations.

"We see further opportunity to deliver improved efficiency and effectiveness driven by management changes which support our strategy of working more closely together across the Group," he said.

"We will employ the wide range of skills we have across Pennon to share best practice and deliver cost savings and growth opportunities. As we move towards a more consistent risk profile across Pennon, we are increasingly well-positioned to drive sustainable profit and dividend growth.

"We remain committed to growing dividends at +4% above RPI inflation through to 2020."

JP Morgan Cazenove today reaffirms its neutral investment rating on Pennon Group PLC (LON:PNN) and raised its price target to 850p (from 800p).

Half Year Results 2016/17
for the period ended 30 September 2016

Building Momentum, Driving Growth

Chris Loughlin, Pennon Chief Executive said:
"Pennon has delivered a good performance in the first half of 2016/17 across its water and waste businesses. South West Water continues to achieve a sector-leading RORE([1]) at 11.7% as it outperforms for its customers, and is expecting momentum and delivery to continue. Viridor is on track to contribute the targeted c.£100 million of EBITDA from its ERF([2]) portfolio this year while self-help measures are driving improved EBITDA margins in recycling.

We are continuing to invest for growth. Following a review, we have taken the decision to commit to a £252 million ERF at Avonmouth, expanding our portfolio to twelve plants. This is a significant investment in the UK's environmental infrastructure and will add to the already expected significant increase in EBITDA from our ERF portfolio once all facilities are fully operational. In water, we are announcing a new retail venture for business customers with South Staffs/Cambridge Water.

We remain focused on driving value through efficiency. South West Water has delivered £80 million of Totex savings since the beginning of K6 (2015-2020), while our recently completed Shared Services Review will increase total Group cost savings from the c.£11 million previously announced to c.£17 million p.a from 2019.

We believe Pennon is well positioned for the future and is on track to meet management expectations for the full year 2016/17. Our performance underpins our sector-leading dividend policy of 4% growth per annum above RPI inflation to 2020."

MORE.....

Credit Suisse today downgrades its investment rating on Pennon Group PLC (LON:PNN) to underperform (from neutral) and cut its price target to 680p (from 800p).

Today's trading statement is well received, rising chart as well.

So much for the Credit Suisse analysis.

Trading Update from Monday http://www.moneyam.com/action/news/showArticle?id=5679028

StockMarketWire.com
Pennon Group booked a higher first-half profit after restructuring costs fell and revenue rose.

The environmental infrastructure group said pre-tax profit rose 26.8% to £129.8m, while revenue rose 5.6% to £723.9m.

Underlying pre-tax profit, which strips out one-off items such as restructure charges and changes in the value of derivatives, rose by a more modest 2.3% to £131.1m.

The company declared an interim dividend of 11.97p, up 7.9%.

"Pennon has delivered robust performance in the first half across both water and waste activities," chief executive Chris Loughlin said.

"Our priority continues to be to provide an outstanding level of service to our customers and communities, while offering a sector-leading dividend policy for our shareholders."

Deutsche Bank today downgrades its investment rating on Pennon Group PLC (LON:PNN) to hold (from buy) and cut its price target to 840p (from 870p).

Goldman Sachs today initiates coverage of Pennon Group PLC (LON:PNN) with a neutral investment rating and price target of 749p

StockMarketWire.com
Environmental infrastructure firm Pennon Group said its underlying operating performance was in line with expectations as it neared the conclusion of the financial year.

Capital expenditure was expected to peak in the current financial year through March, reflecting investment profiles at waste management arm Viridor's energy recovery facilities.

'With our clear strategy of focusing on the UK water and waste market supported by a strong balance sheet, Pennon is well-placed to continue to deliver for customers, communities and shareholders.' the company said.

StockMarketWire.com
Water utility and waste management group Pennon said annual profit rose by a quarter, owing to regulatory tariff increases, higher customer demand and cost savings.

Pre-tax profit rose 25% to £262.9m, as revenue rose 2.9% to £1.39bn.

On an underlying basis, pre-tax profit rose 3.5% to £258.8m.

The company declared a full-year dividend of 38.59p per share, up 7.3% on year.

'Pennon has delivered a strong performance this year across water and waste,' chief executive Chris Loughlin said.

The company said it continued to expect UK residual waste market dynamics to be favourable, with demand for Energy Recovery Facilities exceeding capacity into the long term

Half year results https://www.moneyam.com/action/news/showArticle?id=6221883

Deutsche Bank today downgrades its investment rating on Pennon Group PLC (LON:PNN) to hold (from buy) and raised its price target to 790p (from 780p).

I'm surprised it's not falling given IRV news.