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!

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.