Utility Week

UTILITY Week 27th March 2015

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Page 15 of 31

Finance & Investment UTILITY WEEK | 27Th March - 2nd aprIL 2015 | 15 Stock watch 850 840 830 820 810 Pennon share Price, 18 - 24 March 19 Mar 18 Mar 20 Mar 23 Mar 24 Mar 880 860 840 820 800 Pennon share Price, 24 February - 24 March 3 Mar 24 Feb 10 Mar 17 Mar 24 Mar Ken harvey's announcement that he will retire as chairman of pennon in July reignited speculation about mergers and acquisitions, and share prices jumped from 827.50p to 842p. The company said early this week that it will continue with its dividend policy of growth 4 per cent above rpI. Share prices continued their upward trajectory after this, moving from 833p on Friday close to a high of 849.50p on Tuesday morning. This week Pennon reports PR14 win for shareholders Enhanced status will give water business an opportunity to generate a return for shareholders South West Water's parent company Pennon has reported a financial win for shareholders in the wake of the PR14 price review process. The water and environment giant said in a trading update that its water business will have an opportunity to gener- ate returns for shareholders "ahead of the assumed returns on equity" because of the enhanced status it was awarded in April last year. This will allow South West Water to earn "a tangible financial benefit for Pennon", and ensure a "swi and smooth transition into the new regulatory period". Pennon also announced it will continue its dividend policy of year-on-year growth of 4 per cent above RPI inflation to 2019/20. This is significantly higher than other listed water companies. United Utilities is targeting a dividend growth at least in line with RPI, and Severn Trent will cut its dividend by 5 per cent and then aim to grow it by at least RPI until 2019/20. Whitman Howard analyst Angelos Anastasiou said the 4 per cent dividend return "is at the top end of expectations" and that the announcement "will con- tinue to give a short-term boost to Pennon's shares". This follows the news that Pennon chairman Ken Harvey will retire at the end of July, which reignited merger and acquisition speculation among investors. Harvey has been chairman for 18 years, but aer the company's AGM this summer he will be replaced by former National Grid chairman John Parker. MB For more, see p17. EnErgY Budget breaks for fossil and tidal Chancellor George Osborne's final Budget statement before the general election balanced widely expected tax breaks for the offshore oil and gas industry with a boost for tidal power. The budget included support for the £1 billion Swansea Bay tidal lagoon project as well as tax breaks worth around £1.3 billion for the offshore oil and gas sector. It also included a proposed review of Scottish distribution charges. The treasury will start talks with developer Tidal Lagoon Power over the support it needs under the contracts for differ- ence regime, initially thought to be about £150/MWh. At the same time, Osborne confirmed the 30 per cent sup- plementary tax charge on North Sea profits would be cut to 20 per cent, and backdated to the start of the year. EnErgY Eon to back out of North Sea business German energy giant Eon is planning to back out of its busi- ness interests in the North Sea, selling £1 billion-worth of assets. Eon is considering a one-off disposal of its offshore assets. Siccar Point Energy has been named as a potential buyer. Eon announced a major strat- egy overhaul late last year with plans to split its business opera- tions between new emerging energy market trends, and the continued need for conventional security of supply. The company said it will focus on energy innovations including renewables, distribu- tion networks and customer solutions; while a new spin-off business, to be set up by 2016, will manage the group's conven- tional power generation, energy trading and upstream activities. ELEcTrIcITY GIB and ESB invest £70m in power plant The UK Green Investment Bank (GIB) has partnered with Irish electricity utility ESB Interna- tional to provide £70 million for a £190 million waste wood power plant in Essex. The 60MW Tilbury Green Power plant is expected to gen- erate 300GWh a year when it is commissioned in early 2017. The two companies will each commit £35 million through a combination of equity and shareholder loans. Stobart Biomass will provide 270,000 tonnes of waste wood fuel a year for the project, which will be sourced locally and pro- cessed on site. Last month, GIB said it will invest £50 million in small waste-to-energy projects. SWW will earn a 'tangible financial benefit' for Pennon

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