Utility Week

UTILITY Week 22nd May 2015

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UTILITY WEEK | 22ND - 28TH MAY 2015 | 13 Finance & Investment Stock watch 2250 2200 2150 2100 2050 SEVERN TRENT SHARE PRICE, 12-18 MAY 12 May 13 May 14 May 15 May 18 May 2300 2200 2100 2000 1900 SEVERN TRENT SHARE PRICE, 23 FEBRUARY - 18 MAY 23 Feb 9 Mar 23 Mar 7 Apr 20 Apr 5 May 18 May Seven Trent's shares enjoyed a small bounce after the company agreed a £61.9 million deal to sell its water purification business to its joint venture partner De Nora. Shares rose more than 1 per cent last Wednesday, from 2,126p on the opening of the market to 2,158p by the close of trading, on the day the deal was announced. At the start of the week, shares were trading at 2,169p, and track- ing above 2,150pps. Analysis, p15 This week Eon and GIB press on with offshore project 400W Rampion scheme will cost £1.3bn, with £236m from the Green Investment Bank Eon will push ahead with its plans for a 400MW offshore windfarm off the Sussex coast, working with the UK's Green Investment Bank (GIB). The company said it would invest in and build the £1.3 bil- lion Rampion windfarm with £236 million from the GIB, which will retain a share in the project. Eon has already completed the construction of seven offshore windfarms with a total capacity of 1.2GW and has another 507MW under construction, making it the third largest developer in the world. Eon UK chief executive Tony Cocker said its latest investment decision in the "strategically important" project could be the largest capital infrastructure project in the UK this year. It is the first offshore windfarm to be built in the South of England and will also be the first to move ahead under the third planning round. Energy secretary Amber Rudd said: "This huge invest- ment is a vote of confidence in the UK, creating local jobs, bringing business opportunities and providing clean, home-grown energy. The UK is the best place in the world to invest in offshore wind, thanks to the cer- tainty the government is able to provide to attract private finance in partnership with the Green Investment Bank." For the GIB, Rampion represents its seventh invest- ment in the UK's offshore wind sector, which will bring the total capacity it has helped fund to more than 2.5GW. GIB chief executive Shaun Kingsbury said its backing "gives the developer the confidence" to push forward with the project. JA WATER Severn Trent sells purification arm Severn Trent has agreed to sell its global water purification business valued at $99 million (£61.9 million) to its joint ven- ture partner Industrie de Nora. The company said that under the deal, the group's £50.8 mil- lion share will be settled through a cash payment of £12.6 million and net intercompany debt will also be settled. Utilities analysts at Citigroup said: "Water purification was loss-making in 2013/14 but we were assuming a recovery from 2014/15 onwards." Severn Trent chief execu- tive Liv Garfield confirmed the company's plans to focus on core water and waste water service businesses in the UK and abroad. The sale is expected to be completed on or around 30 June 2015. WATER Dee Valley refinances to fund AMP6 Dee Valley has secured £30 mil- lion of credit to fund its five-year capital investment programme. The company has renegoti- ated a deal with HSBC Bank, and the new agreement will replace the previous £9 million credit facility, which was due to mature in March 2016. The new deal will let the company invest up to £50 million in Dee Valley Water, the largest capital investment programme in the company's history. Dee Valley said that secur- ing the new debt facility "was important considering the out- come of the final determination regarding a considerably lower allowed return on capital of 3.6 per cent" compared with the 5.1 per cent allowed in 2010-15. The company has also announced its intention to main- tain a flat annual dividend base of 62.5 per cent per share plus a proportion of any financial outperformance, whether from revenue or cost efficiency. ENERGY Green investment at an all-time high Investment in renewable energy hit an all-time high last year of £10.7 billion, but at the same time the cost of reaching the government's 2020 targets may have increased. A report prepared for the Renewable Energy Association by consultants at PwC found that even though investment in renewables since 2010 is set to reach £50 billion by the end of the year the same amount will be needed again to reach the country's target of meet- ing 15 per cent of demand from renewables by the end of the decade. Visualisation of Rampion scheme from Brighton

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