Utility Week

Utility Week 23 06 17

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UTILITY WEEK | 23RD - 29TH JUNE 2017 | 17 Finance & Investment This week Thames Water backs dividend payment Cash yield 'lower than for comparable listed company', says finance boss Thames Water's chief finan- cial officer has defended the company's decision to distribute £100 million in dividend pay- ments to shareholders. The decision was set out in Thames's annual report, which also revealed that the water com- pany has missed its target for leakage reduction in 2016/17. Chief executive Steve Robertson admitted that divi- dend payments are a "tricky subject" especially "when you miss a target like leakage which impacts customers". However, he stood by the decision to make the £100 mil- lion distribution. Chief financial officer Brandon Rennet also insisted the move was robust: "The equity holders obviously form an essential part of the capital structure and we need to be able to provide a reasonable and justified return for them over the [AMP] period." "If you look at the cash yield, it's about 2.6 per cent from the last year, which is lower than you would prob- ably expect to see from a comparable listed company." Rennet also told Utility Week that Thames' new share- holder make-up means the company is "well positioned" to take a longer-term view with its investments. In the past, Thames has come under fire for paying out excessive dividends. There was a high-profile row over its payout in 1997 that increased dividend returns by 22 per cent, at the same time as Thames reported high leakage levels and threatened a hosepipe ban. Further controversy followed, attracting coverage in the national press. JG ENERGY Green Deal Finance relaunches loans The Green Deal Finance Com- pany (GDFC) has begun offering new loans for energy efficiency measures for the first time in almost two years. The company is undertaking a so relaunch before a wider brand overhaul and rollout later in 2017. During this initial phase, GDFC will focus on improving its loans and customer service by working with a small group of trusted Green Deal providers. "We are delighted to be able to take this significant first step of making loans accessible to homeowners again," said chief executive Kilian Pender. The Green Deal scheme was launched by the government in 2013, but ended in July 2015 when the government cut off funding. Aurium Capital Markets and Greenstone Finance bought GDFC and its existing loan book from the government in January for £40 million. WATER Castle Water eyes further acquisitions Castle Water will continue to evaluate large acquisition opportunities in Scotland and England aer its purchase of fellow independent water retailer Cobalt Water. The deal with Cobalt gives Castle the ability to "acceler- ate its growth in Scotland", the company's chief executive John Reynolds told Utility Week. Cobalt is currently the retailer for about 7,600 supply points, and most of its customers are multi-site. Castle has about 11,500 supply points in Scotland. ENERGY Drax weighs up coal-to-gas switch Drax is considering whether to "repurpose" its remaining coal- fired power units to run on gas if it is unable to secure subsidies for biomass conversion. With no clarity over the avail- ability of support, the group is "looking at other options" for the three coal-fired units at its plant in Yorkshire, the company revealed in a trading update. "We remain ready to convert further units to biomass… and we're very pleased that the government is taking a much harder look at whole system costs, because we believe if you consider whole system costs, conversion technology is one of the cheapest, if not the cheapest, on the system," said Drax Power chief operating officer Andy Koss in a presentation to investors. "But we're also looking at other options as well, and one of the things we are looking at is the potential to repurpose our coal units to actually run on gas." Rennet: 'We need to provide a reasonable return' Stock watch 370 360 350 340 330 320 DRAX SHARE PRICE, FIVE-DAY 23 May 30 May 6 Jun 13 Jun 20 Jun DRAX SHARE PRICE, ONE-MONTH Drax has failed to win over investors with its strategy for the long-term future of the company aer shares in the group shed nearly 10 per cent of their value in the wake of a trading update last week. Drax Power chief operating officer Andy Koss said the firm is considering repurposing the three-remaining coal-fired units at its Yorkshire plant to run on gas as a possible alternative to biomass conversion. The stocks closed the previous day at 361p and by the time of publication had fallen to 330p. 370 360 350 340 330 320 15 Jun 16 Jun 19 Jun 20 Jun

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