Attractive and sustainable dividends supported by high operating margins and strong, resilient cash generation. The Company expects to declare a target dividend of £55m for the financial year ending 31 March 2015, its first full financial year following the Offer. Thereafter, the board of directors of the Company (the "Board" or the "Directors") intends to increase dividends at least in line with inflation. For the current financial year ending 31 March 2014, the Company intends to declare a dividend equivalent to an annual dividend of £55m pro rata for the period from Admission to 31 March 2014;
· Organic profitable growth through the build-out at cost of the Group's onshore wind project development pipeline, with a target of adding 130-150 MW of onshore UK wind capacity over the next three financial years. Investing at cost in new high quality renewable power generation capacity such as Infinis' organic projects under development represents a clear opportunity to expand the Company's asset base, drive future earnings growth and deliver attractive returns to shareholders.
I agree on EV/EBITDA it is fully valued. An operational wind project changes hands for 9x EBITDA and landfill for less so that the shares on 9.5x EBITDA look fully valued. But I do think the yield is probably okay for a few years assuming 4-5% decline in landfill revenues.
Infinis Energy PLC On Track To Fullfill £55m Payout
Infinis Energy (LSE: INFI), the renewable energy firm chaired by the former SSE boss Ian Merchant, saw revenues increase by 7.3% in 2014 on strong performance from its landfill gas and wind businesses.
Strong revenue growth and a focus on cost control boosted earnings before exceptional items by £148m from £125m a year earlier. The Northampton based firm has strengthened its balance sheet and the leverage ratio fell to 3.7 times from 4.4 times a year earlier.
As for outlook, there are no shortage of risk factors, from unfavourable weather to a challenging political backdrop. However, the firm’s strong cash generative nature means that the board is confident the stated dividend policy can be delivered without compromising growth plans.
The chief executive, Eric Machiels, commented:
“We are pleased with the performance of the Group during its first months since listing and look forward to further delivery against our targets in the current year.”
In the week leading to today’s results the shares rose by 16p, or 8%, to 227p. Infinis posted a final dividend of 6.6p per share and is committed to paying a full year dividend of £55m (18.3p) for the coming year. Based on the present share price, which values the company at £682m, the prospective yield on a purchase in Infinis could be 8%.
Sound company but perhaps overvalued at IPO and even now.
Mkt cap now of £705M. Net debt £547M. Total enterprise value (EV) £1252M. ADJUSTED EBITDA (after taking out all "one-off" costs) £148M. Subtract annual maintenance capex of £17M. gives recurring REAL EBITDA of c£130M.
Therefore valued at c9.6x REAL ADJUSTED EBITDA which may be OK for high growth but likely not for a company with declining assets.
Yes agreed that landfill does say 65% of ebitda and that is in decline. Wind will partly compensate but the cash is probably enough to pay the divi for a few years albeit costs will fall as wind developments costs (capitalised but still cash out) fall ditto o&m. So I think it's ok for a bit but still better value than greencoat which is simply an annuity income stream for which you pay 2%!!
My view of the flaw in Infinisis is that, ironically, it is NOT infinite but its assets -especially landfill- have a very finite life. On current EBITDA earning measures it looks OK but this excludes DA (depreciation and amortization) which are not cashflow but are important, in my view, because they capture the fact that company's assets have limited life. In my, non-expert, opinion Full Year EBITDA will be c£130M. But net of maintenance capex (mentioned in prospectus and similar to ops cost) of c£15M and interest of c£45M, INFI is left with c£70M to pay an annual divi of c£55m. Moreover there will be downward pressure on earnings from end-of-life assets and I am concerned that this pressure will be felt on dividends which is the main attraction.
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