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I am not invested here but I wish the dim witted politicians would back off their attacks on water companies - I pay less than �1 per day for all my water - I also pay about �1 per day for electricity but average �2 per day for gas. IMO gas prices are far too high (due to meddling politicians and their crazy energy policies) I came off a 3 year fixed price G&E tariff last November and the cheapest new fixed rate I could get was 40% higher !!! Water bills have in the last 10 years gone DOWN by about 9% - I would support a 5 or even 10% rise in bills to allow more billions to be spent repairing old leaky mains and building new reservoirs. The eggheads say the next world wars will be fought over water rights ! Regards all and GL with your investment
as a business always counts. If you have started from a base of small, technically simple, contracts you cannot successfully become a deliverer of large construction projects UNLESS you merge your business with someone who has done it before. Interserve were never an engineering-led business. They had aspirations well above their management and, more importantly technical/project management, capabilities. What is shameful is that people who are looking after peoples investments are surprised at the current position at Interserve
Thanks both - interesting comments. I guess the only winners will be the lawyers I think Interserve went wrong by taking on the processing risk in a sector they didn't understand, rather than just the construction risk which they were used to doing. I understand they put all their eggs in one basket by partnering with a sector specialist that went bump. Naive at best, but really negligent on behalf of the Board at that time who signed off the EfW Contracts. Interseve have already taken massive losses on the EfW Contracts. Very Harsh on the Employees who have been and will soon be made redundant - Pennon employ circa 5000 employees, Interserve employee 80,000 (20,000 in the UK) and will probably now have to lose circa 5000 due to this serious error of judgement. It will be interesting to see if Interserve make a statement about this on Monday when publishing their annual 2017 financials. It will also be interesting to see if Pennon will want to see Interserve punished further........
The value of PNN's claim will include consequentials; hence the huge number. As i have said before on thjis site, Interserve grew rapidly over the past 15+yrs - far too rapidly to be contractually competent, given their background / starting point. Shareholders are bedazzled by growth in order back-log, but it is a worthless statistic in itself. They should simply never have been considered for this project technically, and they will have won it with a very sharp price, in the hope of making something on variations. A recipe for disaster. To the extent that PNN's assessment procedure allowed this work to be placed with a company with a lack of credible track record, they are also commercially culpable - hence my questions about whether heads actually rolled in PNN?? Given the quantum of claim there is zero probability of this being settled this side of the the doors of the court. The outcome is then in the lap of the gods - or the English judicial system - neither of which are nags I have ever bet on!
I would say this is already factored in to the SP.getting anything out of interserve will take time and if they do I would expect the SP to go up
If PENNON have over-exaggerated their chances of recovering significant monies from Interserve as they indicated in their recent financial statement. And if this is shown to be the situation on Monday, then what are peoples views on the level of the affect on the SP?
The claim equates to the value of Interserve but weeks ago. Given their dire straights I would not assume a settlement on this anytime soon. Whilst Interserve were ill-qualified to take on this contract in the first place, these sorts of over-spend are not the result of one party alone. PNN need to sharpen up their contracting skills - I am assuming that this has happened?????
On a separate point note how the PNN share price has been in lockdown these past couple of weeks even when other water utilities were trying to rebound. PNN remained static and then fell even more. Clear leak of the extra costs for Glasgow ERF well in advance of the results which shorts were privy to.
The Glasgow ERF is in final commissioning. Completion of the construction has required a somewhat higher level of remediation than previously anticipated following the need for contractor change. Overall expenditure is expected to be �95 million higher than the original �155 million target. Viridor is contractually entitled to recover incremental costs from the original principal contractor, Interserve, under certain circumstances. Discussions with Interserve are ongoing with regard to the contractual settlement. Dependent upon the conclusion of those discussions, margins over the life of the project to 2043 could potentially be lower than originally expected, although we do not believe there is any immediate impact on earnings.
"Completion of the construction has required a somewhat higher level of remediation than previously anticipated following the need for contractor change. Overall expenditure is expected to be �95 million higher than the original �155 million target." That is some increase on the original, looks like they think they can recover some of the extra but warn it might impact future earnings. Otherwise things look reasonable apart from the usual concerns. Is this dip dippy enough?
At these prices. Armagedon priced in, IMO.
Being the Banker: In my opinion you can make a good case for renationalising water, because it's quite a stable monopoly. However I think energy is not a sensible thing to nationalise. The energy sector requires more innovation and change than water supply, so it's much better to let diverse companies to compete to supply it. Also just look at what a pig's ear successive governments have made of the energy policy, they do control. I.e a ban on onshore wind and building the worlds most expensive nuclear reactor on a '10%' pa financing deal.
I bought more in at this level, cheap given the solid business and new Viridor EFW' plants on progress to generate this year on, the political uncertainty alone does not touch the waste side of the business. I have done the same with IRV as their exit from the EFW is clearer too.
He is far too left wing for even traditional Labour voting families.
If you are a shareholder here you want Corbyn out - unless you want to see nationalisation. His own MP's are turning on him again including Yvette Cooper.
Nationalisation threats far overdone IMO 'Sheer fury' at Corbyn's response to spy poisoning Labour backbenchers are voicing their disapproval at their party leader's comments in the wake of the spy poisoning. Jeremy Corbyn was accused of "appeasement" towards Russia as MPs - including his own backbenchers - voiced anger at the Labour leader's apparent reluctance to directly blame Moscow for the Salisbury nerve agent attack. Mr Corbyn was heckled in the House of Commons on Wednesday as he responded to the Prime Minister's statement setting out a range of retaliatory measures the UK will take against Russia. https://news.sky.com/story/salisbury-attack-jeremy-corbyn-accused-of-appeasement-towards-russia-11289753
As usual though short sellers suppressed the rise - blatant manipulation again. *********************************************************************************************************************************** Analysts at JP Morgan upgraded their recommendations for Pennon and Severn Trent, arguing that concerns about regulatory risk, rising government bond yields and possible nationalisation by a Labour government had pushed the shares to "unusually low" levels. That trifecta of risks was on top of the "more traditional" decarbonisation, affordability and security of supply balancing act, they said. "We take this opportunity to highlight stocks in our coverage universe that are oversold, trading at a material discount to 'worst case' nationalisation scenario projections," they added. Looking out to 2021/22, Severn Trent (target price: 2,250p), United Utilities (target price: 1,000p) and Pennon (target price: 830p) were changing hands at discounts of 1%, 5% and 11% versus their regulated capital values, respectively. In the analysts' opinion, that made little sense in the context of Labour's nationalisation threat and upgraded their recommendation for Pennon and Severn Trent from 'neutral' to 'overweight' and said they were at 'overweight' on United Utilities, having had no coverage on it beforehand. At a forward price-to-earnings multiple of 12.5 and with its offering of a dividend yield of 6.6%, their preferred stock in the UK water space was Pennon https://uk.webfg.com/news/broker-recommendations-/broker-tipspennon-severn-trent-acacia-mining-severn-trent--3182360.html
in the news saying utilities were unprepared and articles listed with the high pay of board members. I'm not sure what more you can do if the weather freezes. Do you invest in lagging pipes or adding heating underground? I'm not sure adding pay packets into the mix really adds much, would it be ok then to say you have had no water for several days but thats ok cos I only get minimum wage? Are they overpaid, most probably but that is a side issue. Ofwat chairman Jonson Cox also comments on debt leverage, performance, pensions and suggesting dividends should be in the 4% region
I think the other problem is the next OFWAT review, which is expected to cut water bills. I think Pennon still looks a decent buy at this price, though.
It's also to do with rising bond yeild expectations. Utilities are often veiwed as bond proxies and move in relation to bonds. But I am keeping an eye on Pennon and National Grid. At some point they'll be bargains. But I'm not about to bet against the trend. People will also be dumping them because they bought them as 'safe plays' and have lost on them. I started building a position at 900 but backed out pretty quickly when they started dropping.
Looking to invest in here as it looks to cheap but it just keeps dropping. Surely it can't be all to do with the labour privatisation issues. ?? Any thoughts
Maybe corbyns been hit by a bus?
so up 17p at the present and can't see any news relating to this.Anyone aware of anything that has triggered such a big jump today?
Seems to have stabilised now, the only way is up