On December 27, 2018, ERM Power Limited (ASX: EPW) has announced its ongoing buy-back event wherein the company bought back a total of 33,65,378 shares via on-market trade for the total consideration of A$ 54,64,422.44. While, on the previous day, the company has brought back 7,884 shares and paid $11,909.57 for that. The company had paid $1.5340 as the highest price and with the lowest price of $1.4500. The company has prohibited their directors from participating in the buy-back, and the company has also disclosed that the number of shares required to achieve up to $14,535,577.56 in value.
ERM Power Limited (ASX: EPW) is in the energy sector. The company generates and sell electricity in Australia and the United States. The company was incorporated in February 1980 and got listed in December 2010. Mr. Trevor St Baker founded the company.
ERM Power has shown robust financial results for 2018 which reflects a good year of growth and record sales for the Australian business. The energy industry and policy environment remained topical within a year. The company capitalized upon opportunities to support commercial and industrial customers with new and innovative energy supply and demand products.
Financial performance: In FY18, ERM Power’s EBITDAF grew by 25% to $97.5 Million, with positive results across the Australian businesses. In FY18, the company generated underlying Net profit after tax was $30.2 Million. Oakey and Neerabup Power stations have proven to perform well which is visible through its outstanding availability and overall performance. Power station earnings have increased by 5% on the previous year which demonstrates the value of gas-fired assets in the transition to renewables.
ERM Power’s Australian electricity retailing business performance is depended on its industry-leading customer service. It further attained 92% customer satisfaction. The company has exceeded both their target of 19TWh of electricity load sold and their gross margin target for the year with sales up 4% on the previous year. Contracted forward electricity sales increased to 28.9TWh reflecting the strength of the Australian franchise.
Their core Retail and Generation business, as well as their new energy solutions business, they had a very good year.
FY19 Outlook: The company is in a fortunate position, over the next two years as they have posted very strong profit growth in FY18 and at the same time they have built up a capacity to drive their investment in the Energy Solutions business. Besides this, the management assumes a continuous growth in their C&I segment. Additionally, for FY19, the company expects more conservative volume for Retail at 19TWh which is driven mainly by SME volume reductions following the sale of the single-site portfolio. They have anticipated a mid-case margin assumption for FY19 of $4.75/MWh with a medium-term range of $4-$5.50/MWh over the FY2019 -2021 period.
Revenue is expected to grow by about 50% as they are continuously building their businesses. EBITDAF is expected to be positive in FY20, with NPAT at or around breakeven in FY20.
In the last six months, the share price of the company increased by 8.87 percent as on 24 December 2018. EPW’s shares traded at $1.540 with a market capitalization of $390 million as on 27 December 2018.
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