With the CEO having knee surgery today , it was the CFO Paul James making the presentation, taking the questions. Last week’s trading update was highlighted, with 2H trade being slightly weak but the shares continued the recent rise.

Significant regulatory tailwinds in water and climate management are very supportive for the near and long term. £1bn market cap.

Last week’s 10 month trading update was explained to analysts the night before and so with good IR the shares suffered no price hit, going up 20p. The ‘ Board now expects underlying operating profit for the year to be just below its previous expectations’. As explained, the 2H was badly weather hit, with no trend emerging and the weather not helpful for hole digging. The 2H got softer and civil delays as highlighted in the RNS were responsible for the financial miss. Residential was good (new build) and so was Nuaire. RMI was ‘stagnant’.

The PLC is optically very ESG with 40% of the mega pipes business using 17000 tonnes of recycled milk bottles in the pipe construction. This could be 50% in time. However drinking water pipes must be made from new material by law. Triple layer products ( around a recycled core) are made to reduce new product content and helping the overall ESG credentials of the products. The FD stated that the next R&A will have a much bigger ESG section, explaining the environmental impact stance they have.

An annual price rise in January 2019 was successfully held all year and a similar amount for 2020 announced, been a 3% net increase the hope for the year. Most material prices have been stable with the exception of human capital this year.

89% of revenue is from the UK with 26% from UK RMI, 37% new build properties, 20% commercial and 5% infrastructure. Europe is responsible for 5% and RoW 5% of revenues. The subject of expansion outside of the UK came up where the FD opened up that several investors told them not to do so a few years ago and just stick to the UK and be a one stop shop for water management. Now the PLC has 25% market shares in its UK activities with upside to continue as they outperform the sector by 2% year. Their rivals are significantly smaller and not innovators it seems. Planning ahead it…

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