The company reported a 23% slump in core full year earnings to £230m, due to rising costs of carbon emissions, although this was above analysts forecasts of £221m. But
With a cautious outlook on trading for the current year, given the mild winter which will hit spreads,
It plans to convert a second unit to burn more biomass, ahead of the award of contracts for difference from the government in the spring (which are designed to provide long term deals and a stable revenue stream). In the meantime the conversion will attract a renewable obligation certificate (a system which is part of the government's drive towards increased use of renewables) but the level is likely to be lower than expected and will hit profits.
[The company] indicated that the impact of the lower spreads (around £3/MWh lower) , along with getting just 0.9 ROCs (rather than 1.0 ROC) for enhanced co-firing on its second unit (from
Consensus could move to £240m-£250m from around £280m (we are on £270m), with earnings per share at 27p-29p (we are on 34.2p), with guidance to normal corporation tax having a slight negative impact here as well.
On the positive side, the company expects to achieve output of 630MW from its converted units, up from the 600MW suggested in October.
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