Transcription of Finance News Network Interview with Energy Developments Limited (ASX:ENE) Managing Director, Greg Pritchard
John Treadgold: Energy Developments Limited (ASX:ENE) is a provider of low emissions energy that operates over 900 megawatts of power in two key areas, remote energy and clean energy.I’m John Treadgold and joining me today at the ASX Investor Series is the Company’s Managing Director, Greg Pritchard. Greg, welcome back to FNN.
Greg Pritchard: Thank you very much, good to be here.
John Treadgold: Clean energy is a term that’s bandied around a lot lately. Can you explain to our viewers how your energy offering fits into the mix?
Greg Pritchard: Landfill gas and waste coal gas comprise our core clean energy business. That’s removal of methane from underground coalmines and coke and coal landfills. And that means that that product is being used for power generation, rather than being wasted through flaring.
John Treadgold: You’ve lifted your earnings guidance for 2015 to between $211 million and$216 million, with weather and currency factors in your favour. What are some other key drivers of growth for the business?
Greg Pritchard: Over the last few years, we’ve invested $300/$400 million in growth for acquisitions, such as our Envirogen acquisition last year. And also the expansion of current projects that we’ve been operating on, with our blue chip customer base. So it’s a pretty even mix between acquisitions and growth. And we’ve had other factors as well as contractual revenue in our landfill gas businesses, in the UK and US. And that’ll continue to drive our earnings growth as we go forward.
John Treadgold: The price of natural gas and LNG has seen some major swings, as the market becomes exposed to exports. How does this impact your gas supply business?
Greg Pritchard: Certainly from our perspective, it has had no impact on us. Because the landfill gas and the waste coal gas that we buy from coalminers and landfill owners, is fixed for the term of the contract. So it’s actually also not natural gas, so it can’t be pipelined. So actually it had no price impact on us. What is useful though, if natural gas price goes up, as we’re seeing on the east coast of Queensland, power prices generally go up, which means that we’re able to sell our finished product at a higher price.
John Treadgold: You’ve been involved in the Federal Government’s emission reduction auction. How is the program affecting your investment decisions?
Greg Pritchard: It’s having a very positive impact John. We were successful in the first auction in selling forward credits, out of our landfill business over the next seven years. What that will do is provide ongoing investment in those landfills. And also the other aspect, which we’re working very closely with the Government on, is the development of new waste coal gas projects, which will actually be able to attract emission credits. And we’ll be able to be sold into future auctions.
John Treadgold: Looking forward, what should investors keep an eye on?
Greg Pritchard: The Company’s had quite a substantial growth over the last few years. And we expect that to continue in our core businesses of clean energy and remote energy. We certainly have the cash flow to be able to do it and our growth program continues unabated, notwithstanding the cycles that we’re seeing. What we’ll also see is continuing growth in dividend. The Board has a progressive dividend policy and we’ve paid some substantial increases in dividends. And we expect that to at least be maintained or increased, over coming time.
John Treadgold: A lot to look forward to. Greg, thank you for joining us on FNN.
Greg Pritchard: Thanks John, it’s a pleasure to be here.