For the six months to 31 December 2014 energy company ERM Power Ltd (ASX: EPW) reported a healthy profit rise of 432%, on a statutory basis.
On an underlying basis – which removes significant items and gains on financial instruments – net profit after tax, or NPAT, rose 113% to $14.7 million.
Boosted by an extra 21.5% of electricity sold, underlying earnings per share jumped 90% to 6.1 cents. But perhaps most pleasing for shareholders is the declaration of a six cent interim dividend, equal to its payout in the prior period.
At today's price of $2.29 per share, it trades on a fully franked dividend yield of 5.2%, or 7.5% grossed-up.
CEO Jon Stretch said, "ERM Power has recorded strong results across the business. Our electricity business achieved half year sales of 7.9TWh and increased underlying EBITDAIF by 30%. We have maintained momentum in the commercial and industrial market segment. Expansion into the small to medium enterprise market is progressing well and is expected to break-even this financial year."
He also painted a bright outlook for the remainder of the year: "We are well positioned to continue our growth trajectory with forward contracted sales of 29 TWh at 31 December 2014, 21% higher than the same time a year ago."
Full year guidance was confirmed, with load expected to increase by 15% to 16.2TWh, excluding the US business. However it was slightly less than the previous forecast of 17.0TWh, "mainly due to a short period of unusual competitor behaviour in the first half of the financial year."
Should you buy or sell ERM Power?
Despite a recent rally in share price, ERM could be worthy of your consideration. It appears to combine all the things an investor could ask for: a number of different ways to grow earnings and a juicy fully franked dividend – find a spot for this one on your watchlist.
