Investment column: Independent

INDEPENDENT Energy has proved a stunning success in its short life as a publicly quoted company. Shares in the energy distributor were priced at 100p when the company came to the Alternative Investment Market three years ago. Yesterday they closed 30p higher at 901p after the group reported maiden profits of pounds 4m compared to the previous year's pounds 180,000 loss.

Independent Energy was set up to take advantage of deregulation in the UK electricity market, and has done so with gusto. Although a minnow in a market dominated by the regional electricity companies, Independent has concentrated on supplying electricity to medium-sized businesses and claims a 6 to 7 per cent share of that business.

It has been helped by being able to use its nimbler marketing techniques to outmanoeuvre the lumbering Recs. It also has a built-in regulatory advantage, which means that if a Rec offers a discount to an individual customer if must offer the same terms to all other customers in that category. With their margins already under attack from Ofgem, the Recs have so far not been sufficiently worried about the threat from the likes of Independent Energy to bother, though of course that could change as the threat grows.

A move to the main market is planned for the autumn. This will be combined with a fund raising of about pounds 50m to underwrite investment in better systems as well as expansion plans in the deregulating electricity markets of continental Europe. Spain and Holland are likely to be the first targets, though not until next year.

On Peel Hunt's full-year profit forecast of pounds 18m the shares trade on a forward multiple of 22, falling to 13 the following year. Investors who were in at the start might consider taking profits after such a strong run. But prospects are still good, making the shares an attractive buy on weakness.

u

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific