Pennon Group pleased with performance ahead of half-year results

24th Sep 2018 08:34

(Sharecast News) - Environmental infrastructure company Pennon Group updated the market ahead of its half-year results to 30 September on Monday, reporting that its South West Water business had continued to deliver a "strong" operational and financial performance, with a focus on efficiency and customer service.The FTSE 250 firm said South West Water's cost saving momentum was being maintained, leading to ongoing outperformance on total expenditure.It said the division had continued to score highly on the customer experience survey, and operationally there were no water restrictions during the summer despite the "unprecedented demand" as a result of prolonged dry weather.Revenue from increased customer demand was expected to broadly offset the operational cost of delivery.Return on retained earnings was on track for continued outperformance for the 2019 financial year.At Viridor, Pennon said that division was on track for growth, with the three new energy recovery facilities (ERFs) at Glasgow, Dunbar and south London all receiving waste through the process of final commissioning.Optimisation was ongoing, and operations would ramp up over the next 18 months as had previously occurred at the other ERFs in the Viridor portfolio, Pennon's board explained.Works at the Avonmouth ERF were on track for commissioning in the 2021 financial year, with process construction proceeding as planned."There has been some improvement in recyclate pricing since the end of last financial year, in particular for paper," Pennon siad in its statement."Output quality demands remain high, and we continue to focus on our processes to ensure we meet these requirements."As a result, the mix of output had continued to move towards higher-value product.Pennon said Viridor's recycling performance for the half-year and full-year remained in line with its expectations.The firm said it was in a "strong" liquidity and funding position, explaining that since 31 March, it had secured £430m of financing.Of that, £240m was through the use of its sustainable financing framework, with £110m through the European Investment Bank with an inaugural Pennon facility. "On 3 September, South West Water submitted its business plan to Ofwat for the next five-year period 2020-2025," the board said in its statement."Given South West Water's strong operational and financial delivery in K6 - 2015-2020 - we are well-positioned to deliver outstanding services to customers through K7 - 2020-2025."Pennon said it was awaiting Ofwat's assessments by 31 January, with draft determinations expected between 1 March and 31 July next year, and final determinations by December 2019."We remain confident in the UK residual waste sector fundamentals, with further capacity essential to meet longer term demand."With our clear strategy of focusing on the UK water and waste market, supported by a strong balance sheet, Pennon is well-placed to continue to deliver for customers, communities and shareholders."The board said it intended to announce its half-year results for the 2019 financial year on 27 November.