28th Sep 2015 06:27
LONDON (Alliance News) - Pennon Group PLC Monday said it is on track to hit its targets for the full year and is well-positioned for the future as its recycling and waste management business establishes its new energy recovery business.
The FTSE 250-listed utility infrastructure company's waste management business, Viridor, is establishing energy recovery facilities business which aims to transform waste into a resource.
Viridor currently has operational energy recovery facilities in the UK, five of which are relatively new and are being ramped-up since they came online in 2014 to 2015 financial year. Three other new facilities are currently being constructed and the one based in Peterborough is being commissioned and due to be brought on-stream in the second half of the financial year to end March 31, 2015.
The other two sites being constructed in Glasgow and Dunbar will come online in the first half of the next financial year and in the second half of the financial year due to end March 31, 2018, respectively.
"The energy recovery facilities business is contributing significantly to Ebitda and is on track to contribute GBP100.0 million to Viridor's Statutory Ebitda in 2016 to 2017," said the company.
"Although there continues to be pressure on commodity prices, recycling Ebitda in the first half of 2015 to 2016 has improved on the second half of 2014 to 2015. This is as a result of Viridor's ongoing Input, Throughput and Output Optimisation programme, which is addressing the effectiveness and efficiency of operations and is yielding financial benefits," it added.
Pennon said, as anticipated, its South West Water division's revenue for the full year will be impacted by the reduction in base allowed returns as part of the 2014 final determination, which sets prices for utility companies.
However, it said South West Water will have "an opportunity to generate the highest returns in the sector" between 2015 and 2020, and the overall performance of the division should "deliver financial rewards" from the current financial year, it said.
"South West Water is well-prepared for market liberalisation in 2017, with established retail and wholesale strategies. Within the South West region, South West Water has Water Business Services, which is tasked with retaining existing business customers, and outside the region it has Source for Business, which is focused on winning new customers," it said in a statement.
Its Bournemouth Water division is performing in line with expectations, and Pennon said the Competition and Markets Authority referral is "progressing as planned". The results from the CMA are expected shortly, it added.
Pennon plans to release its results for the six months ended September 30, 2015 on November 27.
By Joshua Warner; [email protected]; @JoshAlliance
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