11th Feb 2016 07:59
LONDON (Alliance News) - Pennon Group PLC on Thursday said it is on track to meet management expectations for the year ending March 31, helped by the performance of its waste management business Viridor, South West Water, and the recently acquired Bournemouth Water.
The FTSE 250 water company said its return on regulated equity - a measure of profitability - is on track to remain at about 11.5% for the full year.
Higher expectations for group earnings before interest, tax, depreciation and amortisation are driven by the full year effect of the five new energy recovery facilities brought on-stream over the course of the previous financial year, and the contribution from Bournemouth Water.
Energy recovery facilities are on track to deliver targeted Ebitda of about GBP100.0 million in the next financial year ending 2017, the company said, despite pressure on power prices and the removal of levy exemption certificates.
South West Water's "revenue reset" for K6 (2015-2020) has been mitigated by higher than expected customer demand in the first half and its ability to achieve outperformance on K6 total expenditure commitments, thanks to "efficiency initiatives".
"We see further opportunity to deliver improved efficiency and effectiveness driven by management changes which support our strategy of working more closely together across the group. We will employ the wide range of skills we have across Pennon to share best practice and deliver cost savings and growth opportunities," Chief Executive Chris Loughlin said.
The group said it has new initiatives underway in a move expected to deliver future annualised cost savings of about GBP11.0 million.
"As we move towards a more consistent risk profile across Pennon, we are increasingly well-positioned to drive sustainable profit and dividend growth. We remain committed to growing dividends at +4% above RPI inflation through to 2020," Loughlin added.
Pennon Group intends to announce its full-year results for on Wednesday May 25.
By Samuel Agini; [email protected]; @samuelagini
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