25th Mar 2019 07:19
LONDON (Alliance News) - Water utility Pennon Group PLC will take a GBP16 million hit due to financial problems at partner Interserve PLC, Pennon said Monday.
Pennon, whose financial year ends on Sunday, had booked a provision of GBP8 million related to its exposure to Interserve, but this has now been increased.
Interserve is now in administration, and Pennon "is seeking further clarification" on Interserve's situation, meaning the provision could increase.
"We will continue to pursue recovery of all amounts due from the operating subsidiary Interserve Construction Ltd and will take all the necessary legal and procedural steps to achieve this," said Pennon.
On the trading front, South West Water continues to perform strongly, Pennon said, with its return on retained earnings expected around 12%, an outperformance.
Current operations are focused on replenishing water resources, after the hot summer of 2018. Revenue for the current year is guided to "broadly" offset operational costs.
Waste arm Viridor's energy recovery facilities at Glasgow, Beddington, and Dunbar are all likewise performing well, and Pennon is confident its recycling business will meet full-year expectations.
"We continue to see a positive future for the recycling business, with the announcement of the government's resources & waste strategy aligning with Viridor's strategy and key priorities and with opportunities for contract backed asset investment," added Pennon.
Pennon will release results for its year ending March 31 on May 30.
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