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RNS Number : 6193B
Pennon Group PLC
24 September 2018
24 September 2018
PENNON GROUP PLC
Trading Statement
Pennon, one of the UK's largest environmental infrastructure
groups, is issuing the following update ahead of its results for
the half year ended 30 September 2018, which will be announced on
27 November 2018.
Key highlights
-- On track to meet management expectations for 2018/19
-- Continued leading efficiency in water, driving an enhanced
Return on Regulated Equity (RORE)
-- No water restrictions for the 22(nd) consecutive year, despite high demand and dry weather
-- Ambitious South West Water business plan for the period 2020-2025 published
-- Glasgow, Dunbar and South London Energy Recovery facilities
(ERFs) are all receiving waste. Operational ramp up over the next
18 months
-- GBP430m of financing raised, of which GBP240m under Pennon's
sustainable financing framework.
South West Water delivering for customers and shareholders
South West Water continues to deliver strong operational and
financial performance, with a focus on efficiency and customer
service.
Cost saving momentum is being maintained, leading to ongoing
Total Expenditure (Totex) outperformance.
South West Water continues to score highly on the customer
experience survey, and operationally there were no water
restrictions this summer despite the unprecedented demand as a
result of the prolonged dry weather. Revenue from increased
customer demand is expected to broadly offset the operational cost
of delivery.
RORE is on track for continued outperformance for 2018/19.
Viridor on track for growth
The three new ERFs at Glasgow, Dunbar and South London
(Beddington) are all receiving waste through the process of final
commissioning.[1] Optimisation is ongoing and operations will ramp
up over the next 18 months as has previously occurred at the other
ERFs in our portfolio.
Works at the Avonmouth ERF are on track for commissioning in
2020/21, 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. 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
has continued to move towards higher value product. Our recycling
performance for the half year and full year remain in line with our
expectations.
Strong liquidity and funding position
Since 31 March 2018, Pennon has secured GBP430m of financing,
GBP240m of which has been through the use of its sustainable
financing framework, with GBP110m through the European Investment
Bank with an inaugural Pennon facility.
Outlook
On 3 September 2018, South West Water submitted its Business
Plan to Ofwat for the next five year period 2020-2025. 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).
We await Ofwat's assessments by 31 January 2019. Draft
determinations are expected between 1 March and 31 July 2019, with
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.
Half Year Results - 27 November 2018
Pennon intends to announce its half year results for 2018/19 on
Tuesday 27 November 2018. Further information on Pennon, Viridor
and South West Water can be found on the Group's website,
www.pennon-group.co.uk.
For further information, please contact:
Pennon: Susan Davy - Chief Financial Officer
Steve Hodges - Investor Relations Manager
01392 443 046
Finsbury: James Murgatroyd
Faeth Birch
0207 251 3801
Cautionary statement in respect of forward-looking
statements
Certain statements in this announcement are forward-looking
statements relating to the Group's operations, performance and
financial position based on current expectations of, and
assumptions and forecasts made by, management. They are subject to
a number of risks, uncertainties and other factors that could cause
actual results, performance or achievements of the Group to differ
materially from any outcomes or results expressed or implied by
such forward-looking statements. The Group's principal risks were
described in the 2018 Pennon Group Annual Report which can be
viewed online at http://annualreport.pennon-group.co.uk/ Such
forward looking statements should therefore be construed in light
of such risks, uncertainties and other factors and undue reliance
should not be placed on them. They are made only as of the date of
this announcement and no representation, assurance, guarantee or
warranty is given in relation to them including as to their
accuracy, completeness, or the basis on which they are made. No
obligation is accepted to publicly revise or update these
forward-looking statements or adjust them as a result of new
information or for future events or developments, except to the
extent legally required. Nothing in this Statement should be
construed as a profit forecast.
[1] Protected by contractual compensation, primarily liquidated
damages received /receivable when construction completed post
original contractual completion date.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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