Owners of South West Water and Bournemouth Water Pennon Group has this morning announced its Half Year Results for the period ended 30 September 2015.

The Group said it had delivered a strong earnings performance in the period with EBITDA up compared to the first half of 2014/15 as operational Energy Recovery Facilities (ERFs) in its waste company subsidiary Viridor contributed increased earnings.

South West Water’s EBITDA was also marginally higher with the effect of the anticipated revenue reset mitigated by higher than expected customer demand and a first time profit contribution from Bournemouth Water, acquired in April 2015. With results likely to be weighted towards the first half, the Group said it is on track to meet management expectations for the full year 2015/16.

Sir John Parker, who became Chairman of Pennon in August this year. said:

“The Group is increasingly well-positioned and operationally effective with a talented and committed leadership team. The water and waste businesses are performing strongly, driving sustainable profit and dividend growth.”

“Moving towards a more homogeneous risk profile across the Group is a strategic priority. We are increasing the proportion of contracted long-term index-linked revenues at Viridor. At the same time, we will continue to invest in growth where it fits with our strategy. Engineering and operational excellence combined with the application of leading technology will support outperformance of the regulatory contract for the water business, as well as optimisation of the ERF portfolio at Viridor.”

“Alongside operational excellence, our focus remains on delivering outstanding customer service.”

Overall profit before tax rose 6.8% to £106.8 million compared to the same period last year , with Viridor seeing a massive 174.5% increase to £12.9 million. Profits in the  water business rose by  +0.9% to £87.0 million, made up of a 3.1% increase  to £83.5 million at  South West Water and a first time contribution of £3.5 million from Bournemouth Water acquired earlier this year.

Pennon Group said both South West Water and Bournemouth Water had performed robustly in H1 2015/16. South West Water has delivered a strong financial and operational performance and is outperforming Ofwat’s assumed base returns on equity and Bournemouth Water is also outperforming.

The Bournemouth acquisition was unconditionally cleared by the Competition and Markets Authority (CMA) on 5 November, meaning the merger of the two businesses and integration of Bournemouth Water into South West Water is now underway. South West Water is targeting synergies of c.£27 million over the K6 period (2015-2020). Pennon Group said both water businesses are well-prepared and supportive of future industry reform.