South West Water looks set to outperform on its current AMP5 contract, according to an Interim Management Statement released by owners Pennon Group this morning.
Overall financial performance at Pennon Group since 30 September 2013 remains on track to meet management expectations.
The Group said:
“South West Water is continuing its robust performance against the 2010-2015 regulatory contract and is well placed to outperform its assumptions. Despite the exceptional weather and resultant flooding in the South West, the company continues to deliver effective operational performance and high standards of customer service, underpinned by strong financial performance.”
According to the Statement, feedback on the utility’s AMP6 Business Plan submitted to Ofwat in December indicates it has achieved 84% acceptability from customers. Pennon Group said the plan reflects the most extensive customer/ stakeholder engagement and research ever undertaken by the water company.
The Group also commented on Ofwat’s revision in December to the ongoing AMP6 price review process, and its subsequent publication of risk and reward guidance for the industry on 27 January 2014. Pennon Group said the company is currently reviewing the guidance – which also covers guidance on key financial parameters, including the cost of capital for the K6 period.
The Statement says that South West Water’s sister company waste management specialists Viridor is “successfully holding” operational performance broadly in line with management expectations and operating contribution is slightly ahead of last year.
Viridor is currently in a transitional period – Pennon said the firm has made excellent progress in establishing its Energy from Waste business which will “transform Viridor into a leading player in the UK renewable energy sector.”
On financing arrangements, the Statement said that since 30 September 2013 Pennon Group Plc has drawn down £60m from the European Investment Bank and a further £130m facility is currently being progressed. It has also renewed and increased a £60m term loan to £100m and drawn down a £30m Revolving Credit Facility.
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