South West Water’s parent company Pennon Group has delivered strong first half results with profit before tax up 22.7 per cent to £163.1 million over the sixth months to the end of September.
The rise was driven largely by the waste management business, Viridor, which enjoyed EBITDA growth across all activities.
The water business, South West Water, has so far generated cumulative totex savings of £268 million in the current regulatory period and reported being on track to deliver its target of c£300 million saving by 2020. It has also achieved a return on regulated equity of 11.8 per cent.
Pennon said these operational savings demonstrated the company’s continued focus on cost efficiency and innovation to deliver operational improvements and capital investments at a lower cost.
EBITDA for South West was down 2.6 per cent year on year at £190.6 million, while profit before tax also fell 3.7 per cent to £96.2 million. The group said this was a result of lower revenue in the first half of the year and a one-off cost of £3 million during extreme weather in the period.
Company growth came largely from the waste management business, with its energy recovery facilities outperforming expectations.
Pennon said the water business focused on customers and innovation as it prepares to introduce its customer share scheme in 2020.
The scheme called New Deal will give customers a financial stake in the company and a say at the group’s AGM.
Chris Loughlin, chief executive of Pennon Group said: “Our plan will see customer bills reduce further, with the cost of the average bill lower in 2025 than it is today. Almost two thirds of South West Water employees are shareholders and, from next summer, our ‘New Deal’ will give South West Water customers a financial stake and a say in the business.
“We have challenged ourselves to be more ambitious on environment and climate action, reducing leakage and targeting net zero carbon emissions by 2030.”
In its H1 report, South West highlighted gains made as a result of putting customers first, including a 15 per cent reduction in written complaints and fewer pollution incidents and supply interruptions.
Across the region 83 per cent of bathing water achieved excellent status and 99 per cent met the quality standard.
South West is “on track” to meet its leakage target for the year as it moves towards its five-year goal to lower leakage by a further 15 per cent.
Viridor has a pipeline for growth in the coming year that includes contracts signed for an energy park development and construction of a plastics recycling centre.
The group is conducting a strategic review, which it will publish the results of next year. In September, company chief executive Loughlin told Utility Week the sale of the waste management arm of the group was pure speculation and the group was performing “exceptionally well”.