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Pennon reports strong Viridor performance

Peterborough erf

Viridor’s parent company has reported strong performance from the waste management company, notably in the roll-out of its energy recovery plants.

Pennon Group’s latest update on the market, which comes ahead of full-year results to be announced in May, reports a strong liquidity and funding position, with funding in place for the development of Viridor’s committed pipeline.

“At Viridor, the portfolio of operational energy recovery facilities (ERFs) continues to perform well, with the five brought on-stream in 2014-15 ramping up as Viridor optimises each plant,” it said.

“Takeover of Peterborough (pictured) is now complete, with the plant delivered on time and below budget, bringing the total number of operational ERFs to eight. Construction of Glasgow, Dunbar and Beddington [South London] is progressing well.”

Pennon says it expects demand for ERFs to continue to exceed capacity into the long term, with Viridor targeting new long and medium-term commercial & industrial contracts, despite the current low prices for recycled materials.

“Viridor remains cautious about future recyclate price growth, but is targeting margin enhancements through improvements to source material quality, restructuring and asset efficiency, productivity yield and quality of outputs,” the update reported.

Chris Loughlin, who became Pennon’s chief executive in January, said all of the group’s major companies – Viridor, South West Water and Bournemouth Water – were all performing well and results for the full year were on course to meet expectations.

“We see further opportunity to deliver improved efficiency and effectiveness driven by management changes which support our strategy of working more closely together across the group,” he said.

“As we move towards a more consistent risk profile across Pennon, we are increasingly well-positioned to drive sustainable profit and dividend growth. We remain committed to growing dividends at +4% above RPI inflation through to 2020.”

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