22 February 2001

Pennon Group continues to weigh up future of operations including Viridor

Pennon Group plc which owns Viridor Waste and South West Water, has confirmed that a review of its operations is continuing at a time when sources in the City of London suggest that a sale of parts of the company, including the waste business is an option under consideration.

Last September in its interim results Pennon Group chairman Ken Harvey said that the Viridor businesses – which also include property and instrumentation – had maintained profitability and were well-placed to produce future growth.

He added at the time that: “Viridor will focus on its waste management and instrumentation businesses, with a number of options being pursued to support its growth aspirations.”

However the results commentary noted that operating profit on a slightly higher turnover for the six months to September 2000 at £54.1 million was £7.0m compared to 7.8m for the equivalent period in 1999.

Operating margins (excluding the impact of landfill tax) were 18.8% compared to 21.9% for 1999.

Pennon put the decline in profits down mainly to “a reduction in minerals activities and cost increases in the collection business.”

Landfill

The commentary added then that landfill volumes and gate prices had remained relatively flat and were “not expected to show a significant improvement in the immediate future”.

On a brighter note, the results said that Viridor Waste was well placed to take advantage of the anticipated shortage of landfill capacity in key parts of the UK, having 74m cubic metres of fully consented void space and 53m cubic metres of unconsented void.

Today, Stephen Swain Communications Manager for Pennon, said: “In terms of the group, it continues to review operations and on that basis nothing is ruled in or ruled out. The strategic review is ongoing and the group board has not set any deadlines.”

Pennon Group’s annual results will be published in May.

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