SOUTH STAFFORDSHIRE PLC NEWS ARTICLE
10/07/14 South Staffordshire Plc 2013/14 Group Results
The Group has had another successful year to 31 March 2014 with good operational performance in all of its divisions with challenging targets set at the start of the year being achieved. Encouragingly this has led to each division experiencing growth in profits with the Group well positioned for another successful performance in 2014/15.
South Staffs Water
South Staffs Water (including Cambridge Water) has at the core of its strategy providing high quality water and customer service at low prices. The 2013/14 average combined domestic water charges for the South Staffs and Cambridge regions of £141 was the second lowest in the industry and 24% below the industry average. The Company's commitment to customer service is reflected in its continuing high Service Incentive Mechanism (SIM) scores and it has now been ranked by Ofwat as the industry leader for SIM for the 3 years to March 2014.
Following the merger of the two supply regions in April 2013, system and business process integration has been a core priority with significant progress being made. Completing the full integration of the two regions and realising the related further benefits remains a priority for this new year. With the market set to open further to non-household competition in 2017, the business is actively involved in the Open Water consultation and is developing its systems and business processes in readiness for this significant change. Following significant customer engagement, the business submitted its Business Plan for the AMP 6 period to Ofwat in December 2013 and has formally responded to Ofwat's feedback in June 2014 following a further period of customer consultation.
SSI Services has had an encouraging year, being awarded more new business and developing existing relationships. The Clean Water business had a particularly good year, successfully delivering the high volume of work required under key framework contracts and ensuring its clients receive the quick response to orders and the high quality service they expect. The Water Hygiene business also performed well in a competitive environment.
Further system development and implementation is a priority for SSI Services in the current year in order for it to continue to respond further to competitive pressure and allow it to provide the high quality service that clients expect at competitive prices.
Echo had another very positive year, with strong operational performance on its existing contracts, including another year of pleasing debt collection performance for its clients. Echo also made significant progress in the successful implementation of its RapidXtra billing system into Dwr Cymru (Welsh Water) which is expected to be completed, as originally planned, in the current year.
The business is expecting further growth from the RapidXtra product in the current year including growth expected from the opportunities from the development of non-household competition in the water sector with the business recently securing a new contract with Anglian Water Business, its first with a commercial water retailer. It is anticipated that this success will support Echo in achieving its objective of being the leader in this new and expanding market.
The Group has again achieved a strong financial result with turnover, operating profits and operating cash flows all growing in the year to 31 March 2014. This reflects the Group's continued focus on developing new business, tight management of all of its costs and on cash generation with the profits and cash flows achieved being ahead of challenging targets set at the start of the year and with the Group being in a good position to experience another successful year in 2014/15.
Group turnover increased by £19.7m (9.6%) to £224.7m (2013: £205.0m) with sales growth being experienced in all of the Group's divisions.
The Group's operating profit (before goodwill amortisation) of £51.3m was ahead of our challenging budget for the year and represents growth of 10.7% on the previous year (£46.3m) with Group EBITDA increasing by £6.1m to £80.2m.
Group cash flow from operating activities was ahead of the target for the year and increased by £9.1m to £75.0m (2013: £66.0m) mainly as a result of the increase to EBITDA (£6.1m) and lower increases to working capital compared to the previous year (£2.8m) reflecting the Group's commitment to enhancing cash generation and to keeping working capital at efficient levels.
In an increasingly competitive environment, the Group requires and encourages its employees to provide ideas, solutions and implement these quickly. The success of the Group is evidence of our employees' dedication, hard work and ability to work with and manage change, as well as the development and training opportunities the Group provides to them. All of our businesses continue to invest in their people, their safety and wellbeing and we aim to make South Staffordshire Plc a safe Group to work for and to provide a healthy and enjoyable working environment for everyone.In April 2014, the Group successfully enrolled over 1,300 employees into a new Group Personal Pension Plan under the government's Automatic Enrolment initiative.
This new year is, as expected, bringing significant challenges including working with customers and Ofwat to ensure the Final Determination for regulated water prices for the AMP 6 period is acceptable to all stakeholders, preparing further for increased competition in the water sector, continuing to implement technological and efficiency initiatives across the Group, successfully completing existing projects and developing new opportunities for SSI Services and Echo. However, the Board believes the Group has the expertise and resources to meet these challenges and expects another successful year.