SOUTH STAFFORDSHIRE PLC NEWS ARTICLE
27/05/11 - South Staffordshire Plc 2010/11 Group Results
The Group has had another successful year with the water industry entering the new five year AMP period which has resulted in a period of successful operational delivery in South Staffs Water, coupled with a number of new opportunities arising in our non-regulated service businesses.
The Group has exceeded challenging targets set at the start of the year for both profitability and cash generation despite significant inflationary cost pressures, the continuing uncertainty in the UK economy and the coldest winter on record which impacted operations.
Group turnover increased by 12% to 159.5m, with operating profit of £28.1m being achieved, which was ahead of our expectations at the start of the year. This reflected the reduced cost of capital allowed by Ofwat for this five year period announced in 2009, offset by further cost savings in South Staffs Water, together with new contracts being awarded in our non-regulated businesses.
Cash flow from operating activities increased to £56.4m from £44.2m mainly as a result of slightly higher operating profits before goodwill amortisation and lower working capital requirements in the year, which were better than our expectations in a very challenging environment and reflects the Group's ongoing commitment to prioritise cash flow and keep working capital at efficient levels.
South Staffs Water
South Staffs Water continued to provide high levels of service to its customers, coupled with an efficient operation and low charges, with domestic charges remaining 25% below the industry average.
The severe winter put pressure on the operation, however it is a testimony to the staff and contractors that the interruptions to supply were kept to an absolute minimum and the leakage target for the year was still achieved.
The year also saw the introduction by Ofwat of a new measure of customer satisfaction and the business is ensuring that it is responding positively to the challenge of continuing to provide an excellent service to our customers. In addition the business is recognised as being one of the most efficient in the sector and is ranked in the top band for efficiency by Ofwat.
With the year being the first of a new AMP period (2010/15), much work has been undertaken on our procurement, contracting and AMP5 capital delivery strategies which has seen us deliver significant efficiency savings within the capital programme. The business has made good progress in delivering this capital programme to ensure its assets remain in good condition, maintain stable asset serviceability and good quality, reliable supplies to customers. Capital expenditure for the year of £28.0m is slightly ahead of the amount included in the 2009 Ofwat Final Determination.
SSI Services provides a range of specialist infrastructure management services in a regulated environment, developing long-term relationships with its customer base.
The year saw the start of AMP5 in the water sector, which resulted in increased activity, particularly in the second half of the year, and saw a number of important contracts being secured. In addition there were a number of bolt-on acquisitions in the year to broaden the geographic coverage of our activities. All of these have been successfully integrated into their respective operating companies.
Echo provides customer contact services in regulated markets. During the year, Echo continued to provide high levels of service to its customers, whilst expanding the client base for its billing and customer care software, RapidXtra and further expanding the debt collection services provided.
The acquisition of a debt management business was one of Echo's key priorities for the year. London based debt collection agency, Inter-Credit International is an excellent strategic fit for Echo and its acquisition further strengthens Echo's debt collection offering.
There have been a number of changes to the Executive Team in the year with the appointment of Liz Swarbrick, who has been with the Group for over 20 years, as Managing Director of South Staffs Water following the retirement of Jack Carnell, together with the appointment of Andrew Garcia as Managing Director of SSI Services.
The Group is well positioned in each of our businesses to have another good year, meeting the challenges that we face and maintaining the high standards that we set.