Pennon ups FY profits and boosts dividend policy for coming years

In its preliminary results for the year ended 31 March 2010, FTSE250 utility Pennon Group (LSE: PNN) has reported a 14.2% increase in underlying profit to £189.1m. The company also announced its intention to increase its dividend by 4% per annum, above inflation, from next year until at least 2014/15.

"This has been another successful year for the group. During the year South West Water has delivered strong operational performance and has outperformed the operating cost efficiency and financing targets set by Ofwat for the K4 period (2005 - 2010 investment period)”, Pennon Chairman Ken Harvey commented.

Overall, the group’s full-year revenue broke through the £1bn mark for the first time, increasing 11.6% to £1.06bn. Pre-tax profits grew by 14.2% to £189.1m, and earnings per share increased 9.2% to 41.6p. Pennon said it has substantial cash resources and committed facilities, and consequently it is well placed in the current financial market conditions.

For the 2009/10 financial year, Pennon is recommending a final dividend of 15.6p per share, up 9.5% from the previous year, which along with the interim dividend of 6.95p, took the total dividend for the year to 22.55p, representing an increase of 7.4% on the previous financial year. 

The improved performance was driven strongly by its waste management and recycling business Viridor, which contributed £55.4m following 34.8% growth in its underlying profits. “Viridor has once again delivered a very strong financial performance.  The Greater Manchester Waste PFI contract, Lakeside Energy from Waste project and the latest acquisitions are further major steps forward in the successful evolution of Viridor”, Harvey added.

Furthermore, the company’s chairman also said he expects the business unit to continue to deliver strong long-term growth, particularly due to opportunities arising from the Government's landfill diversion, recycling and renewable energy targets.