Profits at water and waste utility Pennon were boosted by lower interest charges and improved performance from waste arm Viridor in the first half.
Regulated water business South West Water saw revenues rise 1.5 per cent to £227m as a result of tariff increases, though these were offset by lower demand, and the continued impact of water metering (customer switching from unmetered to metered reduced turnover by £3.8m in the period).
Unlike fellow utility which suffered through business closures, SWW is not as exposed to large industrial customers and usage decline reflected the long-term trend. The business continues to operate efficiently, boasting one of the lowest leakage rates in the industry, and £13m of cost saving have been achieved ahead of schedule.
The outcome of Ofwat's final determination on pricing for the next five years was due to be published as the Investors Chronicle went to press, but July's draft determination shows Pennon has less to fear that its peers.
Viridor boosted revenues 9.5 per cent to £310m. However, it gained £42m of revenue from its acquisition of London Recycling and Intercontinental Recycling, plus its Greater Manchester Waste PFI deal. So revenue from its existing business decreased by £15.5m, mainly due to lower landfill volumes. Pre-tax profits for the division rose 14 per cent to £22.8m.
Broker Cazenove forecasts full-year underlying pre-tax profits of £161m and adjusted EPS of 34p.
| PENNON (PNN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 488p | MARKET VALUE: | £1.7bn | |
| TOUCH: | 488-489p | 12-MONTH HIGH: | 567p | LOW: 372p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 13 | |
| NET ASSET VALUE:* | 164p | NET DEBT: | £1.9bn | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 505 | 83.9 | 9.60 | 6.75 |
| 2009 | 536 | 94.8 | 19.7 | 6.95 |
| % change | +6 | +13 | +105 | +3 |
Ex-div: 20 Jan Payment: 7 Apr *Includes intangible assets of £253m, or 72p per share | ||||
