Pennon’s juxtaposition of water and waste management looks to be flowing well as it continues to recycle profits to shareholders. Underlying profit before tax rose 14.2 per cent to £189m and having raised the full-year dividend by 7 per cent the group is targeting a 4 per cent real dividend increase for at least the next five years, the highest growth rate in the sector.
South West Water revenues were up 2.9 per cent in the year as tariffs increased, demand was stable and 5,000 new connections were made. Costs were only slightly higher which helped underlying profit before tax increase 8.7 per cent to £132m, while Ofwat’s leakage target was achieved despite the severe winter. Net interest charges fell £5.7m due to lower rates and the group has fixed 73 per cent of debt for the next five years at lower rates than Ofwat assumptions.
Viridor’s performance was equally positive as underlying profit grew 34.8 per cent to £55.4m after the waste firm benefited from strong prices of recycled material and favourable power prices from energy produced. What's more, the group is preferred bidder for an Oxfordshire public-private partnership (PPP) and an Exeter energy-from-waste facility.
Deutsche Bank forecasts full-year adjusted pre-tax profits of £163m and EPS of 35.67p (2009: £189m/41.6p)
Pennon (PNN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 507p | MARKET VALUE: | £1.79bn | |
| TOUCH: | 507-508p | 12-MONTH HIGH: | 558p | LOW: 434p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 187p* | NET DEBT: | 287% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 0.65 | 54 | 9.9 | 17.2 |
| 2007 | 0.75 | 131 | 26.5 | 18.6 |
| 2008 | 0.88 | 150 | 38.2 | 19.8 |
| 2009** | 0.96 | 159 | 25.8 | 21.0 |
| 2010 | 1.07 | 184 | 39.9 | 22.6 |
| % change | +12 | +15 | +55 | +7 |
Ex-div: 11 Aug Payment: 6 Oct *Includes intangibles of £260m, or 73p a share **Restated | ||||
