Viridor growth boosts Pennon profits

24th May 2011 07:31

Strong growth in its waste services group Viridor helped the water company Pennon post a rise in profits in the year to 31 March, despite regulatory restraints on how much it can charge its water customers.Pennon, which operates South West Water serving Devon, Cornwall and parts of Dorset and Somerset, saw pre-tax profits rise by 1.5% from the previous year to £188.5m, with South West Water seeing a 0.5% decline and Viridor a 14.2% increase. Revenues were up to £1.16bn from £1.07bn.The company is planning to pay a final dividend of 17.15p, which makes for a full year payout of 24.65p, up 9.3% from the previous year.Revenues at South West Water were up by 1% to £448.8m. Tariff rises and higher demand due to dry weather helped offset the impact of canny customers switching to metered tariffs. The decline in profitability was partly due to the reduced rate of return allowed by the regulator Ofwat.Revenues at Viridor, whose activities include recycling and converting waste to energy, were up by 13.6% at £712m, largely due to acquisitions, but also helped by strong organic growth."South West Water is well placed to outperform the assumptions for the current regulatory period," said chairman Ken Harvey. "Viridor's long-term profit momentum is underpinned by its recycling business, its major Energy from Waste planning successes, and its strong PPP (public private partnership) pipeline."---RG