4th Jun 2020 09:09
(Alliance News) - Pennon Group PLC on Thursday declared a higher dividend for financial 2020 but said it expects revenue for financial 2021 to be hurt by the Covid-19 pandemic.
Shares in the FTSE 100 water firm were trading 3.0% lower at 1,157.00 pence each on Thursday morning in London.
For its financial year ended March 31, Pennon posted revenue of GBP636.7 million, up 0.6% from GBP632.6 million the year before. However, pretax profit declined 4.1% to GBP193.1 million from GBP201.4 million.
Lower earnings reflected the mix of margin on retail and wholesale revenue, Pennon said, with South West Water's wholesale margin reduced as a result of lower customer consumption. In addition, the utility company recorded increased depreciation on asset growth and higher absolute interest.
For the continuing group and waste business Viridor - which Pennon in March agreed to sell to US-based private equity Kohlberg Kravis Roberts & Co LP for GBP4.2 billion - profit was up 16% to GBP301.5 million.
Pennon declared a final dividend of 30.11p, taking the total annual payout to 43.77p, up 6.6% from 41.06p the year before.
Pennon noted that Viridor represents 22.66p of the financial 2020 dividend, implying a continuing dividend after the disposal of 21.11p. It said that under its dividend policy for 2020 to 2025, this rebased dividend will be increased by two percentage points above the UK consumer price index including owner occupiers' housing costs. Pennon changed to CPIH from the retail prices index to match a change in the regulatory model for South West Water.
"We are pleased with the solid operational and financial performance delivered this year. Viridor has continued to drive growth while South West Water has maintained its sector leading returns," said Chief Executive Chris Loughlin.
Looking ahead, Pennon said it expects non-household revenue to reduce in financial 2021 due to Covid-19, highlighting a risk from expected credit losses for businesses, retailers and households. It added that the sale of Viridor is expected to complete in early summer.
"Following the sale, Pennon will be a leading UK-focused water infrastructure group, delivering for customers and providing services in the most efficient and sustainable way possible," Loughlin added.
As at the end of March, Pennon had cash of GBP665.9 million
By Ife Taiwo; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Pennon