Parent company Pennon’s preliminary results for 2014/15 show that greater cost efficiencies within the water company more than offset the reduction in revenue caused by the tariff price freeze introduced last year.
Revenue increased by 0.4 per cent to £522.2 million as a result of increased customer demand and 7,600 new connections, although the impact of customer switching to metered tariffs limited the increase.
The results state that “good cost control, the continued delivery of cost efficiency and lower financing costs” has resulted in the £5.4 million increase in profit before tax and exceptional items.
SWW’s Ebitda was also fractionally up by 0.1 per cent, to a total of £331.3 million for the financial year and has contributed to what analysts are saying are “slightly better than expected” results.
The results also state the final Pennon group dividend is 31.8p, an increase of 4.9 per cent on the previous year. This is in line with the group’s policy to grow the dividend by 4 per cent above inflation per annum.
The Pennon group as a whole posted an increase in pre-tax profit of 1.6 per cent, up to £210.7 million. This included the £27.7 million of pre-tax profit made by recycling and energy recover company Viridor (up 0.4 per cent).
The results also noted the £100.3 million takeover of Bournemouth Water by Pennon – subject to approval from the Competition and Markets Authority – with the cash resources used to fund the deal being “replenished” through equity placing.
Pennon group director of finance Susan Davy said: “The group has delivered a resilient financial performance, underpinned by strong liquidity and efficient long-term financing.
“This has allowed us to continue our track record of consistent, sustainable cash returns to shareholders.”