Pennon declares special dividend, acquires Bristol Water for £425.0m

Utility company Pennon Group said on Thursday that despite underlying pre-tax profits slipping in a "pivotal year", it would pay out a special dividend for the twelve months ended 31 March and that it had agreed to acquire Bristol Water for £425.0m.

While underlying revenues were up 1.2% at £644.6m, statutory revenues dropped £12.6m year-on-year to £624.1m as a result of a £20.5m reduction stemming from the group offering its Watershare+ credit to customer bills.

Underlying earnings were down 8.4% at £334.7m, while operating profits were 12.3% lower at £215.3m and pre-tax profits slumped 14.2% to £157.0m. Adjusted earnings per share contracted 9.4% to 21.9p.

However, Pennon declared a special dividend of 355.0p per share, meaning it would return nearly £2.0bn to shareholders through the payment and a programme aimed at buying back its own shares.

Chief executive Susan Davy said: "This has been a pivotal year for the group as we have repositioned Pennon to focus on driving sustainable growth in the UK water sector, building stability for the longer term, and recognising ongoing shareholder loyalty.

"Our sector-leading dividend policy, together with the planned special dividend, recognises the ongoing loyalty of our shareholders, underpinned by the group's confidence in our ongoing growth strategy, and building a sustainable future for all."

Elsewhere, Pennon revealed it had acquired Bristol Water for a £425.0m cash consideration, stating the move had provided it with a "high quality" business and approximately 1.2m new customers.

The Exeter-based firm also agreed to take on Bristol Water's £389.0m of debts, valuing the deal at a total of £814.0m.

As of 0835 BST, Pennon shares were up 3.97% at 1,110.89p.