Hardy Wessex raises interim

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The Independent Online
WESSEX Water, the smallest of Britain's 10 privatised water and sewage utilities, lifted taxable profits by 11 per cent to pounds 44.3m for the half-year to 30 September.

The interim dividend has been raised by 10.6 per cent to 7.3p, the highest from the sector, from earnings up 12 per cent to 40.6p.

Nicholas Hood, chairman, said the half-time payout reflected tight cost control and 'the investment reward to shareholders from our non-regulated business'.

There was no increase in operating costs in the core water business during the first half, although a small rise is expected for the year as a whole.

However, water prices have increased by 4 per cent above inflation this year.

Group operating profits jumped by almost a quarter to pounds 42m, thanks partly to a higher contribution from Wessex Waste Management, the joint venture company. Despite the recession, the business improved its profits by 14 per cent to pounds 3.2m.

A high capital spending programme led to a fall in interest income from pounds 6.1m to pounds 600,000 in the first half. The company spent pounds 74m on 540 projects in the first half and the year's total expenditure is likely to be about pounds 130m against pounds 135m. As a result, Wessex is expected to move into debt soon.

Earlier this year, Wessex commissioned an pounds 8m plant to turn sewage sludge into odourless granules that can be used as a soil conditioner. The move was in response to a European Community directive ending the dumping of sludge at sea after 1998.

The new plant is expected to treat about a third of all sludge handled by Wessex in a year. The remainder will continue to be spread over farm land.

The company acquired five specialist waste treatment businesses for an initial cost of pounds 6.3m in the first half. Mr Hood said it was on the lookout for more acquisitions.

However, it is understood to have dropped out of the auction to purchase Econowaste, the landfill waste management business owned by Tarmac.