Viridian profits rise 7% to £50.8m

VIRIDIAN yesterday promised to deliver real growth in dividends over the next five years, after reporting a 7% increase in operating profits to £50.8 million.

The Northern Ireland power utility reported profits growth at the top of forecasts yesterday as better earnings from non-regulated business outweighed a fall in profits from its core electricity arm.

However, the sale of its interest in two loss-making joint ventures contributed about two-thirds of the profit improvement as the company reported pre-tax profits before exceptional items and goodwill in the six months to September30 at £37.2 million, up from £30.9 million a year earlier.

It raised its interim dividend 3.5% to 9.46 pence a share and the company pledged continued real dividend growth throughout its five-year regulatory period that runs to March, 2007.

The non-regulated arm, Viridian Power and Energy, contributed profits of £8.7 million, up from £0.5 million in 2002, reflecting a first-time contribution from Huntstown, its new gas-fired plant located near Dublin, and Energia, its electricity supply offering in the newly competitive Irish market.

Dolmen Securities analyst Stuart Draper said Viridian’s expansion into the Republic of Ireland market provides the company with significant sales growth potential, as the Irish market deregulates.

“This is an outcome of the economic growth of the last decade, there continues to be excess demand for electricity, with the ESB continuing to import emergency supplies during winter,” he said.

Mr Draper, re-iterating their buy recommendation on the share, said that Viridian’s current price/earnings ratio of 10.6x forward earnings per share of 52p is still at an 8% discount to the British utility sector average of 11.5x.