British water company Pennon Group Plc on Thursday reported a 0.7 percent rise in its first-half pretax profit due to higher demand for water from summer usage and asset sale of its water utilities business South West Water, but said looking forward, South West Water is well placed to outperform the assumptions for the K5 (2010-2015) period.

The waste management and water and sewage investor said it expects Viridor to continue to deliver strong long-term growth through successfully leading the way in exploiting opportunities arising from the Government's landfill diversion, recycling and renewable energy targets.

Viridor, which has been moving away from being a landfill operator to recycling and creating energy from the methane given off by rubbish, saw profits rise by 29 percent.

Pennon, which supplies customers in Devon and Cornwall via South West Water, reported a pretax profit of 96.2 million pounds for the six months to September 30, 2010, up from a restated pretax profit of 95.5 million pounds in the year-ago period. Revenue rose 10.8 percent to 593.2 million pounds for the period from 535.5 million pounds previously.

The company will pay an interim dividend of 7.5 pence a share, which is 7.9 percent higher for the half-year. It reiterated it would increase dividends by 4 percent above the rate of inflation each year, compared with 3 percent above inflation for the past five years.

Viridor's growth reflects the recovery in H2 2009/10 of recyclate prices compared with the low levels in the first half of 2009/10, said chairman Ken Harvey in a statement.

Shares of Pennon Group closed unchanged at 625 pence on Wednesday on the London Stock Exchange.

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