British water and sewerage services company Pennon Group
reported a better-than-expected pretax profit for the first half helped by strong growth at its waste management unit Viridor.

Waste management, recycling and renewable energy company Viridor now accounts for a third of total group profits.

The company said Viridor's recycling and energy from waste businesses would underpin its profit growth over the next two years.

Pennon, whose progress in recycling, contracts and power generation partially offset the decline in landfill, said it raised interim dividend by 10 percent to 8.22 pence.

First-half pretax profit rose 12 percent to 107.4 million pounds, higher than estimates of 105.7 million pounds, according to a company-supplied poll.

April-September revenue rose 8.3 percent to 642.6 million pounds, while revenue at Viridor rose 10 percent.

Pennon results come a day after Britain's largest listed water utility, United Utilities , reported a slight dip in profits. Peer Severn Trent report results on Friday.

Pennon shares, which have gained 9 percent in the last three months, closed at 697 pence on Wednesday on the London Stock Exchange, valuing the business at 2.53 billion pounds.

(Reporting by Juhi Arora in Bangalore; Editing by Gopakumar Warrier)