Severn Trent (LSE: SVT) published half-year interim results, to 30 September, this morning, in which it reported a good first six months, with financial results that were in line with expectations.Â
Group turnover was £947.6m — up 2.7% on the same period last year — and underlying group pre-tax profit was £15584m — up 10.3% on the corresponding previous period.
Reporting on its regulated operations, the water company says that bills have increased by less than than inflation and that its customers continue to benefit from the lowest average combined water and sewerage bills in the country. Â
Severn Trent says that it’s now nearing the end of its current £2.6bn five year Asset Management Plan (AMP5), with capital expenditure of £247.9m in the six months to 30 September, compared with £269.1m in the prior period.
The company also reports “a stable or improved performance“ in 13 of the 14 Ofwat Key Performance Indicators (KPIs), including a reduction of 20% in internal sewer flooding and a fall of 4% in pollution incidents.  However, Severn Trent’s  benchmark performance on Ofwat’s KPIs for the full year 2013/14 fell slightly year on year, owing to its previously reported marginal serviceability assessments for 2013/14.
Turning to its non-regulated business, profit before interest and tax was £6. 4m for the first half, up from £1.6m in the same period last year.  Severn Trent says that its Operating Services division has continued to grow, especially in the US, whilst its Products business saw performance boosted by a combination of an improved cost base and anticipated growth in key product lines.
Adjusted basic earning per share were up 12.6% at 52.6p, and Severn Trent’s board is recommending an interim dividend of 33.96p, a rise of 5.6% on last year’s interim payout, in line with the current dividend policy of RPI+3%.
Commenting on the results, CEO Liv Garfield said
“As we draw to the close of the price review, we remain committed to maintaining a constructive dialogue with Ofwat. We have submitted our representations on the draft determination and believe we have addressed all its evidence requests.
“Looking forward to AMP6, we are progressing with the organisational changes required to deliver our plan and we will bring forward additional capital investment to ensure we are in the best place possible to start the new regulatory period. The enthusiasm and passion I am witnessing in our people gives me every confidence that we will hit the ground running on 1st April next year.“
At 2,051p at the time of writing, Severn Trent’s share price is up just over 15% on this time last year, compared with an essentially flat FTSE 100 index.  And over five years Severn Trent is trouncing the index, with share price rise of 106%, versus the FTSE 100’s  gain of 28%.
