29th May 2014 07:47
LONDON (Alliance News) - Severn Trent PLC Thursday delivered on its promise to increase its annual dividend by 6.0% after reporting an increase in profit and revenue for the recent full year, driven by a strong performance from its regulated business.
The water company posted pretax profit of GBP282.7 million for the financial year ended March 31, up from GBP200.2 million a year earlier, as revenue crept up to GBP1.86 billion from GBP1.83 billion.
Severn Trent said revenue for its regulated arm increased 2.2%. It said prices were increased by one percentage point less than November 2012 inflation of 3.0% from April 2013, which gave rise to an increase in revenue of GBP29.8 million. The utility also said a dry summer in 2013 led to higher consumption from metered customers which increased revenue by GBP7.1 million year-on-year.
The company said its non-regulated water and wastewater treatment solutions arm Severn Trent Services saw like-for-like growth in sales during the year but lower underlying pretax profit. Last year Severn Trent Services performance included analytical and metering services businesses which have since been sold.
On the back of its strong performance Severn Trent made good on its promise to increase its dividend 6.0% to 80.40 pence from 75.85 pence after a final dividend increase to 48.24 pence from 45.51 pence.
The increase came after analysts speculated that the firm could curb its dividend payments, as UK water firms face the challenge of dealing with the regulator's tough five-year regulatory plan. However, Severn Trent said Thursday it will increase its dividend 5.6% next year to 84.90 pence.
Severn Trent said it continues to make good progress in delivering its capital investment programme, with an 8% increase year-on-year in capital expenditure to GBP602.1 million compared with GBP555.4 million a year earlier.
Looking ahead the company said it will aim to maintain its bad debt level at around 2.2% of revenue. However, it warned operating costs are expected to rise year-on-year due to the impact of inflation, increases in "quasi taxes" and power costs, particularly offset by efficiency improvements.
Newly-appointed Chief Executive Liv Garfield said her focus over the next year will be trying to secure a good outcome from the current price review process, delivering operational and process improvements and making sure customers are "right at the heart" of the business.
Severn Trent shares were quoted down 0.2% at 1,930.00 pence early Thursday.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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