26th Nov 2020 08:46
(Alliance News) - Severn Trent PLC on Thursday raised its dividend despite posting a fall in its earnings for the first half of financial 2021.
Shares in the FTSE 100 water company were trading 0.4% higher at 2,466.00 pence each on Thursday morning in London.
For the six months ended September 30, Severn Trent posted pretax profit of GBP126.5 million, a 30% plunge from GBP180.7 million recorded a year prior. This was as revenue declined 2.5% to GBP887.6 million from GBP910.0 million, as the Covid-19 pandemic resulted in a reduction of consumption from non-household customers.
Profit was hurt by the reduction in revenue as well as increased bad debt provisioning due to the expected hit from the rise in UK unemployment amid Covid-19 and higher depreciation.
The company, which serves the English Midlands and parts of Wales, recognised bad debt charges of GBP24.2 million during the half year, up from GBP18.8 million a year prior. Total operating costs were GBP662.0 million, up 5.0% from GBP630.6 million last year.
An interim dividend of 40.63p was declared, up 1.5% from 40.03p paid for the first half of financial 2020.
Looking ahead, Chief Financial Officer James Bowling said: "We have been encouraged by household customer cash collections that are slightly ahead of the same period a year ago with no significant increase in direct debit cancellations. However, we continue to anticipate bad debt increases in line with the guidance previously given, as recent redundancies and the future increases in unemployment included in consensus economic forecasts impact our region.
"In the first half of the year we, therefore, recorded an additional GBP8.2 million in the bad debt charge in our Regulated Water and Waste Water business for the expected impact on our customers' ability to pay in full amounts already billed."
As at September 30, Coventry-based Severn Trent had cash of GBP22.7 million, down from GBP48.6 million on March 31. Net debt stood at GBP6.24 billion, up slightly from GBP6.23 billion six months before.
By Ife Taiwo; [email protected]
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