23rd May 2018 09:11
LONDON (Alliance News) - FTSE 100-listed water utility Severn Trent PLC on Wednesday hiked its dividend for the recently ended financial year amid revenue growth and despite lower profit.
Pretax profit for the year that ended in March declined to GBP302.4 million from GBP328.0 million the year before, on revenue that increased by 1.3% to GBP1.69 million from GBP1.64 billion.
The dip in profit was due to higher net finance costs at GBP219.5 million from GBP205.1 million the prior year, as well as exceptional costs that totalled GBP12.6 million, swinging from a gain of GBP16.6 million the year before. This came from restructuring costs in the Regulated Water and Waste Water segment and Business Services division.
This led to profit before interest and tax also dropping to GBP528.4 million from GBP536.7 million.
Severn Water's increase in revenue came from outperformance of its customer outcome delivery incentives for the year from the UK government, earning a net outperformance payment of GBP80.0 million.
There was also growth in Regulated Water and Waste Water, helped by inflation-linked tariff increases, and a full-year contribution from Dee Valley Water, acquired by Severn Trent in February 2017. Business Services revenue rose by 8.2% through new contracts with plumbing and drainage insurers.
Severn Trent's return on regulated equity for the year was 12%.
The water firm has declared a final dividend of 51.92 pence per share, bringing the total payout to 86.55p, up from 81.50p the year before.
For the next financial year, Severn Trent expects revenue in both segments to rise, and has set a dividend of 93.37p per share.
"I'm pleased that keeping customers at the heart of our business and investing for the long term has continued to drive positive results. We've had another very strong year on customer ODIs, which we know are the metrics our customers care about most. This, allied with a strong set of financial results, and a backdrop of the lowest average combined bill in the land demonstrates our ability to deliver for our stakeholders in a balanced and sustainable way," said Chief Executive Liv Garfield.
Shares in Severn Trent were up 1.0% at 2,080.00 pence on Wednesday.
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