Severn Trent shares up on \'strong and resilient\' results
By Josh White
Date: Tuesday 21 May 2019
(Sharecast News) - Severn Trent reported \"strong and resilient\" annual results on Tuesday, reporting group turnover of £1.767bn, which was up £71m or 4.2% year-on-year.
The FTSE 100 water utility said group underlying profit before interest and tax was £574m, which was a £34m or 6.3% improvement, with the company having absorbed all hot weather costs.
Group reported profit before interest and tax was £563m, up £36m or 6.8%, with the firm\'s cumulative return on revenue of 9.1%, despite hitting the waste customer outcome delivery incentive cap.
Severn Trent said it saw a reduction in its effective interest rate by 60 basis points to 3.9%, driving its underlying basic earnings per share of 145.8p, which was up 21.0%, and its reported basic earnings per share from continuing operations of 133.4p, which was ahead 31.0%.
The board proposed a final dividend of 56.02p, in line with its policy.
On the operational front, Severn Trent said it had maintained the lowest bills in England for a decade, with the board saying that was set to continue to at least 2025.
It reported \"excellent\" progress on its capital programme, with the largest year of capital spend in 10 years of £769m, supporting its commitment to invest £1,300 for every household it served over Ofwat\'s sixth asset management period (AMP6).
Cumulative AMP6 outcome delivery incentive outperformance was reported to have totalled £138m, including a net £4.5m penalty for the 2019 financial year.
Without the outcome delivery incentive cap, Severn Trent said it would have been its best year to date, with outperformance equivalent to £91m.
It said a strong second half of operational improvements in its water operations gave the board confidence in the 2020 financial year and beyond.
The firm added that it was on track to exceed its 50% renewable energy self-generation target in the current financial year, boosted by the acquisition of the Agrivert UK renewables business, contributing to a group net carbon emissions reduction of 41% since the beginning of AMP6.
Looking ahead, Severn Trent noted that it had received its draft determination for Severn Trent Water, confirming fast-track status for AMP7.
It added that it was one of the first companies in the UK to make the triple pledge to achieve net zero carbon, a 100% electric fleet and 100% of energy from renewable sources by 2030.
The company said it expected to earn at least £25m in customer outcome delivery incentives in the 2020 financial year, increasing the amount of outperformance payments rolled into AMP7 to at least £177m.
Partners had been appointed for around £1.5bn of its £2bn AMP7 capital programme, with the board adding that its new capital delivery model, with a broader supply chain and in-house design team, was \"progressing well\".
\"This has been a year where our teams have really stepped up, whether in response to customer needs in the face of one of the hottest and driest summers we\'ve seen or by being named by Ofwat as one of the top companies in the sector when we received fast-track status for our future plans,\" said Severn Trent chief executive Liv Garfield.
\"At the heart of all of that is our drive to succeed for all of our stakeholders, which is shown in the results we\'re announcing today.
\"They demonstrate not only that we can deliver for our investors but also that we\'re putting ourselves at the heart of the communities in which we live and work by building a lasting legacy for future generations.\"
Garfield said that could mean spending time in the region\'s primary schools exploring the importance of \"using water the right way\", bringing an employee\'s idea to life that \"finds an innovative new way\" to improve services, or the investment the company was making day-by-day in maintaining its assets.
\"By balancing the needs of everyone in this way, we are confident we are doing the right things for all of our stakeholders.\"
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN