Concerns over rising utility bills have seen the regulators grow teeth recently. But Severn Trent (SVT) is one of the good guys - it already has the lowest combined water and sewerage bills in England and Wales due to its below-inflation price rises. The water industry as a whole does face regulatory uncertainty as pricing plans are drawn up for the 2015-2020 regulatory period (AMP6). But Severn Trent says it's on track to submit its business plan to regulator Ofwat by the December 2 deadline, and chief executive Tony Wray says the group will "continue to keep delivering the lowest prices".
But those below-inflation price increases can make it tough to keep pace with cost inflation. During the period, Severn Trent increased prices by 2 per cent while operating costs rose 3 per cent. Still, underlying profit before interest and tax from the regulated water business managed to scrape a 0.6 per cent rise to £269.5m as customers used more water during the dry summer.
Reported figures were flattered by exceptional tax credits, which explains the apparently big jump in group earnings. On an underlying basis, EPS rose 2 per cent to 46.7p and brokers' consensus is currently for full-year EPS of 85.5p (from 98.9p in 2013).
| SEVERN TRENT (SVT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,777p | MARKET VALUE: | £4,246m | |
| TOUCH: | 1,775p-1,778p | 12-MONTH HIGH: | 2,200p | LOW: 1,535p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 455p | NET DEBT: | 389% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 918 | 113 | 49.2 | 30.3 |
| 2013 | 922 | 191 | 145 | 32.2 |
| % change | - | +69 | +195 | +6 |
Ex-div:04 Dec Payment:10 Jan | ||||
