Water utility Severn Trent (SVT) stuck to its inflation busting income promise by announcing an 8.2 per cent boost to the interim dividend on a solid set of results that were slightly ahead of expectations. Underlying profit before tax edged up to £157m excluding losses on financial derivatives and one-offs which skew the reported figures in our table.
The summer deluge resulted in household water consumption being 2.8 per cent down on the prior period last year, but this was offset by a 5.2 per cent regulatory increase in prices, meaning revenue was up 3.5 per cent to £761m at Severn Trent Water. Management expects consumption to return to normal in the second half. Investment in the network increased by over £50m to £239m and maintenance spend rose from £52.1m to £63.4m. Factor in slightly higher bad debts and energy costs and the unit's underlying operating profit came in 1.4 per cent lower at £269m.
Severn Trent Services saw a sharp fall in operating profit from £6.5m to £4.5m mainly due to losses in the analytical services business which is up for sale. A regulatory update provided little cause for concern.
Analysts at Deutsche Bank forecast full-year adjusted pre-tax profits of £269m and EPS of 83.8p (2012: £275m and 89.8p).
SEVERN TRENT (SVT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,555p | MARKET VALUE: | £3.7bn | |
| TOUCH: | 1554-1556p | 12-MONTH HIGH: | 1,836p | LOW: 1,397p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 358p* | NET DEBT: | 476% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 886 | 65 | 30.5 | 28.0 |
| 2012 | 918 | 121 | 51.6 | 30.3 |
| % change | +4 | +85 | +69 | +8 |
Ex-div: 5 Dec Payment: 11 Jan *Includes intangible assets of £154m, or 65p per share. | ||||
