Severn Trent dividend secure

Severn Trent Water saw a 1.4 per cent fall in water usage during the year, but still managed to increase revenues by 3.7 per cent to £1.51bn, after applying a 5.2 per cent regulatory price increase. The water utility spent £555m in capital investments, increasing the regulatory capital value to £7.36bn, with outgoing chief executive Tony Wray adding that the plan is to spend between £600m-£620m in the coming year. Revenues were flat at the non-regulated business, Severn Trent Services, and trading profit before exceptional charges fell by almost a third to £12.7m as water purification and insurance markets proved difficult.

Net debt rose by £300m to £4.29bn, mainly due to the payment of a special dividend, but the effective interest rate fell from 6.4 to 5.9 per cent as Severn Trent raised £500m at 3.625 per cent, the lowest cost of debt in its recent history.