Severn Trent's (SVT) revenue from regulated water and waste business ticked up 2.4 per cent in the year to 31 March, but with the deferral of some of its outperformance payments to the next regulatory period, AMP7, and higher bad debt provisions, overall underlying operating profit came in flat at £570m.
The group has warned that disruption from the Covid-19 pandemic will likely lead to unpaid customer bills due to increased unemployment and stretched household finances. With the bad debt charge jumping from £25.5m to £42.5m last year, this includes £2.2m relating to coronavirus.
Lower commercial activity following the lockdown hit earnings for the WaterPlus joint venture (JV) with United Utilities (UU.), which supplies water to businesses. Severn recorded an exceptional loss of £46.8m against the JV for the year, with the value of its investment in WaterPlus now equivalent to zero.
Despite the turmoil, Severn has lifted its final dividend, adhering to its policy of growing the payout by at least 4 per cent above retail price inflation. Net debt rose 7 per cent to £6.2bn, although the group says all planned investment and cash-flow needs are covered until January 2022. This is thanks to £775m of undrawn credit facilities, with a further £200m raised from a US private placement in March.
| SEVERN TRENT (SVT) | ||||
| ORD PRICE: | 2,452p | MARKET VALUE: | £5.8bn | |
| TOUCH: | 2,451-2,453p | 12-MONTH HIGH: | 2,716p | LOW: 1,901p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 522p | NET DEBT: | £6.2bn* | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1.75 | 303 | 134 | 80.7 |
| 2017 | 1.64 | 328 | 139 | 81.5 |
| 2018 | 1.70 | 301 | 102 | 86.6 |
| 2019 | 1.77 | 385 | 133 | 93.4 |
| 2020 | 1.84 | 311 | 66.7 | 100.1 |
| % change | +4 | -19 | -50 | +7 |
| Ex-div: | 11 Jun | |||
| Payment: | 17 Jul | |||
| *Includes lease liabilities of £123m | ||||
