Severn Trent (LSE: SVT) published half-year interim results, to 30 September, this morning, in which it reported a good first six months, with financial results that were in line with expectations.
Group turnover was947.6m up2.7% on the same period last year and underlying group pre-taxprofit was 15584m up 10.3% on the corresponding previous period.
Reporting on its regulated operations, the water company says that bills have increased by less than than inflation and that itscustomers continue to benefit from the lowest average combined water and sewerage bills in the country.
Severn Trent says that its now nearing the end of its current2.6bnfive yearAsset Management Plan (AMP5), with capital expenditure of 247.9m in the six months to 30 September, compared with 269.1m in the prior period.
The company also reports a stable or improved performancein 13 of the 14 Ofwat Key Performance Indicators (KPIs), including a reduction of 20% ininternal sewer flooding and a fall of 4% in pollution incidents. However, Severn Trentsbenchmark performance on Ofwats KPIs for the full year 2013/14 fell slightly year on year, owing to itspreviously reported marginal serviceability assessments for 2013/14.
Turning to its non-regulated business, profit before interest and taxwas 6. 4m for the first half, up from1.6m in the same period last year. Severn Trent says that its Operating Services division has continued to grow, especially in the US, whilst its Products business saw performance boostedby a combination of an improved cost baseand anticipatedgrowth in key product lines.
Adjusted basic earning per share were up 12.6% at 52.6p, and Severn Trents board is recommending an interim dividend of 33.96p, a rise of 5.6% on last years interim payout, in line with thecurrent dividend policy of RPI+3%.
Commenting on the results, CEO Liv Garfield said
As we draw to the close of the price review, we remain committed to maintaining a constructive dialogue with Ofwat. We have submitted our representations on the draft determination and believe we have addressed all its evidence requests.
Looking forward to AMP6, we are progressing with the organisational changes required to deliver our plan and we will bring forward additional capital investment to ensure we are in the best place possible to start the new regulatory period. The enthusiasm and passion I am witnessing in our people gives me every confidence that we will hit the ground running on 1st April next year.
At 2,051p at the time of writing, Severn Trents share price is up just over 15% on this time last year, compared with an essentially flat FTSE 100 index. And over five years Severn Trent is trouncing the index, with share price rise of 106%, versus the FTSE 100s gainof 28%.
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