Severn Trent share price: Utility updates on recent performance

on Feb 13, 2015
Updated: Oct 21, 2019

Severn Trent Plc (LON:SVT) has this morning issued an interim management statement. Here are the highlights from the company’s statement with more to follow:

The Board of Severn Trent Plc confirms that the group is on track to deliver in line with its expectations for the full year.

Regulated business
Consumption across our measured income base is now expected to be slightly higher year on year as a result of the warmer weather.

We anticipate our bad debt level will remain unchanged at around 2.2% of turnover (UK GAAP) for the full year.

Operating expenditure continues to be in line with the Board’s expectations for the year and, on a like for like basis, in line with the level of the Final Determination for AMP5. Operating costs are expected to rise year on year due to the impact of inflation and quasi taxes, partially offset by efficiency improvements.

Expectations for net capital expenditure (UK GAAP after deducting grants and contributions) remain at £530 million to £545 million. The level of expected net infrastructure renewals expenditure included in capital investment remains £130 million to £140 million.

During the period Severn Trent Water accepted the Final Determination from Ofwat for the period 2015-2020, published on 12 December 2014.

Non-regulated business
We continue to expect top line growth to moderate in the second half, although full year PBIT is still anticipated to be in line with our expectations.

The group interest charge is now forecast to be lower year on year. A higher level of net debt will be more than offset by a higher level of capitalised interest, as a result of a shift in the profile of major capital schemes, and a lower non cash RPI interest charge due to falling RPI.

Expectations for the effective current tax rate for the group remain between 18% and 20%.

Under our dividend policy for AMP5 of RPI+3% growth the total dividend for 2014/15 is expected to be 84.90 pence, representing growth of 5.6% year on year.

The Group also announced its new dividend policy for the period 2015-2020. The 2015/16 dividend will be set at 80.66 pence, a reduction of 5% compared to the current year total dividend of 84.90 pence. The policy will then be to grow the dividend annually at no less than RPI until March 2020.

In November 2014 the group announced proposals to create a new organisational structure to respond to the challenges of AMP 6. This programme is now nearing completion, which will give rise to an expected exceptional charge of £25 million – £30 million in the second half of the year. The anticipated annual benefits of this reorganisation are anticipated to be circa. £20 million from FY 2015/16.
As of 07:18 GMT, Friday, 13 February, Severn Trent Plc share price is 2,057.00p.