Severn Trent posts 7% increase in pre-tax profits

Severn Trent has posted a pre-tax profit of £563.3 million in its annual accounts for the year to 31 March 2019 – up 6.8 per cent on the year before.

Group turnover grew 4 per cent to £1.72 billion, while total profits were £315.3 million, up from £252.8 million in 2018.

The results come on the back of the company being one of only three to be given fast track status by Ofwat for its PR19 business plans.

James Bowling, Severn Trent’s chief financial officer, said: “We have built on our good financial performance in the first half of the year to deliver a strong set of results for 2018/19.

“Our Regulated Water and Waste Water (RWWW) business delivered good growth in profits before interest and tax (PBIT) even after an additional £22 million of operating costs due to the hot, dry summer and our recovery after it.

“In Business Services, strong performance in the second half of the year produced growth both in revenues and PBIT for the year as a whole.

“In May 2018 we announced the sale of surplus land near Nottingham, and this, together with other smaller disposals later in the year, generated property profits for the group of £19.9 million.”

PR19 plans for Hafren Dyfrdwy, the company’s Welsh business, remains in Ofwat’s “significant scrutiny” category and Severn Trent says it has invested in improvements in both the technology platform and asset base.

“We have continued to work constructively with Ofwat on the resubmission of the Hafren Dyfrdwy plan to deliver the right outcome for our Welsh customers”, the report said.

Last year the company set out to achieve 50 per cent self-generation of its electricity needs, a target it expects to exceed by the end of AMP6.

The company says it has maintained its position in delivering the lowest bills in England and Wales with Severn Trent Water and Hafren Dyfrdwy. Based on its PR19 plan, the company is set to continue this position until 2025.

Over the year £1 billion was invested in network resilience, including two key investment commitments where consumers are protected by customer outcome delivery incentives – Birmingham Resilience and the Water Framework Directive.

Writing in a foreward to the report, chief executive Liv Garfield said: “This has been a pivotal year for Severn Trent and one I’m incredibly proud of.

“We put together the most ambitious business plan in our history and I’m personally delighted we were given fast-track status for the first time, showing Ofwat shares our belief that customers will get the best possible outcome from our plan for the next AMP.

“We’re proud of our financial and operational performance. We demonstrated resilience and flexibility in our network throughout the prolonged hot, dry weather over the summer – which saw a 22 per cent increase in demand for water from our customers at peak times.

“With our plan agreed and performance commitments set well before the start of the next AMP – this is just the start of the next five-year journey for us as a company.

“Our teams now have to deliver everything we’ve promised, to set us up for continued success in AMP7. Whether that’s keeping bills low, improving our services, or having a really positive societal impact on our communities. It’s going to be a real challenge and it’s one we’re confident we can meet.”