Water company reveals rise in profit and revenue in half-year financials

Severn Trent will sell off its surplus land to help the UK’s housing market, with the water company pledging to share a proportion of profits from the sale with customers.

The company outlined its plans as it released half-year financial results for the six months to 30 September 2017.

It reported a 3.7 per cent rise in turnover to £850.4 million, while group underlying profit before interest and tax rose 4.4 per cent to £278.8 million.

Severn Trent said it had the lowest average combined water and sewerage bills in Britain at £341.

Speaking to Utility Week, chief executive Liv Garfield said: “I am most pleased with our customer service improvements.”

She highlighted the company’s performance in its outcome delivery incentives (ODIs) including a 38 per cent reduction in internal sewer floodings and 50 per cent decrease in external floodings.

“This is important to us as it shows we are working hard on things customers are really passionate about,” she added. “The outperformance measures are customers telling us if you do anything, these are the types of things we would like to see.”

Garfield told Utility Week she was pleased with the company’s financial performance for the first half of the year but stressed it was an “outcome” of how the business is run and not a “desire”.

She said wanted to create the “right efficient business for the future”.

“We’re the lowest in the land for bills at about £1 a day and are constantly looking at ways to keep bills low,” she added.

Severn Trent invested £324 million in H1 of 2017/18 for network improvements and is investing more than £3 billion of capex during AMP6.

It has forecast net outperformance payments of a least £50 million.

In a statement issued with the financial results, Garfield said: “Our customer-first approach is delivering positive results. It is also clear in today’s society that businesses, including the water sector, are under increasing scrutiny and greater pressure to explain their contribution to society beyond financial profit. We need to make sure our decisions strike the right balance between all of our stakeholders and show we run our business in a sustainable and responsible way.

“As a result of the hard work of everyone at Severn Trent and their focus on the areas that are most important to our customers, we’ve reduced total sewer floodings by 48 per cent. Strong operational improvements have given us confidence to increase the FY2017/18 customer ODI forecast to at least £50 million, reflecting a great start to this year. We’ve managed to do all this while keeping bills down to less than a pound a day – the lowest average combined bills in the country.

She added: “The water sector has been transformed for the better over the last 25 years, with more reliable, more efficient and more environmentally friendly services, but there is still much to do. At Severn Trent we’re determined to rise to the challenge of delivering even better value for money to customers.”