Morning:
10°c
Severn Trent's profits leaking
Robert Lea25 Nov 2008
Fines and settlements for regulatory breaches, rising bad debts, increased energy costs and more costly borrowing all weighed heavily on Severn Trent today.
The FTSE 100 Midlands water giant, which has enjoyed price rises averaging 7% over the past five years, said half-year profits dropped 8%, or £12 million, to £137 million despite a 5% jump in revenues to £814 million.
Pulling back the company were charges totalling nearly £10 million from its run-ins with regulator Ofwat over lying about leakage, bad debts and customer service statistics. It admitted bad debts, always a worry for utilities during a recession for their customers, increased by £2.7 million.
It also had a 20% increase in its interest bill to £107 million in the six months to the end of September on the back of increases to its inflation-linked borrowings and admitted an 80% leap in its pensions deficit to £226 million.
The interim dividend is up 8% at 26.29p.
