Storms and flooding unlikely to impact performance says Severn Trent
MIDLAND utility Severn Trent has said it is not expecting the winter storms to impact the business despite unprecedented levels of rainfall across certain parts of the region.
In a trading update the company said: “We currently anticipate no material financial impact from the present floods.”
It added that operating expenditure continued to be in line with the board’s expectations for the year but costs were expected to rise year on year due to the impact of inflation and power costs, although this would be partially offset by efficiency improvements.
On current trading, it said the group’s group’s performance overall remained in line with expectations and prior guidance.
Water consumption across its measured income base is expected to be slightly higher year on year, given current volumes.
Forecasted bad debt level has been maintained at around 2.2% of turnover for the full year, and it said it was continuing to monitor developments such as unemployment levels and changes to the UK benefits system closely.
Net capital expenditure is expected to be towards the low end of the £600m to £620m range, including an estimated £15m related to private drains and sewers. The level of spending on the renewal of infrastructure is anticipated to between £135m and £145m.
It said it was also awaiting an announcement from watchdog Ofwat on the business plan proposals submitted for 2015-2020. The announcement is due on March 10.
Its Operating Services business was said to be performing well, but in Products shipments have been below expectations in the last two months due to continuing customer project and delivery delays.
The slippage is likely to see pre-tax profit levels for the Services operation below expectations.
Interest charges, debt levels and pensions commitments are all expected to impact performance but it said it still anticipated a 6% increase in dividend at year-end.
Severn Trent Plc will announce its preliminary results for the year ending March 31, 2014 on May 29.
