Severn Trent restates results after ruling on £940m joint venture
COVENTRY-based utility Severn Trent has restated its 2015 results following the reclassification of the business after its £940m joint venture agreement with United Utilities, which saw them merge their non-household water and wastewater retail businesses.
The new operation, called Water Plus, is based in Stoke-on-Trent and principally comprises the billing and customer service activities for the two companies.
Severn Trent said the restatement of the prior-year results followed the reclassification of the non-household retail activities as discontinued operations.
In an update to the markets, Severn Trent said: “These activities are restated following the formation of Water Plus, which completed on June 1, 2016 following Competition and Markets Authority approval.
“For the full financial year to March 31, 2017, the results for the group will therefore include two months of discontinued operations for non-household retail operations, and ten months of the group’s 50% share of the JV.”
It said the restatement of 2015/16 half-year and full-year data would assist investors and analysts in their financial modelling of the group in advance of its 2016/17 interims, which will be announced on November 24, 2016.
For the year ended March 31, 2016, group turnover from continuing operations reduced by £33.2m. This represents the sales of the Severn Trent Water non-household retail business and of its out-of-area retail business, mainly in Scotland (£397.9m), less the sales from its wholesale business to its non-household retail business (£364.7m). Group pre-tax profit (PBITE) from continuing operations has been restated by £19.4m.
Business Services turnover from continuing operations reduced by £397.9m and PBITE from continuing operations is restated by £9.8m.
Regulated Water and Waste Water turnover is unaffected, but PBITE reduced by £9.6m to reflect the share of costs incurred in Regulated Water and Waste Water that were previously reallocated to non-household retail operations.
Discontinued operations turnover increased by £397.9m and PBITE increased by £19.4m.
For the six months ended September 30, 2015, group turnover from continuing operations reduced by £17.5m.
This represents the sales of the Severn Trent Water non-household retail business and of its out-of-area retail business mainly in Scotland (£203.2m), less the sales from its wholesale business to its non-household retail business (£185.7m). Group PBITE from continuing operations has been restated by £10.9m.
Business Services turnover from continuing operations reduced by £203.2m and PBITE from continuing operations has been restated by £6.1m.
Regulated Water and Waste Water turnover is unaffected but PBITE reduced by £4.8 m to reflect the share of costs incurred in Regulated Water and Waste Water that were previously reallocated to non-household retail operations.
As these activities are not transferring to the JV they are deemed to remain with Regulated Water and Waste Water for the purpose of the restatement.
Discontinued operations turnover increased by £203.2m and PBITE increased by £10.9m.
Severn Trent said there was no material change to current year business performance or outlook predictions as a result of the restatement.
