Waste and water group Severn Trent reported that underlying group profit before tax increased by 1.6% to £157.5m in the half-year to end-September (2011: £155m). Interim dividend is up 8.2% at 30.34p per share (2011: 28.04p).
Group profit before tax was £120.9m (£65.3m).
Group turnover was £917.7 million (£886.0 million), an increase of 3.6% over the same period last year. Underlying group PBIT was 2.6% lower than last year. The primary factors affecting turnover and underlying PBIT are described in the commentary below.
There was a net exceptional credit of £1.1 million (charge of £19.5 million). Group PBIT increased 5.3% to £268.3 million (£254.8 million).
Turnover in Severn Trent Water increased by 3.5% to £761.0 million. Sales prices increased by 5.2% (in line with inflation) from 1 April 2012 which was offset by lower consumption during the wet summer period.
Underlying PBIT was down by 1.4% on the same period last year, to £269.1 million.
Basic earnings per share were 51.6 pence (30.5 pence). Adjusted basic earnings per share (before exceptional items, net loss on financial instruments, current tax on exceptional items and on financial instruments and deferred tax) were 47.4 pence (46.4 pence),
Cash generated from operations was £451.3million (£475.6 million). Capital expenditure net of grants and proceeds of sales of fixed assets was £184.4 million (£150.1 million). Net interest paid decreased to £73.2 million (£83.2 million). Cashflows in the period included the £149.9 million special dividend paid to shareholders in July 2012.
Net debt at 30 September 2012 was £4,054.7 million (31 March 2012 £3,967.8 million). Balance sheet gearing (net debt/net debt plus equity) at the half year was 82.6% (31 March 2012 80.2%). Net debt, expressed as a percentage of estimated Regulatory Capital Value at 30 September 2012 was 56.4% (56.0%).
Tony Wray, CEO, said: 'We have delivered again on our commitments to our stakeholders, we are on track with our £150 million additional investment programme announced in May, delivering operational improvements in the areas we targeted for this year, improving our service to customers and producing sustainable, progressive returns for shareholders.
'Group revenue was up 3.6% period on period, although underlying group PBIT was down, reflecting planned increased investment in our networks and customer service in Severn Trent Water.
'In the first half Severn Trent Water invested £239 million and the benefits of this investment are evident in our operationalimprovements, with leakage and pollution incidents decreasing while customer satisfaction, as measured by the SIM (Service Incentive Mechanism), is improving.
'In our non-regulated business we are encouraged by the initial performance of our new business Severn Trent Costain, as well as the improvement in our existing Products business.
'On the regulatory front, we remain in favour of the broader reform programme for the water industry, and have made some constructive suggestions to overcome concerns regarding Ofwat's proposed changes to licences, in order reduce uncertainty for the benefit of all stakeholders. We will continue to promote constructive debate on what the future regulatory framework should look like.'
Bad debts were 1.3% higher at £15.7 million, representing 2.2% of turnover (2.2%). In total, non-controllable costs were up £7.3 million or 7.9%.
During the period, Severn Trent Water invested £239.2 million (£187.0 million) (UK GAAP, net of grants and contributions) in fixed assets and maintaining and improving its infrastructure network.
Reported turnover in Severn Trent Services at £162.1 million in the period was up 1.3% on the same period last year and reported underlying PBIT decreased by 36.9% to £4.1 million.
The group's net finance costs were £109.8 million, compared to £119.4 million in the prior period.