Severn Trent ups dividend but warns of coronavirus impact
Severn Trent today said it would pay a final dividend but warned the coronavirus pandemic was likely to lead to unpaid bills and a decline in sales to businesses over the next year.
Severn Trent proposed a final dividend of 60p, up from 56p last year.
The water company booked a bad debt charge of £42.5m for the year to 31 March, including £2.2m related to coronavirus.
“We do expect to see an increase in related bad debt from higher unemployment and stressed household finances …. and expect to see further covid-19 related increases to our bad debt in future periods,” the company said.
Severn Trent said its Water Plus joint venture with United Utilities, which supplies to businesses, was affected by the government lockdown.
It recorded an exceptional loss of £46.8m related to Water Plus for the year.
The company reported a 0.6 per cent fall in underlying profit before interest and tax for the year as it deferred some net outperformance incentives to the next price period and increased bad debt provisions.
Severn Trent said it had £755m of undrawn credit facilities at year-end and a further £200m which was raised from a US private placement.
Severn Trent shares rose 1.9 per cent to 2,450p this morning.