Severn Trent puts first numbers on Covid damage to business retail
Severn Trent Water in its year-end results has included a £51.7m exceptional loss before tax – including a £4.9m charge on loans receivable – from its share of the Water Plus retail joint venture with United Utilities. It has attributed the loss largely to the impact of the Covid pandemic.
In its report for the year ending 31 March 2020 Severn Trent said Water Plus had “had a difficult year.” It reported a hit on income, ahead of the impact of Covid, from “billing and revenue assurance issues” where Severn Trent took a £14.3m share of losses at the retail venture with £9.3m arising in the first half of the year. “The recovery that was starting to bear fruit in the second half was stopped in its tracks by the Covid outbreak,” the company reported.
Underlying profit before interest and tax (PBIT) at Severn Trent’s regulated water and wastewater segment was off 2.90% year-on-year at £512m on turnover up 2.4% to £1,62bn.
Sales in the segment were lifted largely by £48.2m from increased prices offset by a £22m fall in ODI gains from the previous year. Labour costs jumped 9.5% which was largely attributed to the annual pay award and the company strategy of bringing more work in house. Bad debt leapt 67% to 342.4m. The company said it expected to see "further Covid related increases to our bad debt in future periods, based on the latest economic forecasts."
The Business Services segment comprising Operating Services, Green Power, Bioresources and Property Development posted a £39.5m hike in turnover to £240m including an 80% increase in the Green Power business to £53.5m.
The segment reported flat PBIT at £64.9m with increases of £7.8m in Operating Services and £6m in Green Power offset by a £12m fall in Property Development.
Group turnover was up 4.3% at £1.844bn with underlying PBIT down 0.6% at £570m.