Severn Trent picks up £48m in ODI prizes
Severn Trent Water bagged outcome delivery incentive rewards of close to £48 m for the year to 31 March 2017 which chief executive Live Garfield described as “one of the successes I am most proud of this year.”
Totex savings were £100m and the company is forecasting £770m in efficiencies for the price control period.
The company reported a return on regulated equity for 2016-17 of 11% calculated on the abandoned basis of inflation forecasts used in its price control final determination. Analyst, Lakis Athanasiou, at Agency Partners, said Severn Trent and Pennon had made a “pig’s breakfast” of their RoRE reporting in each using this “flawed methodology.” In the report, Severn Trent calculated the figure using Ofwat’s method based on the current inflation rate at 10%.
Sales for 2016-17 for the regulated water and wastewater operations were £1.529 bn – up £22.7m on the previous year. Underlying operating profit was up 2.5% to £495m. The increased revenue was generated by higher tariffs with increased consumption contributing just over £3m. Newly acquired Dee Valley Water contributed £2.2m to revenue.
Group turnover was up 3.7% on the previous year to £1.819 bn with an underlying operating profit up 4.3% at £525m. After exceptional operating items reported group operating profit was up 7.8% to £544 m