Severn Trent interims on the rise

Water company Severn Trent said interim profits before interest and tax rose 10.8% to £299.4m.

Turnover rose 3.2% to £906.8m. The interim dividend rose 32.6p a share from 32.26p a share. Reported pre-tax profits rose to £185m from £175.3m.

Turnover for the Regulated Water and Waste Water segment was £765.2m, up from £754.4m and underlying profit before interest and tax rose slightly to £268.9m from £265.4m.

Severn said the sharp decrease in corporate bond yields since the year end, in particular following the EU referendum, was reflected in the increased accounting valuation of its pension schemes' obligations at the balance sheet date.

This was only partially offset by the good performance of the schemes' assets over the same period and as a result its accounting pension deficit increased from £309.5m to £711.7m at 30 September 2016.

Severn said a revised schedule of deficit reduction contributions will be put in place to meet the deficit and ongoing administration expenses. These will include payments of £10m for the next three financial years ending 31st March 2019.

Further inflation linked payments of £15m a year will be made through a new asset backed funding arrangement, starting in the financial year ending 31st March 2017 and potentially continuing to 31st March 2031, it added.