Severn Trent notches higher ODI score

Severn Trent increased its dividend 6% after the water and sewage group received more incentive payments than expected and said £100m of efficiency savings would be reinvested back into the business.

Turnover of £1.69bn in the year to 31 March was up 3% on the prior year thanks to higher tariffs, including the impact of the annual RPI increase on price.

Underlying profit before interest and tax rose 4% to £541m as although costs rose, depreciation and infrastructure spending both fell slightly. Underlying earnings per share climbed 5% to 121p, which was ahead of the City's average forecast of 119.45p.

The FTSE 100 group received an £80m incentive payment for outperforming on customer 'outcome delivery', well in excess of the "at least £50m" pledged three months ago.

A final dividend of 51.92p was proposed, taking the total payout to 86.55p, up from 81.50p a year before.

Expected total expenditure efficiencies from the AMP6 regulatory period have been bumped up to £870m from £770m, with chief executive Liv Garfield choosing to reinvest the additional £100m mainly in the water business, to improve performance in preparation for AMP7, which covers the five years from 2020.