Severn Trent dividend edges up as bad debts rise

Reported pretax profit before interest fell 21.3% to £225m in the six months to the end of September as revenue fell 2.5% to £888m. The FTSE 100 group increased its first-half dividend by 1.5% to 40.63p a share in line with inflation including housing costs.

Revenue fell as businesses and other organisations reduced water use because of Covid-19 restrictions, offset partly by higher household consumption. Severn Trent said it would be able to recover lost revenue after two years under industry rules.

Bad debt charges rose by £6m to £24.5m, equal to to 3.7% of household revenue from 3.2% a year earlier. Severn Trent said cash collection from household customers held up well in the first half but that it was expecting an impact on outstanding trade receivables because of rising unemployment. The bad debt charge includes £8.2m for this trend.

Chief Executive Liv Tyler said: "Despite all the challenges we have faced, we have made an excellent operational start to the year. We continue to carefully manage the short-term financial impacts of lower revenue and lower earnings for the year, in the knowledge that a large portion of this will be corrected for in later years."

Tyler said capital investment for the year would be more than £500m including accelerated spending on renewable projects. Severn Trent shares rose 1% to £24.80 at 08:08 GMT.