Utility giant Severn Trent has reported a rise in full-year profits after the firm was boosted by fewer leaks and floodings.
Britain’s biggest listed water company said underlying pre-tax profit rose 4.3 per cent to £525 million in the year to March as turnover increased 3.7 per cent to £1.8 billion.
Severn Trent, which claims to have the lowest combined average bills in Britain at £341 per year, added it has seen a reduction in sewer floodings, supply interruptions and leakages following £680 million of investment.
The group’s full-year net customer outcome delivery incentive reward, doled out for meeting targets such as improving customer service, was £47.6 million.
Severn Trent also said total efficiency savings will now total £770 million by 2020, up £100 million.
Chief executive Liv Garfield, who is from Harrogate, said: “We are delivering both strong customer-focused and financial outperformance this regulatory period, and we feel it is now appropriate to share this with our investors.
“The board is therefore pleased to announce an upgrade to our ordinary dividend policy, to growth of at least RPI +4 per cent.” The company proposed a final dividend of 48.9p, taking the full-year dividend to 81.5p.
Ms Garfield, who is the former boss of BT’s broadband business, became the youngest female FTSE 100 chief executive when she took over the helm at Severn Trent at the age of 38 in 2014.
Before joining Severn Trent, Ms Garfield, who describes herself as “Yorkshire born and bred”, was best known for the roll-out of BT’s £2.5bn super-fast broadband.
George Salmon, an equity analyst at Hargreaves Lansdown, said: “Severn Trent continues to eke out cost efficiencies, while a £47m reward payment from water regulator Ofwat is testament to the fact these savings are not being made by compromising on the service the company delivers to its four million-plus customers. “The shares have always been attractive to income-seeking investors, so the news it is nudging the dividend policy upwards will be music to the ears of many.
“It may also re-ignite interest in a takeover.”