Severn Trent's first half profit falls 16 per cent

Severn Trent, which supplies water and sewerage services to more than 3.7m households in the Midlands and mid-Wales, reported an underlying pre-tax profit of 158m on revenues 1.9 per cent higher at 867.9m for the six months to the end of September.

The company cut the interim dividend by 2.5 per cent and introduced a new dividend policy for the period between 2011/12 and 2014/15.

"The board has decided that the dividend policy for Severn Trent for the period should be RPI plus 3 per cent," the company said in a statement.

"In Severn Trent Services, we expect continued growth in the second half of the year. Water purification has maintained a strong order book, and operating services will continue to focus on cost control and delivery. The market for analytical services remains challenging."