Severn calms financial fears over flooding

Olivia Garfield
Olivia Garfield
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ONE of the water companies on the front-line of Britain’s flooding crisis yesterday reassured investors over the financial impact of the extreme weather.

Severn Trent, which supplies 4.2 million households and businesses across the Midlands and parts of Wales, said there was currently no material financial impact from the floods.

During a similar crisis in 2007, the company suffered a hit of more than £25m after it was forced to evacuate its Mythe Water treatment works near Tewkesbury.

It has since installed new flood defences at the site.

The UK’s second largest water company is currently working to minimise the impact of flooding in Worcestershire, where it has set up pumps to deal with rising water levels.

South West Water owner Pennon also said yesterday that it continued to “deliver effective operational performance and high standards of customer service”, despite the flooding and exceptional weather in the area.

In a scheduled trading update, Severn said its trading performance in the year to March 31 had been in line with expectations and its prior guidance.

Consumption has been slightly higher than a year earlier, while bad debt levels have been maintained at around 2.2 per cent of turnover. Operating costs are expected to rise year-on-year due to the impact of inflation and power costs, although this has been offset by efficiency improvements.

As previously announced, Severn said it expects a six per cent rise in its dividend payment to shareholders when it posts annual results at the end of May.

The group increased prices by two per cent from April, but claims it charges the lowest average combined water and sewerage bill across England and Wales. Average bills this year are expected to increase by £3 – a change of 1.1 per cent.

Liv Garfield will become the youngest female FTSE 100 chief executive when she takes over the helm of Severn Trent later this year. The 38-year-old will take the number of women running FTSE 100 companies to four. Ms Garfield, who describes herself as “Yorkshire born and bred”, is best known for taking charge of the roll-out of BT’s £2.5bn super-fast broadband.

Ms Garfield will join Alison Cooper at Imperial Tobacco, easyJet’s Carolyn McCall and Angela Ahrendts at Burberry as the fourth female CEO in the blue chip index of leading British companies.

Ms Garfield, who comes from Harrogate and read languages at Cambridge, will earn a pay package worth up to £2.4m at Severn Trent.

She is to take up the role when current boss Tony Wray retires this spring. Ms Garfield said last year: “I am really looking forward to joining Severn Trent. It is a leader in an industry going through significant change and has, at its heart, a commitment to serving its customers well.”