Severn Trent pays £150m special dividend

Severn Trent announced a one-off, £150m special dividend for shareholders yesterday, as the water company cut leaks by 7 per cent to a record low last year.

Unveiling a 4.6 per cent fall in full-year profits for 2011 to £275m, Severn Trent still increased its normal dividend by 7.7 per cent to 70.1p and also made a 63p, one-off payment.

The company, which in January increased prices by 5.2 per cent, also said it would invest an additional £150m to improve its infrastructure over the next three years, bringing the total it plans to spend to £1.75bn.

Severn Trent, which supplies 8 million houses in a region stretching from the Bristol Channel to the Humber and from mid-Wales to the East Midlands, was not among those hit by a hosepipe ban this year. However, fears persist of a drought next year after the Environment Agency classified Severn Trent as being "high risk in case of a dry spring and summer".

Its chief executive Tony Wray said: "We have beaten our leakage target, reduced supply interruptions, continue to forecast no water usage restrictions for our region this year and we maintained the lowest average charges for our customers."

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