Severn Trent invests pounds 350m

SEVERN TRENT yesterday unveiled plans to invest a further pounds 350m in businesses outside its core water and sewerage operations with the aim of doubling profits from non-regulated activities to pounds 100m a year, writes Michael Harrison.

Details of the expansion plan came as Severn disclosed that profits in one of its non-regulated divisions, Severn Trent Services, were wiped out in the first half because of a dispute with Scottish Hydro-Electric over the installation of a billing system. Severn has been forced to make an exceptional bad debt provision of pounds 5.5m after Hydro-Electric cancelled its contract, claiming that delivery of the billing system was running late.

Profits in Severn Trent Services, which is also building up a network of laboratories in the US to provide testing services, fell from pounds 8m to pounds 300,000.

However, operating profits from the main unregulated business, the waste management division Biffa, rose by 26 per cent to pounds 17m in the six months to September.

Vic Cocker, chief executive, said it aimed to grow Biffa's turnover to pounds 450m to offset cuts in regulated income. Severn is facing a 15 to 20 per cent reduction in water bills in 2000.