Severn Trent pipes in pounds 1m a day profits
Wednesday 12 June 1996
The company, which last year imposed a hosepipe ban on millions of customers, also promised to pursue a more generous dividend policy by cutting dividend cover from almost three to twice the level of earnings by the year 2000 - regardless of the outcome of its bid for South West Water.
"We will still have a strong balance sheet whatever happens," said Vic Cocker, chief executive. "But it will be easier to get to two times cover if we buy South West because we expect that deal to enhance earnings."
Severn's bid, and a rival offer for South West from Wessex Water, are being investigated by the Monopolies and Mergers Commission. But news that Severn's pre-tax profits soared by 40 per cent to pounds 373m in the year to March provoked an angry response from Clive Wilkinson, chairman of the industry regulator Ofwat's central customer services committee.
"When customers think of how many of them had periods without water because of poor service they are bound to wonder whether Severn Trent are making extra money by cutting corners in the delivery of their service," he said.
"It seems that the balance between customers' needs and shareholders' needs are not in the right perspective and that the shareholder is getting the better deal."
But Mr Cocker responded by saying Severn was spending pounds 1m a day on capital expenditure to improve services to customers. He also noted that despite rainfall in the region 70 per cent being below the long-term average, the hosepipe ban introduced in August had been lifted at the end of April: "I view that as a vindication of the action we have taken over the winter."
The rate of water leakage fell from 24 per cent to 21 per cent, while measures taken to increase water supply by 5 per cent include plans to use the River Trent as a source of drinking water for the first time.
As a result of these improvements, Mr Cocker remained confident there would be no repeat of the hosepipe ban, even though one reservoir - the Derwent, which supplies Derby - is only 60 per cent full.
Last year Severn's total dividend rose by 12 per cent to 32.4p, covered 2.8 times from earnings per share 10 per cent higher at 89.6p.
Severn has been rumoured as a possible takeover target for electricity generator Powergen, but Mr Cocker denied the more generous dividend policy was defensive in nature.
- 2 Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
- 3 Sofyen Belamouadden murder: The inside story of a crime that horrified Britain
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 Ian Brady: Moors murderer announces his support for Ukip and the SNP
Migrant crisis: Greek soldier saved 20 people singlehandedly off Rhodes beach
Russian hack of President Obama's emails worse than previously admitted
Ian Brady: Moors murderer announces his support for Ukip and the SNP
UK weather: Britain braced for snow to replace sun as arctic air mass moves in
Nepal earthquake: US Pastor Tony Miano sparks outcry by suggesting Nepalis should convert and not rebuild their 'pagan shrines'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...