The Board of Severn Trent Plc confirms that trading across the group has been in line with its expectations and prior guidance.
No new material trading events or transactions have occurred during the period 1 April to 17 July 2012.
Customer prices in Severn Trent Water increased by 5.2% (including inflation) from 1 April 2012. Consumption across our measured income base has declined year on year in the period, in line with our expectations.
We continue to forecast a bad debt level around 2.2% of turnover for the full year, although we continue to monitor future developments closely, especially unemployment levels.
Operating expenditure continues to be in line with the Board's expectations for the year and on a like for like basis in line with the level of the Final Determination. Operating costs are expected to rise year on year, due to the impact of inflation, a full year of operating private drains and sewer assets, and increases in quasi taxes, offset by efficiency improvements.
Expectations for net capital expenditure (UK GAAP after deducting grants and contributions) remain in the range 570 million to 590 million, including an estimated 15m related to private drains and sewers. The level of net infrastructure renewals expenditure included in this range is anticipated to be 140 million to 150 million.
For the full year, Severn Trent Services is expected to deliver low single digit revenue growth, with PBIT impacted by investment in Operating Services andBALPURE®, which will offset some underlying growth in the business.
Based on current RPI expectations, the group interest charge is expected to be slightly lower year on year, before adjustments related to pension accounting, with a reduction in the non-cash interest charge, due to lower RPI, partially offset by higher cash interest cost, due to higher net debt.
The expected effective current tax rate for the group for 2012/13 remains at 24% to 26%.
On 28 June 2012 Severn Trent announced that Severn Trent Plc and Costain Group PLC have entered into a new Joint Venture - Severn Trent Costain - to provide complete business water and wastewater management services to high volume commercial and industrial water users in the UK.
Severn Trent Plc will announce its interim results for the period ending 30 September 2012 on 27 November 2012.
