LIV GARFIELD, the new chief executive of Severn Trent, has defended the water industry’s track record on affordability and tax as she unveiled a large rise in profits at the listed utility.
Severn Trent, which supplies homes across South Yorkshire, announced a 7.1 per cent rise in underlying profits before tax to £269.1m and said turnover rose 2 per cent to £1.54bn.
The group increased its shareholder pay-out and pledged to do so again next year.
Severn Trent reported a tax credit of £59.2m, reflecting overpayment in previous years.
The water industry has faced criticism from MPs who claim that utilities are using debt interest schemes to avoid tax.
Ms Garfield, who is from Harrogate, said the industry has paid a lot of tax for a lot of years and will continue to pay lots in the future.
She added that Severn Trent’s effective tax rate for next year is expected to be 20-22 per cent.
Ms Garfield said that the industry cares about the “critical” products that it supplies to customers and has a decade of below-inflationary price increases built into bills.
“That’s very different to other utilities,” she said.
“It understands one of the key priorities is affordability and it has made concrete commitments so that people can plan for their lives and they can budget knowing where that it is.
“It has done lots of good with an incredible investment programme over the last few years – about £4bn per year is what the industry has invested back into the UK with some great jobs for apprentices.”
Severn Trent said it would lift its total dividend for the year by six per cent and next year this will grow again by 5.6 per cent.
But Ms Garfield – the FTSE 100’s youngest chief executive – said future pay-out policy could not be determined until Ofwat’s final decision on its business plan for 2015-2020 at the end of this year.
The 38-year-old former BT high-flyer said Severn Trent would submit a revised plan for the period to the regulator next month. Ofwat wants firms to accept lower returns to help ease the strain on hard-pressed family finances.