StockMarketWire.com - Water utility Severn Trent has reported lower revenue and earnings in the first half of the year due to the impact of Covid-19 but said Ofwat's regulatory model will allow it to recover any shortfall.

In its interim results for the six months to 30 September 2020, the company reported group turnover was £887.6 million, down 2.5%, reflecting lower consumption from non-household customers as a result of Covid-19 which was partially offset by higher household consumption during the first national lockdown.

But the company said the Ofwat regulatory model allows it to recover shortfalls in this year's allowed wholesale revenue in 2022-23.

Underlying group PBIT fell 21.2% during the period to £225.6 million and reported group PBIT was £224.6 million, down from £285.3 million in 2019-20.

Severn Trent said both figures reflected the lower revenue, as well as an increase in its bad debt provision due to the expected impact of unemployment increases and higher depreciation from end of AMP6 schemes coming into operation.

It also announced an improvement in water performance across key customer measures including leakage, water quality and speed of response, and said it was delivering forecasted positive net outcome on water for the year.

It announced an interim dividend of 40.63p, in line with the policy confirmed at the full year.

Chief executive Liv Garfield said: 'The business has adapted well to the impact of the pandemic and delivered resilient performance. We continue to carefully manage the short-term financial impacts of lower revenue and lower earnings for the year, in the knowledge that a large portion of this will be corrected for in later years of the AMP.

'Our liquidity position remains strong, giving us the confidence to increase our investment for the future.'





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