Severn Trent chops divi by 10%

19th Jan 2010 07:57

Water company Severn Trent has announced a 'one-off' cut in the dividend to help it meet the output and operating efficiency demands of the industry regulator.Ofwat's final set of proposals for the period 2010-2015 call for a capital investment programme of £2.5bn, annual average operating spend of £497m and a fall in average household bills of 4% in real terms, or 0.9% a year, by 2015. Severn Trent thinks it can meet the requirements, but the impact of the reduction in Ofwat's allowed weighted average cost of capital to 4.5% real will require an adjustment in the dividend.'The board of Severn Trent has decided to rebase the first year dividend for the start of the AMP5 period to a level around 10% below the full year 2009/10 dividend,' read a statement Tuesday.'The policy for subsequent years is for growth in the dividend from that new base, as performance improves, to deliver both progressive and sustainable returns to shareholders.'Results for the financial year ending 31 March 2010 are due on 28 May.