The Financial Week Ahead - Water buyout boost.
In the spotlight: Severn Trent Water wins court battle for #800m
Midlands water company Severn Trent this year converted from regional water supplier to international waste and water business when it scooped up UK Waste for #380m in June.
Interims due out on Tuesday come as the Severn Trent board, including chartered accountants FD Alan Costin and Brian Duckworth MD celebrates a high court victory over utility rival Western Power Distribution.
The board’s victory prevented the new US-based owner of Hyder, the Welsh utility, from outsourcing the operation of its water business to rival United Utilities.
Lawyers for Severn argued that WPD broke EU procurement rules by giving the #800m Welsh Water contract to United Utilities without allowing rivals to bid for the work.
With pressure mounting in the water industry to separate the ownership and operation of regulated assets, Severn’s test case could have far-reaching implications for water companies looking to restructure.
Despite the group’s push into the waste management arena, more than 60% of its sales are still water-related, with Severn Trent Water providing three million customers in England and parts of Wales.
Subsidiary Biffa Waste Services, which provides waste management in the UK and Belgium, will expand with the acquisition of UK Waste.
Europe and US-based Severn Trent Services helps industrial and municipal customers with water and wastewater processes. Its products and services include consulting, utility software systems, and environmental lab work.
The UK’s second-largest water company, group profits fell from #361.4m to #338.7m in the year to March before a one-off charge of #56.1m, relating to the restructuring of its water business prompted by pressure to cut prices from regulator Ofwat.
Fifty-seven-year-old Costin became group FD in 1992 after working as FD at Lex Service, while Duckworth, 51, joined the board in November 1994 after 20 years with the company.
www.severn-trent.com.