Severn Trent profits plunge due to fines

 

July 14, 2008

The profits of water giant Severn Trent have plunged because of the hefty fines that have been imposed by the water regulator Ofwat. The water company serves three million households in the Midlands region, but has found itself enveloped in disgrace and controversy recently, resulting in fines from Ofwat. In fact, to the end of the last financial year profits had reportedly plunged by 40%, sinking to just £195 million.

Worse still, the recently released figures do not take into account a fine that has yet to be imposed by Ofwat, which could potentially run into tens of millions of pounds. This fine is for an incident where the water firm admitted lying to Ofwat over certain issues, which resulted in an investigation by the Serious Fraud Office. This fine could mean that profits plunge even further.

One official from Severn Trent said that the pending fine could not be included in the recently released figures because details of the fine were not yet known. He said: ‘If we knew the cost it would have appeared in these accounts. The fact is we have had no indication, can make no reliable estimate and therefore have been unable to make provision.’

Sentencing over the incident has been adjourned until later in the month, when Severn Trent will find out just how much it will be fined by the water regulator over the lies that it admitted to telling. Amongst the details that the water firm admitted lying about were two counts of providing false water leakage data to the water regulator. It is thought that the fines imposed on Severn Trent over this incident could reach £150 million.

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Written by admin · Filed Under Energy, Utilities 

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