Severn Trent's profit rises on higher incentives

(Reuters) - British water utility Severn Trent Plc SVT.L posted a 4 percent rise in full-year profit on Wednesday, helped by higher incentives and increased cost efficiency.

The FTSE 100-listed company said it earned 80 million pounds in customer outcome delivery incentives (ODI), up from 47.6 million a year earlier.

The incentives are paid to water companies by regulator Ofwat for meeting or exceeding targets, such as project completions and customer service.

Severn Trent also increased its efficiency target to 870 million pounds, up from 770 million pounds.

The current regulatory period will run until 2020.

The company said it would reinvest an additional 100 million pounds mainly in its water business, to improve performance in preparation the next regulatory period which will run from 2020 to 2025.

The company, which supplies water across the Midlands region, said underlying profit before interest, tax and exceptional items rose to 541 million pounds for the year ended March 31 from 520.1 million a year earlier.

In its regulated water and waste water business, a full year’s contribution from Dee Valley Water and higher revenues more than offset the impact of sector-wide changes in business rates, the company said.

Reporting by Radhika Rukmangadhan in Bengaluru; editing by Jason Neely and Louise Heavens