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Severn reassures on flood cost

One of the water companies on the front-line of Britain's flooding crisis today reassured investors over the financial impact of the extreme weather.

Severn Trent, which supplies 4.2 million households and businesses across the Midlands and parts of Wales, said there was currently no material financial impact from the floods.

During a similar crisis in 2007, the company suffered a hit of more than £25 million after it was forced to evacuate its Mythe Water treatment works near Tewkesbury. It has since installed new flood defences at the site.

The UK's second largest water company is currently working to minimise the impact of flooding in Worcestershire, where it has set up pumps to deal with rising water levels.

South West Water owner Pennon also said today that it continued to "deliver effective operational performance and high standards of customer service", despite the flooding and exceptional weather in the area.

In a scheduled trading update, Severn said its trading performance in the year to March 31 had been in line with expectations and its prior guidance.

Consumption has been slightly higher than a year earlier, while bad debt levels have been maintained at around 2.2% of turnover.

Operating costs are expected to rise year-on-year due to the impact of inflation and power costs, although this has been offset by efficiency improvements.

As previously announced, Severn said it expects a 6% rise in its dividend payment to shareholders when it posts annual results at the end of May.

The group increased prices by 2% from April, but claims it charges the lowest average combined water and sewerage bill across England and Wales. Average bills this year are expected to increase by £3 - a change of 1.1%.

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