Severn Trent, the UK water supplier, has received no ‘appropriate approaches’ from possible takeover suitors, said CEO Tony Wray today. Wray said that his concentration was focused on ‘delivery of efficient services’, declining to comment on any potential interest in the company. ‘If we had any appropriate approaches then we are aware of our duties and we would have announced so,’ Wray said. His comments come amid a flurry of speculation about M&A activity in the UK water sector, following Kelda Group’s acceptance of an offer from the Saltaire Water consortium yesterday. On the release of its half year results, the company was unable to be specific about the eventual cost of the flooding that occurred this summer, though so far it has cost 23.2 mln stg, brought down to 18.2 mln stg after 5 mln stg of interim insurance payments. The eventual cost is estimated at between 25 mln stg and 35 mln stg, with insurance covering between 10 mln stg and 20 mln stg. Inspections are ongoing at 150 sewage pumping stations, the outcome of which is not yet known. ‘We believe that most of this will be covered by insurance,’ said finance director Mike McKeon. ‘We can’t be more specific because we still have to do the work to ascertain whether there is any long-term damage to these stations.’ The company’s first half results were inline with analysts expectations. Pretax profit for the period rose to 161 mln stg from 142.3 mln stg. First half dividend was up 6.9 pct to 24.3p, from 22.8p, and earnings per share was up to 47.6p from 42.1p. The results threw up no surprises for analysts. ‘They flagged the costs before and we expected them to be that sort of size,’ said one analyst about the flooding. ‘They haven’t got all the bills in, but it’s in line with what they said previously.’ Severn Trent was last week charged by the Serious Fraud Office for the misreporting of leakage data between 2000 and 2002. The company is yet to receive details of the charges or a timescale for proceedings. ‘These things are out of our control,’ said Wray. ‘The first stage is that the charges will be listed in the Magistrates Court. Only then will we discern the nature of the evidence and only then will we be able to consider the company position.’ The UK water regulator, Ofwat, is currently in the early stages of developing the price review for the pricing period 2010-2015. Early suggestions from Ofwat are that price caps for water companies will likely benefit customers rather than shareholders. About the price review (PR09), Wray said: ‘PR09 is still two years away and we are in the early stages of consultations. What PR09 will clearly focus on is the best possible way to find the mix between maintaining the necessary investment and ensuring there is a fair deal for consumers, but also investors.’

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