"Our
strategy for transforming Severn Trent into an environmental
services business remains on track, with all three of our
principal business units making good progress.
"Unaudited
management accounts for the quarter ended 30 June 2001 show
that group profit before taxation, excluding an exceptional
profit arising from the sale of Stoner, was marginally ahead
of our expectations.
"Severn
Trent Water has continued to perform well with its programme
of cost efficiencies. The 1100 headcount reduction announced
in December 1999 has now been virtually implemented, several
months ahead of the scheduled date.
"Biffa
has made further progress with the successful integration of
UK Waste. Increased profit from the UK business, which now
constitutes more than 90% of Biffa's profit before interest,
tax and goodwill amortisation, has offset some continuing
weakness in Belgium.
"Profit
before interest, tax and goodwill amortisation from our other
growth business, Severn Trent Services, was significantly
ahead of the corresponding period of last year. Whilst there
are some signs that the issues with the US economy are having
an impact upon the business, the effect to date has been
modest.
"At
Severn Trent Systems we have continued to experience problems
in resolving issues associated with the delivery of the
CIS-Open Vision system contracts in the US. All appropriate
steps will be vigorously pursued to recover Severn Trent
Systems' entitlements, but we now expect losses from this
business to be much higher than the £5.6 million loss
reported last year. The additional loss is expected to have a
limited impact on the group's overall anticipated results.
"Our
strategy for creating shareholder value continues to be based
upon the profitable growth of our waste and services
businesses and out-performance by our regulated water business
against the targets built into the OFWAT price determination.
We remain in a strong position to achieve these
objectives."
