22 November 2022
Interim results for the six months to 30 September 2022
Investing in people, performance and environment for the long-term
Robust financial performance, supported by strong cost control
· Guiding to double-digit real Return on Regulated Equity (‘RoRE’) for FY23, with ODIs1 of at least £50 million, totex in line with allowance, and strong financing outperformance.
· First half Group PBIT2 of £261.7 million up 2.4% year-on-year, reflecting increase in Group turnover (£1,061.8 million, up £103.6 million) and strong cost control.
· Increasing property PBIT guidance by a further £50 million, with planned PBIT from sales of surplus land now £150 million between 2017 and 2032.
· Adjusted basic EPS3 of 29.9 pence (2021/22: 54.0 pence) reflecting PBIT growth offset by impact of inflation on index-linked debt. Basic EPS of 31.4 pence (2021/22: loss of 73.0 pence).
· 2022 pension valuation agreed, with contributions unchanged. IAS19 deficit of £142.6 million.
· Interim dividend of 42.73 pence, in line with AMP74 policy, to be paid on 11 January 2023.
Delivering on our environmental commitments through investment and operational excellence
· On track to deliver one of our largest ever investment programmes, including our innovative Green Recovery schemes, driving real RCV5 growth of 10.8%.
· Over 70% of our £2.9 billion core capital programme either delivered or with prices locked in.
· Nominal RCV growth now expected to be 36%, making this our highest growth AMP to date.
· Strong operational performance with c.85% of Severn Trent Water performance commitments on or ahead of target, despite one of the driest summers since 1836.
· On track to achieve 4* Environmental Performance Assessment (‘EPA’) status from the Environment Agency for a fourth consecutive year, including our best-ever pollutions performance.
· Fast start to our Get River Positive pledges: advisory panel established including NGO representatives to help oversee progress; our share of regional RNAGS6 reduced from 24% to 17%; ahead on our plan to reduce CSO activations to an average of 20 by 2025.
· End of AMP ODIs on course to contribute a further £40-50 million in the final year of AMP7.
Supporting our customers, communities, and colleagues now and into the future
· New ten-year plan to help support 100,000 people out of poverty by 2032, through delivering skills and employability training in communities, a work experience programme and partnership working.
· Offering financial support to up to 315,000 customers, including 90% discounts off their water bill.
· Welcomed 742 young people so far this AMP through graduate, apprentice and intern schemes.
· Colleague engagement at an all-time high, scoring in the top 5% of global utilities.
Liv Garfield, Chief Executive, Severn Trent Plc, said:
” T he first half of this year has shown the benefits of the sustained investment we’ve made over many years in our people, region and environment. We have delivered a robust financial performance leaving us well positioned to support our customers, invest for the long term, and support future growth.
As well as delivering on our operational and environmental commitments, with around 85% of regulatory measures meeting or exceeding targets, we’re also committed to making a long-lasting positive impact in the communities we serve. Today, we are proud to launch a new ten-year strategy to address some of the underlying causes of poverty in our region, helping people to secure employment and supporting customers through current cost of living pressures. This builds on the investment we’re already making through our £10 million Community Fund and the support we offer to 315,000 customers through our affordability schemes, including discounts of up to 90% off their water bills .”
Group results
| 2022 | 2021 | Increase/ (decrease) | ||
| £m | £m | % | ||
| Group turnover | 1,061.8 | 958.2 | 10.8 | |
| Group PBIT | 261.7 | 255.6 | 2.4 | |
| pence/share | pence/share | |||
| Adjusted basic EPS | 29.90 | 54.00 | (44.6) | |
| Basic EPS | 31.40 | (73.00) | 143.0 | |
| Interim dividend declared | 42.73 | 40.86 | 4.6 |
Footnotes to page 1 of this RNS
1. ODIs: Outcome Delivery Incentives, quoted pre-tax and in 2017/18 prices unless otherwise stated.
2. PBIT: Profit Before Interest and Tax.
3. EPS: Earnings Per Share; Adjusted basic EPS is set out in note 8.
4. AMP: Asset Management Plan (see glossary); AMP7 refers to the period 1 April 2020 to 31 March 2025.
5. RCV: Regulatory Capital Value (see glossary). RCV is measured including the impact of Green Recovery and real options. Nominal RCV assumes forecast CPIH of 8.2% for 2022/23, 2.4% for 2023/24, and 1.9% for 2024/25 and forecast RPI of 12.5% for 2022/23, 3.4% for 2023/24 and 3.0% for 2024/25 as per Oxford Economics October 2022 forecast.
6. The Environment Agency’s analysis of Reasons for Not Achieving Good Status (RNAGS) records the source, activity and sector involved in causing waters to be at less than good status.
| Enquiries | ||
| Investors & Analysts | ||
| Rachel Martin | Severn Trent Plc | +44 (0) 782 462 4011 |
| Head of Investor Relations | ||
| Dominique Mowle | Severn Trent Plc | +44 (0) 796 776 7079 |
| Investor Relations Manager | ||
| Media | ||
| Jonathan Sibun | Tulchan Communications | +44 (0) 207 353 4200 |
| Press Office | Severn Trent Plc | +44 (0) 247 771 5640 |
Interim Results Presentation and Webcast
A presentation of these results hosted by Liv Garfield, CEO, and James Bowling, CFO, will be available on our website (severntrent.com) from 7.00am GMT today, 22 November 2022.
We will be hosting a live Q&A session with Liv, James and our wider Executive team at 9:00am GMT today via video call which you can register for through our website.