Severn Trent PLC
22 November 2023
Delivering now, very well placed for the future
Continuing to deliver a strong performance for all stakeholders
| · | Achieved highest 4* EPA1 status from the Environment Agency for a record fourth consecutive year, and on track for a fifth year for 2023. |
| · | 80% of Severn Trent Water’s performance commitments on or ahead of target, including best ever performance on leakage and blockages, and confident of delivering at least £50m in ODI2 rewards this year, which would bring us to a total of over £250m earned cumulatively in AMP73. |
| · | On track to outperform against end-of-AMP ODIs, with £40m-£50m additional reward expected to be recognised on top of year five ODI performance. |
| · | Largest ever year of capital investment, spending c. £1bn on our network, which includes around £200m on our Green Recovery programme; £477m capital investment in first six months, up 77% on H1 of 2022/23. |
| · | Expanded our societal strategy to a third location, Coventry, as part of our commitment to help support 100,000 people out of poverty by 2032. |
| · | Highest ever engagement score with November 2023 results in the top 3% of utilities globally. |
Interim financial results in line with expectations
| · | No changes to full year guidance; continue to expect adjusted EPS4 growth for the full year, after including the additional 46.5m shares issued in October, with financing costs expected to be lower in the next six months. |
| · | PBIT5 marginally lower year on year primarily due to the expected impact of higher energy and chemical prices, which were weighted to the second half in the previous year. |
| · | Shadow RCV Gearing6 is 60.6%, compared to 60.0% at 31 March 2023. |
| Group Results | 30 September 2023 | 30 September 2022 |
| Revenue | £1,165.3m | £1,061.8m |
| PBIT | £255.1m | £261.7m |
| EPS | 20.5p | 31.4p |
| Adjusted EPS | 29.7p | 29.9p |
| Interim dividend per ordinary share | 46.74p | 42.73p |
| Capital Investment | £476.9m | £269.7m |
Ambitious plans for upcoming scale investment in our region
| · | Raised £1bn new equity after the half year for the unprecedented investment programme in AMP8, with PR24 plan including 31% real RCV7 growth. |
| · | Plans submitted to regulator include:o £12.9bn totex, including £5bn of enhancement projects to benefit customers and the environment;o Investing in rivers, long-term water security and achieving Net Zero by 2030; ando Forecasting to be around Upper Quartile on 72% of ODIs, including sector-leading ambitions on storm overflow spills and external sewer flooding. |
| · | Deliverability underpinned by current capital run rate, early engagement with the supply chain, with over £1bn already notionally allocated, and new innovative approaches to deliver assets up to 30% faster. |
| · | Accelerating £400m of capital spend from AMP8 to deliver benefits to customers and our environment sooner. |
| · | Expect to maintain second lowest bill in the sector by 2030 and launching £550m affordability package to support 693,000 customers with their bill; representing support for around one in six families in our region. |
Liv Garfield, Chief Executive, Severn Trent Plc, said:
“Our team has delivered for customers with a sector-leading performance over the last six months, driven by a £500 million investment in the Midlands. We’re doing more than ever, whether it’s protecting the environment where we’re on track to achieve the highest 4* status from the Environment Agency for a record fifth consecutive year, operationally – delivering our best ever performance reducing leakage and blockages, and in our community where 100,000 people are being supported out of poverty.
We’re delivering for customers today, and also preparing for the future. We have set out plans to invest £12.9bn from 2025, the equivalent of £2,400 per household. These plans will bring huge benefits to nature including healthier rivers, 7,000 jobs to our region through new roles, insourcing and in the supply chain, as well as a financial support package to help around one in six families navigate cost-of-living pressures. We’re hugely excited about the economic, environmental and societal benefits this will bring to the Midlands for decades to come.”