22 May 2024
Results for the year to 31 March 2024
Sustaining sector-leading operational and environmental performance
Long-term investment continues to deliver industry-leading performance
| · | Invested £1.2bn in FY24, a 63% increase year-on-year, bringing the total invested this AMP1 to over £3bn and putting us on the right run rate for AMP8 capital delivery. |
| · | Highly confident we have achieved 4* EPA2 in 2023, an unprecedented fifth consecutive year of achieving the highest environmental rating. |
| · | Accelerating investment in 900 storm overflows this year alone, as we work to reduce average spill rate to below 20 by 2025, and halve our rate by 2030. |
| · | Our share of RNAGS3 now 14%, and Get River Positive programme driving long-term improvement in river quality; confident that we will be below 10% within the year. |
| · | Net ODI4 reward of £55m this year (17/18 prices), and in total across AMP7 we expect to earn sector-leading net ODI rewards of around £420m in nominal prices.5 |
| · | Sustained investment and continuous improvement culture driven best ever performance on supply interruptions, blockages and low pressure. |
| · | Achieved lowest ever leakage this year, meaning we have now reduced leakage on our network by 10.8% in AMP7, and remain on track for a 15% reduction by the end of the AMP. |
Strong operational and financial performance delivering cumulative AMP7 RoRE6 of 8.1%
| · | Strong adjusted EPS7 growth of 36% to 79.4p (basic EPS: 51.0p) after accounting for additional 46.5m shares issued in October 2023, including PBIT8 of £512m and net finance costs of £282m (down 22%). |
| · | Shadow regulated gearing9 of 59.7%, supporting future investment; reduces to 58.7% after including the estimated impact of midnight adjustments earned to date. |
| · | Added £1bn to our nominal RCV10 this year, with AMP7 nominal RCV expected to grow by around 40% across five years. |
| · | Record energy generation of 655GWh, the equivalent of 60% of our energy consumption, following acquisition of Andigestion. |
| · | Proposed final ordinary dividend per share of 70.1p, in line with our policy and payable on 17 July 2024. |
Important strategic decisions taken, setting us up for long-term growth and success
| · | Ambitious PR2411 plan which comprehensively addresses Ofwat’s three key tests of financeability, deliverability, and affordability. |
| · | Successful £1bn equity raise, enabling us to accelerate £450m of AMP8 investment into AMP7. |
| · | Progressed our AMP8 strategic investments, with our ODI Centre of Excellence and Zero Spills Hub enabling an early start on AMP8 ODIs, ‘Plug and Play’ capabilities expanding to deliver AMP8 capital programme faster, first 20,000 customers migrated onto new customer platform, Kraken, and insourced around 400 colleagues into our customer Waste Network Team. |
Liv Garfield, Chief Executive, Severn Trent Plc, said:
“I’m proud of the performance our brilliant teams have delivered this year, whether for our customers, the environment or the wider region. We have achieved our best ever leakage performance and we’re very confident of keeping the highest 4* status from the Environment Agency for an unprecedented fifth consecutive year. We’re also driving innovation across our sector, with new technology at our Strongford treatment works eliminating all of the site’s carbon emissions.
“The extra £1bn we raised from our investors will help us continue to transform the network, reducing spills, improving river health and providing our customers with the best and most reliable service. Following extensive work to test and trial solutions, just last week we unveiled plans to deliver storm overflow solutions across 900 locations in the Midlands this year, and a dedicated 300-strong team are now installing c. 1,000 capital schemes which, once finished, will see a reduction of 20% of spills per year.
“We are planning record levels of investment in the coming years, while also keeping bills the second lowest in the country. Our customers and the communities in which they live are at the heart of our business and we’re doing more than ever to ensure we have a positive economic, environmental and social impact across our region.”
| Group Results | 2024 | 2023 |
| Group turnover | £2,338.2m | £2,165.1m |
| Group PBIT | £511.8m | £508.8m |
| Profit for the year | £140.2m | £132.2m |
| Adjusted profit for the year12 | £218.2m | £146.0m |
| Adjusted basic EPS | 79.4p | 58.2p |
| Basic EPS | 51.0p | 52.7p |
| Net ODI reward | £55m | £53m |
| Capital Investment | £1,199.7m | £ 737.1m |
| Shadow regulated gearing | 59.7% | 59.8% |
Footnotes to page 1 of this RNS
1. AMP: Asset Management Plan (see glossary); AMP7 refers to the period 1 April 2020 to 31 March 2025, and AMP8 refers to the period 1 April 2025 to 31 March 2030.
2. EPA: Environmental Performance Assessment (‘EPA’) is a calendar year measure which is expected to be confirmed by the Environment Agency (‘EA’) in July 2024.
3. RNAGS: The EA’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.
4. ODI: Outcome Delivery Incentives (see glossary), quoted pre-tax and in 2017/18 prices unless otherwise stated. FY24 ODIs include in-year reward earnings of £35 million and £20 million for work and milestones already delivered in relation to end of AMP ODIs.
5. Calculated based on prices in the year in which the ODIs earned have been, or are expected to be, recognised in revenue.
6. RoRE: Return on Regulatory Equity (see glossary).
7. EPS: Earnings Per Share; Adjusted basic EPS is set out in note 10.
8. PBIT: Profit Before Interest and Tax.
9. Shadow regulated gearing is based on shadow RCV which includes our Green Recovery programme. Regulated gearing on our FD RCV is 61.3%.
10. RCV: Regulatory Capital Value (see glossary), £1 billion added to nominal RCV includes estimated midnight adjustments accrued to date.
11. PR24: Price Review 2024 (see glossary).
12. Adjusted profit for the year is set out in note 10.