REG - Severn Trent PLC - Interim results for the six months to 30 Sept 2025
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RNS Number : 0764I Severn Trent PLC 19 November 2025
Half Yearly Financial Report
19 November 2025
Interim results for the six months to 30 September 2025
First half adjusted EPS(1) growth of 74% and upgrading FY26 ODI guidance
Severn Trent delivers strong financial performance in the first six months of
AMP8 with year-on-year PBIT growth of 57% and record levels of investment. We
will grow our regulatory asset base by 13% this year, increasing the value on
which we earn future returns.
Liv Garfield, Chief Executive, said:
"The next five years will be a period of exceptional growth for Severn Trent.
We have made a strong start to our largest-ever investment programme,
frontloading our investments to deliver faster for customers. Thanks to these
early investments, we've upgraded our forecasts for this year's performance
incentives to drive improvements in the things our customers care about most,
and delivered an unprecedented sixth consecutive year of top-rated
environmental performance.
"We're investing in people, technology, and new businesses to secure the
capabilities we need for the future. Backed by the financial strength of our
group, we're accelerating growth in our asset base which flows through to
earnings. We're confident we can deliver earnings growth and returns while
investing even more for our customers, creating new jobs across our region and
improving the environment for the communities we serve."
Strong first half financial performance delivering PBIT growth of 57%
· Robust earnings: higher revenue and PBIT underpinning adjusted EPS growth of
74%.
· Financing costs: raised over £900m of new debt this financial year, with the
tightest credit spreads in the sector, minimising net finance costs and
driving financing outperformance.
· Record investment: £769m invested in the first six months, with regulatory
asset base growth of 13% to £15.4bn by the end of this financial year.
· Regulated gearing(2): 61.5% (compared to 62.7% at 31 March 2025).
Group Financial Performance - H1 FY26 30 Sept 2025 30 Sept 2024 Increase
Revenue £1,436.9m £1,217.7m 18.0%
PBIT £466.2m £297.8m 56.5%
Net finance costs £161.2m £124.6m 29.4%
Adjusted EPS 101.0p 58.0p 74.1%
Basic EPS 75.7p 47.2p 60.4%
Interim dividend per ordinary share 50.40p 48.68p 3.5%
Capital investment £769.0m £665.9m 15.5%
Improved FY26 guidance
· Upgrading ODIs(3): net performance incentives (ODIs) of at least £40m
(previously "at least £25m") driven by strong performance in reducing
leakage, storm overflow spills and pollutions.
· Driving cost efficiency: improved outlook on operating costs and
infrastructure renewals expenditure, now expecting 5-8% year-on-year increase
(previously "up to 12% higher").
· Net finance costs: expect to be 25-30% higher (previously "20-25% higher") due
to higher inflation, of which we are net beneficiaries through the regulatory
model.
· Regulatory Return(4): forecasting around 13% this year.
Regulatory period (AMP8) outlook
· Reiterating outlook of doubling adjusted EPS in the 3-year period to FY28
(from 112.1p in FY25).
· Regulated gearing expected to be 60%-65% at FY30, based on forecast regulatory
asset base of £21.9bn.
· Combining our clean energy, property and services businesses with new
acquisitions to form Infrastructure Services, targeting around £100m
EBITDA(5) in FY30 (from £47.5m in FY25).
Delivering customer priorities through excellence in operational performance
· Only company to achieve four star rating from the environment regulator in
2024, a sixth consecutive year of 'industry-leading' environmental status.
· Expect to achieve around 90% of ODI targets and 100% of our delivery incentive
targets (PCDs) this year.
· Expect to halve storm overflow spills to around 13 in 2025 with analysis
showing that even if we'd experienced last year's abnormally wet weather
again, we would have achieved our 25% reduction target from 2024.
· On track to hit our leakage reduction target for an eighth consecutive year.
Footnotes to page 1 of this RNS
1. Adjusted EPS: refers to adjusted basic earnings per share (see note 8 for
further detail).
2. Regulated gearing: the adjusted net debt of our regulated business expressed
as a percentage of our estimated regulatory asset base.
3. ODI: Outcome Delivery Incentive (see glossary). FY26 ODI guidance is stated
post-tax and in 2022/23 prices.
4. Regulatory return: the return generated on actual regulatory equity,
calculated using average actual gearing applied to the Final Determination
RCV. It encompasses the base return, outperformance, and the uplift to our
regulatory asset base from inflation.
5. EBITDA: Earnings Before Interest, Tax, Depreciation and Amortisation.
Enquiries
Investors & Analysts
Nicola Whitehouse Severn Trent Plc +44 (0) 748 450 8198
Head of Investor Relations
Andy Farrell Severn Trent Plc +44 (0) 798 939 0825
Investor Relations Manager
Media
Ed Orlebar Cardew Group +44 (0) 773 872 4630
Press Office Severn Trent Plc +44 (0) 247 771 5640
Preliminary Results Presentation and Webcast
A presentation of these results hosted by Liv Garfield, CEO, and Helen Miles,
CFO, will be available on our website (severntrent.com) from 7.00am GMT today,
19 November 2025.
We will be hosting a live Q&A session with Liv, Helen and our wider
executive team at 8.30am GMT today via video call which you can register for
through our website.
Chief Executive's Review
This year marks a significant milestone for the water industry in England and
Wales. We've moved into a new regulatory period, AMP8, which is set to be a
turning point for the sector with record levels of investment. And this summer
the final report of the Independent Water Commission ('IWC') set out the
recommendations which stand to shape the regulatory framework for the future
beyond 2030.
Both of these developments are positive for the sector as a whole. AMP8 brings
significantly more investment, allowing companies to deliver improvements to
the three priority areas which will define the success of the industry - storm
overflows, leakage and pollutions - while also evolving the incentive regime
and introducing more protection for investors. Meanwhile, the IWC final report
emphasises greater stability for shareholders and clearly sets out that
significant long-term growth will continue far into the future.
We entered AMP8 as the frontier company in the sector. In the five years of
AMP7, we were the only company to be rated as 'industry leading' by the
Environment Agency for our environmental performance every year, made the
fastest start to reduce storm overflow spills, and were one of only two water
and sewerage companies to hit our leakage reduction target every year.
The relative performance of our company is significant because the regulatory
framework is comparative, setting allowances based on industry averages and
directly rewarding better performers. Our operational performance in leakage
and pollutions contributed to £434 million of net 'ODI' rewards earned in
AMP7 - more than twice as much as any other company. That helped us to deliver
a real Return on Regulatory Equity of around 9%, significantly more than any
other company in the sector. We had the highest asset base growth of any
listed water company across the period; when factoring in growth to our asset
base from indexation, our regulatory return was 14.2% p.a. across the past
five years.
Our success is underpinned by our ability to adapt to the changes and
opportunities presented to us. For AMP8, that started with our Business Plan,
which was rated Outstanding by the regulator and granted an additional 30
basis points onto the allowed cost of equity (which equates to a reward of
more than £100 million across the AMP). Since accepting our Final
Determination, we've aligned the business to the new regulatory framework and
made a fast start to the AMP.
We've progressively stepped up our investment levels over the past few years.
We deployed around half a billion pounds of AMP8 spend in the last two years
of AMP7 and secured more than twice as much funding in the AMP7 'Green
Recovery' reopener than the rest of the sector combined, meaning we entered
this year already at the right run rate to deliver the capital programme in
AMP8. This also puts us in the most credible position to be awarded any
additional funding we apply for through Ofwat's 'reopener' (see glossary) in
the next five years, once that process is defined and the growth opportunity
it presents becomes clearer.
Much of our early investment was directed towards storm overflows, meaning we
began tackling the sector's biggest issue earlier than anyone else. Storm
overflow performance is measured by the number of times each company's storm
overflows spill on average across a calendar year, and last year we had the
lowest average spills number in the sector. Having installed over 2,700
interventions so far across our nearly 2,500 storm overflows, we are on course
to halve our spills number this year, beating our 2030 target.
Our progress in addressing storm overflow spills is just one factor
contributing towards the significant ODI reward we expect to earn this year,
as we upgrade our year one guidance. We see ODIs as our strength: we have
demonstrated that Severn Trent has the culture to generate outperformance in
any regulatory regime. We adapted best to the introduction of ODIs in AMP6,
and adapted again to generate the highest rewards in AMP7 as the framework
evolved. And we signalled our continued confidence before AMP8 had even begun,
guiding to at least £300 million of rewards from operational incentives
across the five years.
Strong water performance
2025 marks 30 years since the Severn Trent region last had a hosepipe ban and,
thanks to the network resilience we've built over the past decade, we've
managed this summer's drought with minimal customer impact. While hotter,
drier weather leads to greater water consumption, we've increased our ability
to transfer water through our network to keep customers on supply, and our
roughly even split of water sources between reservoirs, rivers, and aquifers
provides more flexibility when choosing where to abstract.
We've also been better able to manage the dry weather thanks to our strong
track record of leakage reduction, resulting in a greater proportion of
treated water reaching customer homes. We expect to deliver another record
leakage performance this year, putting us on track for a significant ODI
reward. The accelerated rollout of no-dig repairs, which are now used on
around half of our communication pipe repairs, has allowed us to complete
repairs faster and more cost effectively, with minimal customer disruption.
We're also installing pressure management devices that allow us to optimise
water pressure remotely, reducing the frequency of bursts in our network. By
the end of the year around half of our network will be remotely
pressure-controlled, and initial indications show a reduction in bursts of
over 20% on these pressure-controlled parts of the network. Our leakage ODI is
calculated on a three-year rolling average, so consistent performance
underpins reward in future years.
As we continue to improve leakage towards our target of a 31.6% reduction in
the ten years to 2030, we will be expanding and utilising our smart network,
with over a third of our customers on smart meters by the end of that period.
We got a head start, rolling out over 400,000 smart meters in AMP7. This
provides real time data, allowing us to find and fix leaks more quickly.
Customers benefit too as the smart meters integrate into our Kraken customer
management system, giving them insight into their usage.
We are currently on track to meet our annual targets on the vast majority of
our water ODIs, including supply interruptions, water quality contacts and the
Compliance Risk Index (see glossary). The exception is per capita consumption,
with customer demand remaining high during this summer's drought for both
Severn Trent Water and Hafren Dyfrdwy - we have numerous initiatives in place
including flow regulators, which help to promote water efficiency.
Wastewater and environmental leadership
In October, the Environment Agency awarded Severn Trent Water
'industry-leading' four-star status for our 2024 environmental performance. We
earned that rating by delivering against seven stretching operational metrics,
including fully implementing 580 environmental improvement programmes,
delivering another year of 100% compliance on Satisfactory Sludge Disposal,
and achieving 99.5% compliance with our discharge permits across 648
wastewater sites. We were the only company to be given four stars for 2024,
marking six consecutive years of the highest possible rating, twice as long as
any other company has ever achieved. This achievement is testament to the
efforts of the teams involved and the investment we have made, and as we near
the end of the 2025 assessment period, we are currently on track to earn this
rating for a seventh consecutive year.
At this stage of the year, we are on track to meet our targets on 100% of
Ofwat's waste and environment targets, which reflects the hard work of our
teams and the upfront investment we have made.
Storm overflow spills have been the water sector's biggest issue in recent
years. We had the lowest average spills in the sector in 2024, and as we
approach the end of the 2025 assessment period we are highly confident of
halving our average spills number year-on-year to 13, meaning we will have
beaten our 2030 target in the first year of AMP8.
The drier weather this year has undoubtedly been a contributing factor. We
believe our reduction from 2024 in like-for-like weather conditions would have
been 27%. We are seeing the benefit of the over 2,700 interventions already
implemented on our network to slow the rate at which storm water enters our
sewers, increase our storage capacity, and enhance the volume of wastewater
that can be treated at our works. Customers expect us to go further, and we
foresee significant investment to be supported by the regulator in the coming
decades to meet the 2050 government target of ensuring that none of our nearly
2,500 storm overflows spill more than ten times per year.
Pollution incidents are another major focus and we are continuously tackling
pollutions in our network. We have been a top three performer in each of the
past five years and while we expect to continue to outperform Ofwat's targets
over the coming years, we want to go much further. The expansion of our
proactive response teams has contributed to a 20% reduction in pollutions so
far this year and, going forwards, we'll be fully utilising Storm Harvester -
an AI tool which uses data from sewer monitors to give advance warning of when
pollutions are likely to occur. Over the course of this five-year regulatory
period we are investing £400 million to reduce the number and severity of
pollutions, including a sevenfold increase in annual investment in our
proactive intervention programme and upgrades to over 400 sewage pumping
stations.
Sewer flooding continues to be rare, but seriously impacts customers when it
occurs so we will continue to invest to reduce the frequency of these
incidents. We are once again on track to meet our regulatory target on
internal sewer flooding, prioritising fast responses to prevent these
disruptive events. External sewer flooding incidents are also lower
year-on-year, and we expect to achieve our target on the measure having
invested in capability and skills to improve response times and prevent future
issues from arising.
Fast start to investment programme
The AMP8 regulatory period will see the water sector quadrupling investment in
new infrastructure and resources compared to AMP7. We are in prime position to
deliver this investment early and efficiently thanks to two key
differentiators.
Firstly, we scaled up our capital delivery unit early, including deploying
around half a billion pounds of transition spend over the last two years of
AMP7, so that we have entered the new regulatory period already operating at
the right run rate. We anticipate having 80% of our enhancement schemes in
contract by March 2027, which derisks the impact of any supply chain peaks
that might occur later in the AMP.
Secondly, our insourced capital design team gives us intellectual property
ownership of the design of our assets. Traditionally capital build projects
take years to complete, with assets built on site, meaning
more time on site and each asset designed individually. Our embedded design
team has developed a catalogue of standardised and repeatable 'Plug and Play'
assets which can be deployed across multiple projects, reducing the cost and
increasing the speed of design and delivery of these capital schemes.
Utilising this approach across our increased investment profile in AMP8 will
contribute towards at least £500 million of capital efficiencies we are
targeting to achieve over the AMP, providing headroom for additional
investment.
Our upfront investment enables us to guide to the maximum possible reward of
up to £50 million in Price Control Deliverables (PCDs) in AMP8. PCDs
incentivise companies to deliver programmes to time, and we expect to
outperform on all seven of our time incentive schemes across the next five
years. These incentives scale up later on in the period, but we are still
expecting the maximum possible reward on the two PCDs measured this year -
Mains Renewals and Metering.
Over the next five years we will be completing work on thousands of projects
including our largest scheme, a c. £300 million treatment works upgrade at
Wanlip in Leicestershire. With the majority of our work being on a smaller
scale, we can make the most of our unique Plug and Play approach to drive
efficiencies.
For instance, historically we've used over 40 different variations of chemical
dosing rig depending on the specific chemical mix needed on a site. Now, our
Plug and Play team have created modular chemical dosing rigs with a
configurable design that can deliver around 80% of our dosing rig needs. The
team have also developed a unique modular solution to increase storage
capacity at treatment works, including last year at Lower Moor,
Worcestershire. These solutions can be deployed into our existing works at
scale quickly with minimal preparatory civil work. Our capital design
philosophy looks first to Plug and Play solutions, and we expect to utilise
similar technologies across the full breadth of our AMP8 capital programme. As
our region's population increases and the climate changes in future years,
these Plug and Play solutions will continue to grow in importance.
Customers, Communities and Colleagues
In April of this year, customers saw a step up in their bills as the regulator
allowed record levels of investment in AMP8. Knowing this would be the case,
we have been committed to delivering value for their money. Our accelerated
investment has delivered service improvements ahead of the bill increase,
meaning the benefits have been felt from day one. Strong progress on our
capital programme and PCDs means that improvements customers have paid for
will be delivered on time. Continued outperformance against our targets means
delivering the service outcomes they care about most. And our ability to
generate cost efficiencies prevents bills from rising more than needed.
That said, we understand that in some cases the bill increase is simply more
than families can afford. While collections have remained strong, our
five-year £575 million financial support package is sufficient to support
around 1 in 6 households with their bill by 2030. Meanwhile, to help
households who don't qualify for our financial support, we are starting to
proactively move customers onto metered bills where we know it will save them
money.
While our Trustpilot score of 4.9 is the highest in the FTSE100, we are
expecting to be in a penalty position on the regulatory measure of customer
experience, C-MeX. The new methodology introduced this year has created an
asymmetry in penalty and reward across all companies, with total sector
penalties expected to be c. £100 million compared to less than £20 million
of reward.
That said, we are determined to improve, and we know there is more we can do
to ensure customers experience a hassle-free journey, and as more customers
move over to Kraken we're seeing underlying improvements. Thanks to the data
this enables we are segmenting our customers to better tailor the messages we
send and the service we provide to them, and as we adapt to this new
technology we expect it to transform the service we are able to offer our
customers.
We continue to be rated very highly for the services we provide to housing
developers. Severn Trent Water and Hafren Dyfrdwy are the two highest-rated
companies in the sector on the Developer Measure of Experience (D-MeX),
maintaining our strong AMP7 performance into the start of AMP8 when the
associated rewards for good performance are more than three times higher.
More widely, as part of the support we offer to our region, over the past
three years we have reached over 30,000 people and delivered around £10
million of social value through community initiatives, with a key focus being
social mobility. Around 15,000 people have now attended our employability
events and careers fairs across the major cities in our region, and we also
offer 500 work experience opportunities annually, primarily targeting young
people from disadvantaged backgrounds.
Alongside the impact on the lives of people in our communities, this is having
a tangible impact on our business. Most recently, 43% of colleagues at our new
customer contact centre in Edgbaston came through social recruitment
initiatives. And our progress in this area has been recognised externally; we
achieved second place in the 2025 Social Mobility Index, having ranked as one
of the top ten UK employers in each of the past seven years.
Finally, the source of our success is our engaged workforce, and we continue
to see very high morale across our teams. Our recent colleague engagement
score is at an all-time high, and once again within the top 5% of utilities
globally, while we have been ranked in Glassdoor's top 30 workplaces in the UK
with an overall score of 4.6 out of five.
We've maintained these scores while growing our business. We now have more
than 10,000 colleagues, 11% growth over the past year. Despite the increase in
headcount, we have 92% retention rates across staff and an average employee
tenure of over 8 years. This expansion in our organisation has set us up to
deliver the increased level of work and investment that lies ahead in the
coming years and decades, increasing the internal expertise held within our
business while perpetuating the culture that drives our consistent
outperformance.
Long-term value from growth
As we look beyond AMP8, the Independent Water Commission ('IWC') report has
laid out the direction of travel for the sector over the next few decades.
The report was clear that we should expect operational incentives to remain,
evolving towards a more streamlined and simplified form. Our current suite of
24 ODIs contains a number of penalty-only measures which the report recommends
are dropped, alongside other ODIs which offer minimal to no return. We
therefore expect the roughly ten ODIs in future AMPs to consist predominantly
of familiar measures which already carry strong incentives, such as leakage,
storm overflow spills and pollutions. Our consistent outperformance and
confidence across three different ODI frameworks demonstrates that we can
adapt to the future evolution and continue to generate strong returns.
We also know that this era of growth is only just starting. Existing
government targets on issues such as storm overflows will require funding for
decades, while other investment themes such as PFAS continue to emerge. The
IWC report explicitly builds on this foundation, indicating that higher levels
of investment will continue well into the future, advocating for upgraded
asset health standards, improved resilience standards, greater digitisation
and smarter networks.
We are particularly sensitive to these trends. We have no coastline, so our
treated wastewater adheres to the stricter permits required to discharge into
rivers; as standards continue to tighten, we will continue to be funded to
upgrade our treatment works accordingly. Equally, our region continues to
experience high levels of population growth, leading to further funding to
increase our supply and treatment capacities. And our population is widely
dispersed across the region, meaning we have a relatively high number of
assets which will require funding.
This growth matters to our business. Increases in the value of our asset base
compound over time and are adjusted to reflect inflation. The asset base is
used to calculate our base return and as the reference point for
outperformance rewards earnt, both of which are key determinants of future
earnings.
Finally, as we saw in AMP7, opportunities and challenges will arise that we're
not yet able to predict. We're confident that we are best placed to adapt our
organisation to whatever challenges and opportunities are ahead.
Chief Financial Officer's Review
AMP8 is a period of exceptional growth for the Group and we have made a strong
start, building on our achievements from AMP7. We have delivered strong
financial performance in the first half year, with revenue up 18%, PBIT up 57%
and adjusted earnings per share up 74%. It is also pleasing we are able to
upgrade our ODI guidance for the year to £40 million, demonstrating our
commitment to deliver returns with a regulatory return forecast of 13%
(nominal).
While we expect to continue to deliver strong performance in the second half
of the year, this year we expect that our PBIT will be more weighted to the
first half than it has been in the past, due to higher consumption over the
very dry summer, and the impacts in the second half of more customers
switching from unmeasured to measured billing, increased infrastructure
renewals expenditure and higher depreciation due to capital investment.
We have delivered another record level of investment, £769 million in the
first half of the year and we expect our RCV to grow by around 13% in the full
year to £15.4 billion, including the return from inflation.
We have continued to outperform on financing costs, with a particular
highlight being our €700 million 12-year Eurobond issued at a sector-leading
76 bps below the adjusted iboxx allowance set by Ofwat.
Our regulated gearing of 61.5% underpins our strong balance sheet, providing a
solid platform for the growth to come in our Regulated Water and Wastewater
division. Our target range for regulated gearing by the end of the AMP, i.e.
at 2030, is 60 - 65%.
In October 2025, we published an updated Sustainable Finance Framework, which
includes stronger alignment with ICMA Green Bond Principles, improved EU
Taxonomy mapping, the inclusion of Blue and Nature Bonds, and enhanced impact
reporting in line with ICMA guidelines. Our leading approach to sustainable
financing reflects our broader environmental and social commitments, and
further strengthens our platform for funding record levels of investment.
We are also driving for growth outside the regulated business through our
Infrastructure Services businesses. This includes our new Network Services
business, formed from the acquisition of two existing suppliers to Severn
Trent Water, together with our existing Business Services division comprising
the Operating Services, Green Power and Property Development businesses. We
see significant potential for growth from all of these businesses and are
targeting EBITDA of £100 million from Infrastructure Services by the end of
2029/30, predominantly through organic growth.
A summary of our financial performance in the period is set out below:
2025 2024 Better/(worse)
£m £m £m %
Turnover 1,436.9 1,217.7 219.2 18.0
PBIT 466.2 297.8 168.4 56.5
Net finance costs (161.2) (124.6) (36.6) (29.4)
Gains/losses on financial instruments, share of results of joint venture and 2.8 19.1 (16.3) (85.3)
impairment of loans receivable
Profit before tax 307.8 192.3 115.5 60.1
Tax (80.4) (50.9) (29.5) (58.0)
Profit for the period 227.4 141.4 86.0 60.8
Adjusted earnings for the period(1) 303.3 173.6 129.7 74.7
(1) Adjusted earnings exclude gains/losses on financial instruments and
deferred tax
Group turnover was £1,436.9 million (2024/25: £1,217.7 million), up £219.2
million (18.0%), driven by higher revenues in our Regulated Water and
Wastewater business (up £215.1 million) due to tariff increases and higher
consumption over the dry summer.
Group PBIT was £466.2 million (2024/25: £297.8 million). In our Regulated
Water and Wastewater business PBIT increased by 58.5%. Along with the higher
revenue, higher operating costs were partly mitigated by lower energy prices
and reductions in infrastructure renewals. In Infrastructure Services, EBITDA
was £3.1 million lower, impacted by lower export prices in Green Power, which
were partially mitigated by increased generation of electricity and gas.
Our effective interest cost increased to 5.2% (2024/25: 4.4%) due to higher
inflation uplift on index linked debt, and higher market rates impacting the
cost of new debt issued, although lower than the cost of debt we were allowed
by Ofwat. Average adjusted net debt increased by 18.4% over the same period in
the previous year and net finance costs increased to £161.2 million (2024/25:
£124.6 million), up 29.4%. Excluding the impact of inflation on our
index-linked debt, our effective cash cost of interest was 3.8% (2024/25:
3.3%), as we saw the impact of higher interest rates on new debt issues
compared to maturing debt.
Our adjusted effective current tax rate was nil% (2024/25: 0.1%) as the
benefit of full expensing for tax purposes of our significant expenditure on
qualifying plant and machinery reduced our profit chargeable to tax. Our
effective tax rate was 26.1% (2024/25: 26.5%).
Group profit after tax was £227.4 million (2024/25: £141.4 million). Our
adjusted basic earnings per share were 101.0 pence (2024/25: 58.0 pence).
Basic earnings per share were 75.7 pence (2024/25: 47.2 pence).
Our balance sheet remains strong. At 30 September 2025 our adjusted net debt
was £9,149.8 million (31 March 2025: £8,545.3 million) and our regulated
gearing was 61.5% (31 March 2025: 62.7%). We have £1.5 billion of committed
facilities, and at 30 September 2025 our cash flow requirements were funded to
March 2027.
Our net pension deficit at 30 September decreased to £112.8 million (31 March
2025: £119.8 million) . The overall funding level across all of our defined
benefit schemes was 93.7% (31 March 2025: 93.3%).
Capital investment was £769 million (2024/25: £665.9 million) as we carried
the momentum through from our transition spend in AMP7 to make a fast start to
our largest ever programme in AMP8.
The acquisitions in our Infrastructure Services division led to a total net
cash outflow of £32 million.
The Board continues to recognise the important role dividends play in
providing income for pensioners and other investors. Taking into account the
Group's prospects and financial position and the interests of other
stakeholders including customers, our pension scheme members, colleagues and
communities; the Board has declared an interim dividend for the year ending 31
March 2026 of 50.40 pence, up 3.5% in line with our policy for the five years
of AMP8 to increase the dividend by CPIH.
Regulated Water and Wastewater
Six months ended 30 September
2025 2024 Better/(worse)
£m £m £m %
Turnover 1,346.0 1,130.9 215.1 19.0
Net labour costs (131.2) (115.5) (15.7) (13.6)
Net hired and contracted costs (157.1) (132.7) (24.4) (18.4)
Power (82.1) (89.3) 7.2 8.1
Bad debts (22.2) (16.4) (5.8) (35.4)
Other costs (177.7) (172.2) (5.5) (3.2)
(570.3) (526.1) (44.2) (8.4)
Infrastructure renewals expenditure (71.5) (94.2) 22.7 24.1
Depreciation (237.3) (216.1) (21.2) (9.8)
PBIT 466.9 294.5 172.4 58.5
Turnover for our Regulated Water and Wastewater business was £1,346.0 million
(2024/25: £1,130.9 million) and PBIT was £466.9 million (2024/25: £294.5
million).
Turnover increased by £215.1 million. Core revenue increased by £219.6
million, mainly due to the annual CPIH + K increase in prices as the new AMP8
revenue allowance took effect, alongside increased consumption from measured
customers during the very dry first half year.
Infrastructure diversions turnover was £12.9 million lower mainly due to
lower HS2 activity, which is offset by lower infrastructure renewals
expenditure, and other turnover was £8.4 million higher.
Net labour costs of £131.2 million were 13.6% higher period-on-period.
Investment in additional headcount to drive operational improvements in key
strategic business areas such as pollutions, and to deliver the step up in our
capital programme increased gross labour costs by £31.7 million. Annual pay
increases, which take effect from 1 July each year, increased costs by £15.3
million period-on-period. Increased employer's national insurance, higher take
up of sharesave and other factors increased gross labour costs by £4.0
million. The increases in gross labour costs were partly offset by a £35.3
million step up in capitalised salaries.
Net hired and contracted costs increased by £24.4 million (18.4%), £10.9
million most of which relates to a planned step up in licence costs for our
new billing system, Kraken. Additional tankering to manage the impacts of the
prolonged drought have contributed £7.6 million. Higher volume-related sludge
recycling costs in Bioresources contribute a further £2.0 million, along with
a number of other small increases across other areas. Operational efficiencies
of £4.5 million have been generated including through our water networks
Origin activities which allow us to complete jobs faster, with lower need for
excavation and gang costs.
Power costs were £7.2 million or 8.1% lower period-on-period, driven by the
lower wholesale weighted average price of electricity on imports (around
£25/MWh lower). This was partly offset by increased consumption at our Water
Treatment sites during the hot summer months.
Bad debt charges increased by £5.8 million but remained broadly flat as a
proportion of household revenue at 2.1% (2024/25: 2.0%).
Other costs were up by £5.5 million as a result of increased Ofwat regulatory
fees, higher business rates and price increases to chemicals such as ferric
sulphate. These increases were partly offset by lower spend on compensation
payments and damage costs as we have delivered operational activities more
effectively. We have also benefited from improved commercial agreements on
some small contracts.
Infrastructure renewals expenditure was £22.7 million lower in the period,
due to lower HS2 activity as well as a higher proportion of capitalised mains
renewals jobs compared to this time last year.
Depreciation of £237.3 million was £21.2 million higher period-on-period due
to the increasing asset base.
Infrastructure Services
Six months ended 30 September
2025 2024 Increase/(decrease)
£m £m £m %
Turnover
Operating Services and other 55.7 47.9 7.8 16.3
Network Services 5.0 ‒ 5.0 n/a
Green Power 39.2 42.1 (2.9) (6.9)
99.9 90.0 9.9 11.0
EBITDA
Operating Services and other 11.8 13.0 (1.2) (9.2)
Network Services (1.3) ‒ (1.3) n/a
Green Power 9.4 10.5 (1.1) (10.5)
Property Development 1.4 0.9 0.5 55.6
21.3 24.4 (3.1) (12.7)
Infrastructure Services turnover was £99.9 million (up 11.0%) and EBITDA was
£21.3 million (down 12.7%). This includes the performance of the two Network
Services acquisitions, Industrial Jetting Water Systems Limited (IWJS) and
Watertight Management Limited (Watertight), that were completed on 31 July
2025.
In our Operating Services and Other businesses, turnover increased by £7.8
million due to recovery of higher charges from water and wastewater suppliers
in our MoD contract, the acquisition of Reigate Environmental Services Limited
and higher project revenue in Oren Services, our reed bed business. EBITDA was
£11.8 million, £1.2 million lower year-on-year due to EIR case legal costs
being recovered in the prior year. On an underlying basis, EBITDA was £1.3
million higher year-on-year.
Network Services includes our two new acquisitions. IWJS provides sewer
rehabilitation and jetting services, removing sewer blockages to prevent
pollutions and sewer flooding events. Watertight was one of our key civil
engineering suppliers and brings experience in complex mains renewals,
infrastructure upgrades and incident response.
Both businesses were acquired on 31 July 2025 as part of a strategic vertical
integration of members of the Severn Trent Water supply chain, securing this
part of the supply chain for Severn Trent Water and creating opportunities for
Infrastructure Services to benefit from the increased sector investment over
AMP8 and beyond. These businesses have contributed additional revenues to the
period of £5.0 million and EBITDA of £0.2 million before acquisition costs
of £1.5 million.
In Green Power, turnover was £2.9 million lower year-on-year as a result of
lower incoming waste volumes translating into lower gate fee revenue.
Green Power EBITDA was £1.1 million lower period-on-period. Above-inflation
cost increases on employment costs, food waste and haulage, as well as
additional maintenance costs were offset by lower costs associated with
reduced food waste volumes.
Profits from Property Development were £1.4 million, up £0.5 million. Our
long-term plans to deliver £150 million profit by 2032 remain on track.
Corporate and other
Corporate overheads were £7.2 million (2024/25: £10.6 million). The prior
year charge included a reclassification of Executive Director bonuses and
three years' unvested long-term incentive plans to Severn Trent Plc of £2.4
million to ensure these costs are not borne by customers.
Net finance costs
The Group's net finance costs for the six month period were £161.2 million,
(2024/25: £124.6 million). Average adjusted net debt of £8,840.1 million was
higher than the previous year (2024/25: £7,469.1 million) and our effective
interest cost for the period increased to 5.2% (2024/25: 4.4%) due to the
impact of higher inflation on our index-linked debt and increased interest
rates on new debt. Our effective cash cost of interest (which excludes the
inflation uplift on index-linked debt) was 3.8% (2024/25: 3.3%) higher due to
increased interest rates on new debt. Interest capitalised of £72.0 million
(2024/25: £43.0 million) increased due to the higher capital work in progress
during the period.
The Group's EBITDA interest cover was 4.5 times (2024/25: 4.4 times) and PBIT
interest cover was 3.0 times (2024/25: 2.5 times). See note 18 for further
details.
Net gains/losses on financial instruments
The Group uses financial derivatives solely to hedge risks associated with its
normal business activities including:
· Cross currency swaps, which economically act to hedge exchange rate risk on
borrowings denominated in foreign currencies;
· Interest rate swaps to balance our interest rate mix in line with our strategy
and to manage interest rate exposures on floating rate borrowings;
· Energy swaps to mitigate exposures to increases in electricity prices; and
· Inflation swaps, which swap RPI linked cash flows for CPI linked cash flows to
mitigate risks arising from changes in the regulatory model from RPI to CPIH.
An analysis of the amounts charged to the income statement in the period is
presented in note 5 to the financial statements including:
· A net charge of £1.0 million (2024/25: credit of £0.5 million) from
revaluing debt and swaps accounted for as fair value hedges.
· A net credit of £8.8 million (2024/25: £24.7 million) from interest rate
swaps not subject to hedge accounting and exchange movements on borrowings
denominated in foreign currencies along with the revaluation of the related
cross currency swap where hedge accounting is not applied.
· A net charge of £3.4 million (2024/25: £6.7 million) arose from losses on
cash flow hedges recycled from reserves and other valuation adjustments.
The Group has fixed around 95% of the estimated wholesale energy usage for the
remainder of 2025/26 through a combination of forward price contracts and
financial derivatives.
Taxation
We are committed to paying the right amount of tax at the right time and were
pleased to have our Fair Tax Mark accreditation renewed for the seventh year.
As well as corporation tax on profits, which is included in the tax charge in
our accounts, we pay a range of other taxes, charges and levies imposed by
government agencies including business rates, employer's national insurance,
the Climate Change Levy and Insurance Premium Tax. Our 2024/25 Annual Report
and Accounts sets out an analysis of the taxes incurred in that year and we
will set out this year's amounts in our Annual Report to be published in June
2026.
The tax charge reported in the income statement is calculated at a rate of
26.1% (2024/25: 26.5%), representing the best estimate of the annual average
tax rate expected for the full year, applied to the profit for the six month
period.
The current tax charge for the period was £0.1 million (2024/25: £0.2
million). The deferred tax charge was £80.3 million (2024/25: £50.7
million).
The tax allowances generated by our significant capital programme reduced our
adjusted effective current tax rate (in line with guidance) to nil% (2024/25:
0.1%).
Profit for the period and earnings per share
Reported profit for the period was £227.4 million (2024/25: £141.4 million).
Basic earnings per share were 75.7 pence (2024/25: 47.2 pence). Adjusted basic
earnings per share were 101.0 pence (2024/25: 58.0 pence).
Cash flow
Six months ended 30 September
2025 2024
£m £m
Operational cashflow 625.7 541.9
Cash capex (781.8) (662.0)
Net interest paid (142.7) (105.1)
Purchase of subsidiaries net of cash acquired (31.6) (14.9)
Net tax paid (0.6) (0.7)
Free cash flow (331.0) (240.8)
Dividends (219.6) (209.9)
Issue of shares 13.7 15.4
Proceeds from swap issue 1.4 -
Purchase of own shares (0.8) -
Change in net debt from cash flows (536.3) (435.2)
Non-cash movements (68.2) (42.2)
Change in adjusted net debt (604.5) (477.5)
Opening adjusted net debt (8,545.3) (7,187.9)
Closing adjusted net debt (9,149.8) (7,665.4)
Adjusted net debt comprises:
30 September 31 March 30 September
2025 2025 2024
£m £m £m
Bank loans (787.4) (784.7) (785.1)
Other loans (9,844.2) (8,798.0) (7,904.4)
Lease liabilities (113.7) (111.1) (119.1)
Net cash and cash equivalents 1,449.2 1,044.8 1,046.0
Fair value accounting adjustments 18.6 23.1 26.5
Exchange on currency debt not hedge accounted 73.9 9.4 0.6
Loans due from joint ventures 53.8 71.2 70.1
Adjusted net debt (9,149.8) (8,545.3) (7,665.4)
At 30 September 2025 we held £1,449.2 million (31 March 2025: £1,044.8
million) in net cash and cash equivalents. Our average debt maturity is 12
years. Including undrawn committed facilities, the Group's cash flow
requirements are funded until March 2027.
We invest cash in deposits with highly rated banks and liquidity funds. The
Treasury Committee regularly reviews the list of counterparties and their
limits.
Adjusted net debt at 30 September 2025 was £9,149.8 million (31 March 2025:
£8,545.3 million). Regulatory gearing (Adjusted net debt of our regulated
businesses, expressed as a percentage of estimated Regulatory Capital Value)
was 61.5% (31 March 2025: 62.7%).
The estimated fair value of debt at 30 September 2025 was £1,153.5 million
lower than book value (31 March 2025: £1,109.8 million lower). The difference
arises because market expectations for interest rates and inflation are higher
than the average embedded amounts in our debt instruments (see note 9 for
further details).
Pensions
We have three defined benefit pensions arrangements, two for Severn Trent and
one for Dee Valley Water. The two Severn Trent schemes closed to future
accrual on 31 March 2015 and the Dee Valley Water scheme closed to future
accrual on 31 March 2024.
The future funding plan agreed under the 2022 actuarial valuation for the main
Severn Trent Pension Scheme (STPS) includes:
· Annual deficit reduction payments to be made until the year ending 31 March
2027, increasing in line with CPI (based on increases in the measure
covering the 12-month period to the previous November). These contributions
are made to a limited liability partnership that the Group and the Trustee
have established;
· Payments under an asset-backed funding arrangement of £8.2 million per annum
to 31 March 2032, which will only continue if the Scheme's assets are less
than the Scheme's Technical Provisions; and
· Inflation-linked payments under an asset-backed funding arrangement,
potentially continuing to 31 March 2031, although these contributions will
cease earlier should a subsequent valuation of the STPS show that these
contributions are no longer needed.
We have substantively completed the 2025 triennial valuation with the Trustee
and have agreed in principle that payments will remain on the same basis as
the 2022 valuation set out above.
On an IAS 19 basis, the estimated combined net position (before deferred tax)
of all of the Group's defined benefit pension schemes at 30 September 2025 was
a deficit of £112.8 million. Calculation of the pension deficit for
accounting purposes uses corporate bond yields as the basis for the discount
rate of our long-term liabilities, irrespective of the nature of the scheme's
assets or their expected returns.
The net finance cost was £3.4 million and administration costs were £2.5
million.
The movements in the net deficit during the period were as follows:
Fair value of scheme assets Defined benefit obligations Net deficit
£m £m £m
At start of the period 1,676.7 (1,796.5) (119.8)
Amounts credited/(charged) to income statement 44.4 (50.3) (5.9)
Actuarial gains taken to reserves 7.4 5.0 12.4
Net contributions received and benefits paid (58.9) 59.4 0.5
At end of the period 1,669.6 (1,782.4) (112.8)
On an IAS 19 basis, the funding level is 93.7% (31 March 2025: 93.3%).
Dividends
The Board has declared an interim ordinary dividend of 50.40p per share
(2024/25: 48.68p per share), which will be paid on 12 January 2026 to
shareholders on the register at 28 November 2025.
Principal risks and uncertainties
The Board considers the principal risks and uncertainties affecting the
business activities of the Group for the remainder of the financial year to be
those detailed below. Details of how the Group mitigates and manages these
risks are set out in the Annual Report.
Health and Safety:
· Due to the nature of our operations, we could endanger the health and safety
of our people, contractors and members of the public.
Infrastructure Failure and Asset Resilience:
· We do not provide a safe and secure supply of drinking water to our customers.
· We do not transport and treat wastewater effectively, impacting our ability to
return clean water to the environment.
Customer Service and Experience:
· We do not meet the needs of our customers or anticipate changing expectations
through the level of customer experience we provide.
Supply Chain and Capital Project Delivery:
· Insufficient resilience in the supply chain impacts the deliverability of the
capital programme (time, cost, quality).
Security and Resilience:
· Core operational capabilities are compromised through physical, people or
technological threats.
Political, Legal and Regulatory:
· Uncertainty of regulatory, legislative and Government reforms which could
fundamentally impact our operating environment and strategic ambitions.
Financial Liabilities:
· Failure to responsibly manage our financial position to maintain financial
resilience and a strong funding platform, and effectively manage market
volatility.
Climate Change, Environment and Biodiversity:
· Our climate change strategy does not enable us to respond to the shifting
natural climatic environment and maintain our essential services.
· Failure to act as a steward of natural capital in our region providing social,
environmental and economic benefits.
People and Culture:
· Our people and culture do not adapt in response to a changing environment and
take advantage of technological advancements to deliver enhanced business
performance.
Outlook Statement
Long-term earnings
Our long-term earnings outlook remains unchanged. We project Group adjusted
EPS to double in the 3-year period to 2027/28, from 112.1 pence in 2024/25,
benefitting from regulated revenue growth including ODI outperformance,
continued cost management, and our strategic approach to financing. We expect
this Group adjusted EPS growth to be weighted towards 2025/26 reflecting our
bill profile.
In addition, we anticipate increasing EBITDA from Infrastructure Services to
around £100 million in the period 2029/30, driven by growth in Network
Services as well as our Green Power, Operating Services, and Property
businesses. This includes our long-term plan to achieve £150 million of
profit from our Property business by 2032.
Financial resilience
We expect regulated gearing to be between 60% - 65% at the end of the AMP. We
expect Plc gearing to remain within thresholds consistent with our current
credit ratings.
Technical Guidance 2025/26
Year-end guidance FY25 Year-on- Year
Regulated Water and Wastewater
Turnover Around £2.6 billion including HS2 related income. £2.25bn ▲
Operating costs & IRE 5% - 8% higher year-on-year including continued investment in operational £1.2bn ▲
performance and increases in national insurance and pay.
ODIs¹ At least £40 million of ODI reward. £68m ▼
STW Regulatory Return² Around 13%. 11.9% ▲
Infrastructure Services
EBITDA 15% - 25% increase year-on-year driven by higher property profits and the £47m ▲
performance of our new acquisitions.
Group
Net finance costs³ 25% - 30% higher year-on-year driven by higher inflation and includes £244m ▲
additional debt to fund the AMP8 investment programme.
Adjusted effective current tax rate Adjusted effective current tax rate of nil due to "full expensing" and other 0.1% ↔
accelerated capital allowances on our substantial capital investment
programme.
Capital investment Set to invest between £1.7 billion - £1.9 billion. £1.7bn ▲
Dividend⁴ 2025/26 dividend of 126.02 pence, in line with our AMP8 policy of annual 121.71p ▲
growth by CPIH.
Footnotes to Technical Guidance
1. Outcome Delivery Incentives are quoted post-tax in 2022/23 prices.
2. Regulatory return: the return generated on actual regulatory
equity, calculated using average actual gearing applied to the Final
Determination RCV. It encompasses the base return, outperformance, and the
uplift to our RCV from inflation.
3. Based on Oxford Economics October inflation forecast. Index-linked
debt comprises around a quarter of our total debt.
4. 2025/26 dividend growth rate based on November 2024 CPIH of 3.53%.
Investor Timetable
19 November 2025 Interim Results Announcement 2025/26
27 November 2025 Ex-dividend date (interim)
28 November 2025 Dividend record date (interim)
17 December 2025 DRIP election date (interim)
12 January 2026 Interim dividend payment date
31 March 2026 Financial Year End
For more information please visit:
https://www.severntrent.com/investors/financial-calendar-and-regulatory-news/financial-calendar/
(https://www.severntrent.com/investors/financial-calendar-and-regulatory-news/financial-calendar/)
A Dividend Reinvestment Plan ('DRIP') is provided by Equiniti Financial
Services Limited. The DRIP enables the Company's shareholders to elect to have
their cash dividend payments used to purchase the Company's shares. More
information can be found at www.shareview.co.uk/info/drip
(https://www.shareview.co.uk/info/drip) .
Further Information
For further information, including the Group's half-year results presentation,
see the Severn Trent website (www.severntrent.com (http://www.severntrent.com)
).
Condensed consolidated income statement
Six months ended 30 September 2025
2025 2024
Note £m £m
Turnover 3,4 1,436.9 1,217.7
Other income - 0.4
Operating costs before charge for bad and doubtful debts (948.4) (903.8)
Charge for bad and doubtful debts (22.3) (16.5)
Total operating costs (970.7) (920.3)
Profit before interest and tax 466.2 297.8
Finance income 75.5 72.6
Finance costs (236.7) (197.2)
Net finance costs (161.2) (124.6)
Net gains on financial instruments 5 4.4 18.5
Share of net (loss)/profit of joint ventures accounted for using the equity 10 (1.6) 0.6
method
Profit on ordinary activities before taxation 307.8 192.3
Current tax 6 (0.1) (0.2)
Deferred tax 6 (80.3) (50.7)
Taxation on profit on ordinary activities 6 (80.4) (50.9)
Profit for the period 227.4 141.4
Earnings per share (pence)
Note 2025 2024
Basic 8 75.7 47.2
Diluted 8 75.5 47.1
Condensed consolidated statement of comprehensive income
Six months ended 30 September 2025
2025 2024
Note £m £m
Profit for the period 227.4 141.4
Other comprehensive income
Items that will not be reclassified to the income statement:
Net actuarial gains 11 12.4 34.4
Deferred tax on net actuarial gains (3.2) (8.6)
9.2 25.8
Items that may be reclassified to the income statement:
Losses on cash flow hedges (5.6) (2.3)
Deferred tax on losses on cash flow hedges 1.4 0.6
Amounts on cash flow hedges transferred to the income statement 5 4.1 7.4
Deferred tax on transfer to the income statement (1.0) (1.9)
(1.1) 3.8
Other comprehensive income for the period 8.1 29.6
Total comprehensive income for the period 235.5 171.0
Condensed consolidated statement of changes in equity
Six months ended 30 September 2025
Equity attributable to owners of the company
Share capital Share premium Other reserves Retained earnings Total
Note £m £m £m £m £m
At 1 April 2024 295.4 1,363.1 167.6 7.9 1,834.0
Profit for the period ‒ ‒ ‒ 141.4 141.4
Net actuarial gains 11 ‒ ‒ ‒ 34.4 34.4
Deferred tax on net actuarial gains ‒ ‒ ‒ (8.6) (8.6)
Losses on cash flow hedges ‒ ‒ (2.3) ‒ (2.3)
Deferred tax on losses on cash flow hedges ‒ ‒ 0.6 ‒ 0.6
Amounts on cash flow hedges transferred to the income statement 5 ‒ ‒ 7.4 ‒ 7.4
Deferred tax on transfers to the income statement ‒ ‒ (1.9) ‒ (1.9)
Total comprehensive income for the period ‒ ‒ 3.8 167.2 171.0
Share options and LTIPs
- proceeds from shares issued 0.8 14.6 ‒ ‒ 15.4
- value of employees' services ‒ ‒ ‒ 5.5 5.5
- issue from treasury shares ‒ ‒ ‒ 2.3 2.3
Deferred tax on share based payments ‒ ‒ ‒ (0.2) (0.2)
Dividends paid 7 ‒ ‒ ‒ (210.1) (210.1)
Unclaimed dividends ‒ ‒ ‒ 0.2 0.2
Transactions with shareholders 0.8 14.6 ‒ (202.3) (186.9)
At 30 September 2024 296.2 1,377.7 171.4 (27.2) 1,818.1
At 1 April 2025 296.3 1,378.3 174.3 (78.1) 1,770.8
Profit for the period ‒ ‒ ‒ 227.4 227.4
Net actuarial gains 11 ‒ ‒ ‒ 12.4 12.4
Deferred tax on net actuarial gains ‒ ‒ ‒ (3.2) (3.2)
Losses on cash flow hedges ‒ ‒ (5.6) ‒ (5.6)
Deferred tax on losses on cash flow hedges ‒ ‒ 1.4 ‒ 1.4
Amounts on cash flow hedges transferred to the income statement 5 ‒ ‒ 4.1 ‒ 4.1
Deferred tax on transfers to the income statement ‒ ‒ (1.0) ‒ (1.0)
Total comprehensive income for the period ‒ ‒ (1.1) 236.6 235.5
Share options and LTIPs
- proceeds from shares issued 0.6 13.1 ‒ ‒ 13.7
- value of employees' services ‒ ‒ ‒ 6.4 6.4
Deferred tax on share based payments ‒ ‒ ‒ (0.3) (0.3)
Dividends paid 7 ‒ ‒ ‒ (219.6) (219.6)
Purchase of own shares ‒ ‒ ‒ (0.8) (0.8)
Transactions with shareholders 0.6 13.1 ‒ (214.3) (200.6)
At 30 September 2025 296.9 1,391.4 173.2 (55.8) 1,805.7
Condensed consolidated balance sheet
Six months ended 30 September 2025
30 September 31 March
2025 2025
Note £m £m
Non-current assets
Goodwill 151.8 117.3
Other intangible assets 206.2 206.5
Property, plant and equipment 14,000.2 13,307.2
Biological assets 4.9 4.9
Right-of-use assets 140.9 141.0
Investment in joint venture 10 ‒ 1.6
Derivative financial instruments 9 104.4 59.9
Trade and other receivables 77.0 90.8
Retirement benefit surplus 11 5.0 5.3
14,690.4 13,934.5
Current assets
Inventory 44.6 43.2
Trade and other receivables 1,049.5 878.3
Derivative financial instruments 9 8.3 5.6
Cash and cash equivalents 1,454.1 1,048.1
2,556.5 1,975.2
Current liabilities
Borrowings (774.2) (533.0)
Derivative financial instruments 9 (0.8) (2.9)
Trade and other payables (956.8) (862.2)
Current tax payable (0.5) (0.4)
Provisions for liabilities (51.9) (46.4)
(1,784.2) (1,444.9)
Net current assets 772.3 530.3
Total assets less current liabilities 15,462.7 14,464.8
Non-current liabilities
Borrowings (9,976.0) (9,164.1)
Derivative financial instruments 9 (26.1) (44.7)
Trade and other payables (1,938.9) (1,839.2)
Deferred tax (1,555.9) (1,472.1)
Retirement benefit obligations 11 (117.8) (125.1)
Provisions for liabilities (42.3) (48.8)
(13,657.0) (12,694.0)
Net assets 1,805.7 1,770.8
Equity
Called up share capital 13 296.9 296.3
Share premium account 1,391.4 1,378.3
Other reserves 173.2 174.3
Retained earnings (55.8) (78.1)
Total equity 1,805.7 1,770.8
Condensed consolidated cash flow statement
Six months ended 30 September 2025
2025 2024
Note £m £m
Cash generated from operations 14 655.1 555.6
Tax paid 14 (0.6) (0.7)
Net cash generated from operating activities 654.5 554.9
Cash flows from investing activities
Purchase of subsidiaries net of cash acquired (31.6) (14.9)
Purchases of property, plant and equipment (794.1) (663.5)
Purchases of intangible assets (23.1) (18.7)
Proceeds on disposal of property, plant and equipment 6.0 6.5
Net loans repaid by joint ventures 17.5 2.5
Interest received 27.1 27.6
Net cash outflow from investing activities (798.2) (660.5)
Cash flow from financing activities
Interest paid (169.8) (132.7)
Dividends paid to shareholders of the parent (219.6) (209.9)
Repayments of borrowings (2.6) (52.4)
Principal elements of lease payments (0.6) (3.1)
New loans raised 926.4 582.9
Issues of shares net of costs 13.7 15.4
Proceeds from swap issue 1.4 -
Purchase of own shares (0.8) -
Net cash inflow from financing activities 548.1 200.2
Net movement in cash and cash equivalents 404.4 94.6
Net cash and cash equivalents at the beginning of the period 1,044.8 951.4
Net cash and cash equivalents at the end of the period 1,449.2 1,046.0
Cash at bank and in hand 40.0 55.4
Bank overdrafts (4.9) (9.8)
Short term deposits 1,414.1 1,000.4
1,449.2 1,046.0
Notes to the condensed interim financial information
1. General information
The interim report has been prepared in accordance with the recognition and
measurement criteria of UK-adopted International Accounting Standards and the
disclosure requirements of the Listing Rules.
The information for the period ended 31 March 2025 does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006. A copy of the statutory accounts for that year prepared under IFRS has
been delivered to the Registrar of Companies. The auditor's report on those
accounts was unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
a) Accounting policies
The interim financial information has been prepared on the going concern basis
using accounting policies consistent with United Kingdom adopted International
Accounting Standard 34 'Interim Financial Reporting'. The same accounting
policies, presentation and methods of computation are followed in the interim
financial information as applied in the Group's annual financial statements
for the year ended 31 March 2025.
b) Going concern
Including undrawn committed credit facilities of £1,500 million, and based on
its latest forecasts, the Group is fully funded for its investment and cash
flow needs for more than the next year.
After making enquiries the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future and hence the interim financial information has been
prepared on a going concern basis.
c) Seasonality
Historically around half of the Group's PBIT has arisen in the first half of
the year. Further detail on the expected seasonality of PBIT in the current
year is set out in the Chief Financial Officer's Review.
2. Significant accounting judgments and key sources of estimation uncertainty
In the course of applying the Group's accounting policies, the Group is
required to make certain judgments, estimates and assumptions that it believes
are reasonable based on the information available. Although these estimates
are based on management's best knowledge of the amount, event or actions,
actual results may ultimately differ from those estimates. Details of the
significant accounting judgments and key sources of estimation uncertainty
were set out in the Group's financial statements for the year ended 31 March
2025. Changes to these judgments and uncertainties are set out below.
a) Significant accounting judgments
There have been no changes to the significant accounting judgments made at 31
March 2025.
b) Sources of estimation uncertainty
There have been no significant changes to the estimates relating to
depreciation and carrying amounts of property, plant and equipment, retirement
benefit obligations or to expected credit losses on trade receivables since 31
March 2025.
3. Segmental analysis
The Group is organised into two main business segments:
Regulated Water and Wastewater includes the wholesale water and wastewater
activities of Severn Trent Water Limited ('STW'), its retail services to
domestic customers, and Hafren Dyfrdwy Cyfyngedig ('HD').
Infrastructure Services includes the Group's Operating Services businesses,
the Green Power business including Severn Trent Water's hydro-electric
generation, the Property Development business, Network Services and our other
non-regulated businesses including affinity products and searches.
The Severn Trent Executive Committee ('STEC') is considered to be the Group's
chief operating decision maker. The reports provided to STEC include segmental
information prepared on the basis described above.
Results from interests in our joint venture are not included in the segmental
reports reviewed by STEC.
Goodwill is allocated and monitored at the segment level.
Transactions between reportable segments are included within segmental
results, assets and liabilities in accordance with Group accounting policies.
These are eliminated on consolidation.
A segmental analysis of turnover and profit before interest and tax is
presented below.
Six months ended 30 September
2025 2024
Regulated Water and Wastewater Infrastructure Services Regulated Water and Wastewater Infrastructure Services
£m £m £m £m
External turnover 1,346.0 90.9 1,130.7 87.1
Inter-segment turnover ‒ 9.0 0.2 2.9
Total turnover 1,346.0 99.9 1,130.9 90.0
Profit before interest and tax 466.9 8.6 294.5 14.8
The reportable segments' turnover is reconciled to Group turnover as follows:
Six months ended 30 September
2025 2024
£m £m
Regulated Water and Wastewater 1,346.0 1,130.9
Infrastructure Services 99.9 90.0
Corporate and other 0.9 0.9
Consolidation adjustments (9.9) (4.1)
1,436.9 1,217.7
Segmental PBIT is reconciled to the Group's profit before tax as follows:
Six months ended 30 September
2025 2024
£m £m
Regulated Water and Wastewater 466.9 294.5
Infrastructure Services 8.6 14.8
Corporate and other (7.3) (10.9)
Consolidation adjustments (2.0) (0.6)
Profit before interest and tax 466.2 297.8
Net finance costs (161.2) (124.6)
Net gains on financial instruments 4.4 18.5
Share of net (loss)/gain of joint ventures accounted for using the equity (1.6) 0.6
method
Profit on ordinary activities before taxation 307.8 192.3
The following table shows segmental capital employed:
30 September 31 March
2025 2025
Infrastructure Services Regulated Water and Wastewater Infrastructure Services
Regulated Water and Wastewater
£m £m £m £m
Operating assets 15,081.8 407.9 14,240.9 388.9
Goodwill 63.5 89.6 63.5 55.1
Segment assets 15,145.3 497.5 14,304.4 444.0
Segment operating liabilities (3,038.8) (72.0) (2,865.9) (42.4)
Capital employed 12,106.5 425.5 11,438.5 401.6
Operating assets comprise other intangible assets, property, plant and
equipment, biological assets, right-of-use assets, retirement benefit
surpluses, inventory and trade and other receivables.
Operating liabilities comprise trade and other payables, retirement benefit
obligations and provisions.
4. Revenue from contracts with customers
Revenue recognised from contracts with customers is analysed by business
segment below:
Six months ended 30 September 2025
Regulated Water and Wastewater Infrastructure Services Corporate Consolidation adjustments Group
and other
£m £m £m £m £m
Water and wastewater services 1,321.0 ‒ ‒ ‒ 1,321.0
Operating services ‒ 47.7 ‒ (2.1) 45.6
Network services ‒ 5.0 ‒ (3.8) 1.2
Renewable energy 21.6 39.2 ‒ (3.1) 57.7
Other sales 3.4 8.0 0.9 (0.9) 11.4
1,346.0 99.9 0.9 (9.9) 1,436.9
Six months ended 30 September 2024
Regulated Water and Wastewater Infrastructure Services Corporate Consolidation adjustments Group
and other
£m £m £m £m £m
Water and wastewater services 1,110.0 ‒ ‒ (0.2) 1,109.8
Operating services ‒ 39.9 ‒ (0.1) 39.8
Renewable energy 19.5 42.1 ‒ (2.9) 58.7
Other sales 1.4 8.0 0.9 (0.9) 9.4
1,130.9 90.0 0.9 (4.1) 1,217.7
5. Net gains on financial instruments
Six months ended 30 September
2025 2024
£m £m
Loss on swaps used as hedging instruments in fair value hedges (3.8) (1.3)
Gain arising on debt in fair value hedges 2.8 1.8
Exchange (loss)/gain on other loans (64.5) 18.9
Net loss on cash flow hedges transferred from equity (4.1) (7.4)
Hedge ineffectiveness on cash flow hedges 0.1 0.1
Gain arising on swaps where hedge accounting is not applied 73.3 5.8
Amortisation of fair value adjustment on debt 0.6 0.6
4.4 18.5
6. Tax
Six months ended 30 September
2025 2024
£m £m
Current tax
Current year at 25% (2024: 25%) 0.1 0.1
Prior years ‒ 0.1
Total current tax 0.1 0.2
Deferred tax
Origination and reversal of temporary differences:
Current year 80.3 50.7
Total deferred tax 80.3 50.7
80.4 50.9
The tax charge in the income statement is calculated at a rate of 26.1% (2024:
26.5%) representing the best estimate of the annual average effective income
tax rate expected for the full year applied to the pre-tax income for the six
month period.
The adjusted effective current tax rate was nil% (2024: 0.1%). See note 18.
Current tax of nil (2024: nil) and a net deferred tax charge of £3.1 million
(2024: £10.1 million) has been taken to reserves in the period.
Deferred tax is provided at 25%, the rate that is expected to apply when the
asset or liability is expected to be settled.
7. Dividends
Amounts recognised as distributions to owners of the Company in the period:
Six months ended 30 September
2025 2024
Pence per share £m Pence per share £m
Final dividend for the year ended 31 March 2025 (2024) 73.03 219.6 70.10 210.1
The proposed interim dividend of 50.40p per share (2024: 48.68p per share) was
approved by the Board on 18 November 2025 and has not been included as a
liability at 30 September 2025.
8. Earnings per share
a) Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares in
issue during the period, excluding those held in the Severn Trent Employee
Share Ownership Trust and treasury shares, which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares. These represent share options granted to employees where the exercise
price is less than the average market price of the Company's shares during the
period.
The calculation of basic and diluted earnings per share is based on the
following data:
i) Earnings for the purpose of basic and diluted earnings per share
2025 2024
£m £m
Profit for the period 227.4 141.4
ii) Number of shares
Six months ended 30 September
2025 2024
m m
Weighted average number of ordinary shares for the purpose of basic earnings 300.3 299.4
per share
Effect of dilutive potential ordinary shares:
- share options and LTIPs 0.8 0.5
Weighted average number of ordinary shares for the purpose of diluted earnings 301.1 299.9
per share
b) Adjusted earnings per share
Six months ended 30 September
2025 2024
pence pence
Adjusted basic earnings per share 101.0 58.0
Adjusted diluted earnings per share 100.7 57.9
Adjusted earnings per share figures are presented for continuing operations.
These exclude the effects of net gains/losses on financial instruments,
current tax on net gains/losses on financial instruments and deferred tax. The
Directors consider that the adjusted figures provide a useful additional
indicator of performance. The denominators used in the calculations of
adjusted basic and diluted earnings per share are the same as those used in
the unadjusted figures set out above.
The adjustments to earnings are as follows:
Six months ended 30 September
2025 2024
£m £m
Earnings for the purpose of basic and diluted earnings per share 227.4 141.4
Adjustments for:
- net gains on financial instruments (4.4) (18.5)
- deferred tax 80.3 50.7
Earnings for the purpose of adjusted basic and diluted earnings per share 303.3 173.6
9. Fair value of financial instruments
a) Fair value measurements
The valuation techniques that the Group applies in determining the fair values
of its financial instruments on a recurring basis are described below. The
techniques are classified under the hierarchy defined in IFRS 13 which
categorises valuation techniques into Levels 1 - 3 based on the degree to
which the fair value is observable. The Group's valuation techniques are Level
2 unless otherwise stated below:
30 September 2025 31 March
2025
£m £m Valuation techniques and key inputs
Cross currency swaps Discounted cash flow.
Assets 77.2 23.2 Future cash flows are estimated based on forward interest rates from
observable yield curves at the period end and contract interest rates
discounted at a rate that reflects the credit risk of counterparties. The
currency cash flows are translated at spot rate.
Liabilities (19.9) (39.3)
Interest rate swaps Discounted cash flow.
Assets 30.0 35.6 Future cash flows are estimated based on forward interest rates from
observable yield curves at the period end and contract interest rates
Liabilities (5.2) (5.1) discounted at a rate that reflects the credit risk of counterparties.
Energy swaps Discounted cash flow.
Assets 2.2 0.7 Future cash flows are estimated based on forward electricity prices from
observable indices at the period end and contract prices discounted at a rate
Liabilities (1.8) (3.2) that reflects the credit risk of counterparties.
Inflation swaps Discounted cash flow.
Assets 3.3 6.0 Future cash flows on the RPI leg of the instrument are estimated based on
observable forward inflation indices.
Future cash flows on the CPI leg of the instrument are estimated based on the
future expected differential between RPI and CPI ('the wedge').
Both legs are discounted using observable swap rates at the period end, at a
rate that reflects the credit risk of counterparties. This is considered to be
a Level 3 valuation technique.
Changes in the carrying values of instruments that are measured using a Level
3 technique were as follows:
Inflation swaps
£m
At 1 April 2024 8.8
Net losses recognised in the income statement (2.8)
At 31 March 2025 6.0
Net losses recognised in the income statement (2.7)
At 30 September 2025 3.3
These Level 3 instruments are valued using unobservable inputs. In valuing the
inflation swaps, we have identified the unobservable input as the CPI wedge. A
change of 10bps in the CPI wedge would result in a change in the carrying
value of £4.0 million.
9. Fair value of financial instruments (continued)
b) Comparison of fair value of financial instruments with their carrying
amounts
The carrying values and estimated fair values of the Group's borrowings are
set out below. The Directors consider that the carrying amounts of all other
financial instruments approximate to their fair values.
30 September 31 March
2025 2025
Carrying value Fair value Carrying value Fair value
£m £m £m £m
Floating rate debt
Bank loans 627.3 627.3 629.1 629.1
Other loans 147.7 152.5 147.7 154.7
Overdraft 4.9 4.9 3.3 3.3
779.9 784.7 780.1 787.1
Fixed rate debt
Other loans 7,462.5 7,050.9 6,472.2 5,985.7
Lease liabilities 113.7 113.7 111.1 111.1
7,576.2 7,164.6 6,583.3 6,096.8
Index-linked debt
Bank loans 160.1 146.0 155.6 145.9
Other loans 2,234.0 1,501.4 2,178.1 1,557.5
2,394.1 1,647.4 2,333.7 1,703.4
10,750.2 9,596.7 9,697.1 8,587.3
The above classification does not take into account the impact of interest
rate swaps or cross currency swaps.
Fixed rate loans are valued using market prices for similar instruments, which
is a Level 2 valuation technique.
Index-linked loans are rarely traded and therefore quoted prices are not
considered to be a reliable indicator of fair value. Therefore, these loans
are valued using discounted cash flow models with discount rates derived from
observed market prices for a sample of bonds, which is a Level 2 valuation
technique.
Fair values of the other debt instruments are also calculated using discounted
cash flow models with discount rates derived from observed market prices,
which is a Level 2 valuation technique.
10. Interests in joint ventures
Our joint venture undertaking, Water Plus, is the largest business retailer in
the non-household retail water market in England.
During the current period, the Group has recognised a loss of £1.6 million in
its share of Water Plus against the value of the investment.
Movements in the investment in joint venture balances during the period were:
Investment in joint venture
£m
At 1 April 2025 1.6
Share of loss for the period (1.6)
At 30 September 2025 -
11. Retirement benefit schemes
The Group operates three defined benefit schemes in the UK, two from Severn
Trent and one from Dee Valley Water. The Severn Trent schemes are closed to
future accrual. The Group also has an unfunded obligation to provide benefits
to certain former employees whose earnings were in excess of the pensions cap
that operated when the benefits were accrued. The Group participates in the
Dee Valley Water plc Section of the Water Companies Pension Scheme, which is a
defined benefit sectionalised scheme (the 'DVWS'). The most recent completed
formal triennial actuarial valuations and funding agreements were carried out
as at 31 March 2022 for the Severn Trent Pension Scheme ('STPS') and Severn
Trent Mirror Image Pension Scheme ('STMIPS') and 31 March 2023 for DVWS.
The assumptions used in calculating the defined benefit obligations have been
updated to reflect market conditions prevailing at the balance sheet date as
follows:
30 September 31 March
2025 2025
% %
Price inflation - RPI 2.9 3.1
Price inflation - CPI
Pre 2030 1.9 2.1
Post 2030 2.8 3.0
Discount rate 5.8 5.8
Pension increases in payment 2.9 3.1
Pension increases in deferment 2.9 3.1
The defined benefit scheme assets have been updated to reflect their market
value at 30 September 2025. Actuarial gains and losses on the scheme assets
and defined benefit obligations have been reported in the statement of
comprehensive income. Service cost, and the cost of administrating the scheme,
are recognised in operating costs and interest cost is recognised in net
finance costs.
The scheme assets at the balance sheet date were:
30 September 31 March
2025 2025
STPS, STMIPS, and DVWS £m £m
Fair value of scheme assets
Equities 10.1 21.0
Annuity policies* 102.0 104.1
Corporate bonds 595.2 491.0
Liability-driven investment funds ('LDI's) 665.2 727.7
Property 207.8 209.3
Cash 89.3 123.2
Other - 0.4
1,669.6 1,676.7
*In June 2021, the STMIPS Trustees completed the purchase of a bulk annuity
contract with JUST, an insurance company, to secure the benefits of all
members of the MIPS. The Trustees continue to pay benefits to members as
before the transaction, but these cashflows are now matched exactly by income
from JUST. In March 2023, the DVWS also entered into a bulk annuity buy-in
investment policy with JUST that covers the majority of the scheme
obligations.
Some of the invested assets have quoted prices in active markets, but there
are equities, corporate bonds and LDI investments which are unquoted,
amounting to £891.9 million (31 March 2025: £974.4 million).
11. Retirement benefit schemes (continued)
Movements in the net deficit recognised in the balance sheet were as follows:
Fair value Defined Net deficit
of plan assets Benefit
Obligations
£m £m £m
At 1 April 2025 1,676.7 (1,796.5) (119.8)
Scheme administration costs (2.5) - (2.5)
Interest income/(cost) 46.9 (50.3) (3.4)
Actuarial gains 7.4 5.0 12.4
Employer contributions 0.5 - 0.5
Benefits paid (59.4) 59.4 -
At 30 September 2025 1,669.6 (1,782.4) (112.8)
The net deficit is presented on the balance sheet as follows:
30 September 31 March
2025 2025
£m £m
Retirement benefit surplus 5.0 5.3
Retirement benefit obligations (117.8) (125.1)
(112.8) (119.8)
12. Acquisitions
a) Reigate Environmental Services Limited
On 1 May 2025, the Company acquired 100% of the issued shares in Reigate
Environmental Services Limited for a total consideration of £6.5 million,
£4.0 million of which was settled in cash on completion and £2.5 million
contingent on revenue targets for Reigate Environmental Services Limited. The
fair value of the acquired net assets of £0.9 million is provisional.
b) Watertight Management Limited and Synergen Holdings Limited
On 31 July 2025, the Company acquired 100% of the issued shares in Watertight
Management Limited and Synergen Holdings Limited as part of a strategic supply
chain integration, for a total consideration of £28.5 million. Details of the
purchase consideration, the net assets acquired and goodwill are as follows:
£m
Purchase consideration
Cash paid 20.0
Deferred consideration 7.0
Contingent consideration 1.5
Total consideration 28.5
The assets and liabilities recognised as a result of the acquisition are as
follows:
£m
Property, plant and equipment 1.3
Trade and other receivables 4.3
Cash and cash equivalents 4.4
Inventory 0.6
Trade and other payables (3.5)
Borrowings (0.3)
Current tax payable (0.3)
Deferred tax (0.3)
Net identifiable assets acquired 6.2
Add: goodwill 22.3
The fair value of the acquired net assets of £6.2 million is provisional.
Acquisition-related costs of £0.3 million are recognised as an expense in the
income statement.
c) Industrial Water Jetting Systems Limited
On the same date, the Company acquired the trade and assets of Industrial
Water Jetting Systems Limited for a total consideration of £13.0 million.
Details of the purchase consideration, the net assets acquired and goodwill
are as follows:
£m
Purchase consideration
Cash paid 12.5
Deferred consideration 0.5
Total consideration 13.0
The assets and liabilities recognised as a result of the acquisition are as
follows:
£m
Property, plant and equipment 6.2
Trade and other receivables 0.1
Inventory 0.1
Net identifiable assets acquired 6.4
Add: goodwill 6.6
The fair value of the acquired net assets of £6.4 million is provisional.
Acquisition-related costs of £0.3 million are recognised as an expense in the
income statement.
13. Share capital
At 30 September 2025 the issued and fully paid share capital was 303.3 million
shares of 97(17)/(19)p amounting to £296.9 million (31 March 2025: 302.7
million shares of 97(17)/(19)p amounting to £296.3 million).
During the period the Company issued 0.6 million (2024/25: 0.8 million) shares
as a result of the exercise of employee share options. At 30 September 2025
the Company held 2.2 million (31 March 2025: 2.4 million) treasury shares.
14. Cash flow
a) Reconciliation of PBIT to operating cash flows
Six months ended 30 September
2025 2024
£m £m
Profit before interest and tax 466.2 297.8
Depreciation of property, plant and equipment 216.9 203.8
Depreciation of right-of-use assets 3.3 3.2
Amortisation of intangible assets 23.4 18.8
Impairment of property, plant and equipment 6.4 -
Defined benefit pension scheme administration costs 2.5 1.9
Defined benefit pension scheme contributions (0.5) (0.4)
Share based payment charge 6.4 5.5
Profit on sale of property, plant and equipment and intangible assets (4.3) (0.4)
Release from deferred credits (9.2) (8.8)
Contributions and grants received 29.4 13.7
Provisions charged to the income statement 14.9 22.2
Utilisation of provisions for liabilities (17.8) (25.9)
Operating cash flows before movements in working capital 737.6 531.4
Increase in inventory (0.7) (0.4)
Increase in amounts receivable (167.1) (38.5)
Increase in amounts payable 85.3 63.1
Cash generated from operations 655.1 555.6
Tax paid (0.6) (0.7)
Net cash generated from operating activities 654.5 554.9
b) Reconciliation of movements in adjusted net debt
Net cash and cash equivalents Bank loans Other loans Lease liabilities Fair value accounting adjustments Exchange on currency debt not hedge accounted Loans due from joint venture Adjusted net debt
£m £m £m £m £m £m £m £m
At 1 April 2025 1,044.8 (784.7) (8,798.0) (111.1) 23.1 9.4 71.2 (8,545.3)
Cash flow 404.4 2.6 (926.4) 0.6 ‒ ‒ (17.5) (536.3)
Fair value adjustments ‒ ‒ 4.5 ‒ (4.5) ‒ ‒ ‒
Inflation uplift on index-linked debt ‒ (4.2) (57.6) ‒ ‒ ‒ ‒ (61.8)
Foreign exchange ‒ ‒ (64.5) ‒ ‒ 64.5 ‒ ‒
Other non-cash movements ‒ (1.1) (2.2) (3.2) ‒ ‒ 0.1 (6.4)
At 30 September 2025 1,449.2 (787.4) (9,844.2) (113.7) 18.6 73.9 53.8 (9,149.8)
15. Post balance sheet events
On 21 October 2025, Severn Trent Water Limited agreed £391.7 million
committed bank facilities and Severn Trent Plc agreed £25.0 million new
committed bank facilities.
16. Contingent liabilities
Details of the Group's contingent liabilities were disclosed in the financial
statements for the year ended 31 March 2025 which were approved on 20 May
2025. There have been no significant developments relating to the contingent
liabilities disclosed in those financial statements other than what is set out
below.
Collective Action Claim
In December 2023, STW and Severn Trent Plc were served with the collective
proceedings order ('CPO') application, alongside five other water and sewerage
companies for separate (but equivalent) claims, in respect of potential
collective proceedings to be brought before the Competition Appeal Tribunal
('CAT') (formerly referred to as the "Leigh Day Claim"). The claim was for
£239 million (excluding interest) and was served on behalf of a class
comprising certain consumers of STW (on an opt-out basis) who alleged to have
been overcharged for sewerage services as a result of an alleged abuse of a
dominant position.
The preliminary Certification Hearing to determine if the claim is capable of
being heard by the CAT and should proceed to trial was held on 23 September
2024 and on 7 March 2025 the CAT handed down judgment. The CAT unanimously
held that the claims for abuse of dominance were excluded by s18(8) of the
Water Industry Act 1991 and dismissed.
The Court of Appeal has given the claimant permission to appeal the judgment
and this appeal will be heard in February 2026. The CAT's original judgment
was robust, and we maintain that the judgment will be upheld by the Court of
Appeal.
17. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not included in this
note. Trading transactions between the Group and its joint venture, Water
Plus, are disclosed below.
Six months ended 30 September
2025 2024
£m £m
Sale of services 105.1 118.7
Net interest income 2.1 2.7
Loans receivable from Water Plus of £53.8 million were outstanding at the
balance sheet date (31 March 2025: £71.2 million), £17.5 million of
repayments were made in the period.
The retirement benefit schemes operated by the Group are considered to be
related parties. Details of transactions and balances with the retirement
benefit schemes are disclosed in note 11.
18. Alternative performance measures
Financial measures or metrics used in this report that are not defined by IFRS
are alternative performance measures (APMs). The Group uses such measures for
performance analysis because they provide additional useful information on the
performance and position of the Group. Since the Group defines its own
alternative performance measures, these might not be directly comparable with
other companies' alternative performance measures. These measures are not
intended to be a substitute for, or superior to, IFRS measurements.
a) Adjusted earnings per share
Adjusted earnings per share figures exclude the effects of net gains/losses on
financial instruments, current tax on net gains/losses on financial
instruments and deferred tax. The Directors consider that the adjusted figures
provide a useful additional indicator of performance and remove
non-performance related distortions. See note 8.
b) Adjusted net debt
Adjusted net debt comprises borrowings excluding fair value accounting
adjustments on debt, net cash and cash equivalents, and loans to joint
ventures. Foreign currency borrowings that are hedged by cross currency swaps
are included at the notional principal of the sterling payable leg of the
swap.
c) Effective interest cost
The effective interest cost is calculated as net finance costs, excluding net
finance costs from pensions, plus capitalised finance costs divided by the
monthly average adjusted net debt during the period.
2025 2024
£m £m
Net finance costs 161.2 124.6
Net finance costs from pensions (3.4) (5.0)
Capitalised finance costs 72.0 43.0
229.8 162.6
Annualised* 459.6 325.2
Average adjusted net debt 8,840.1 7,469.1
Effective interest cost 5.2% 4.4%
* the rate is the annualised equivalent interest rate based on that calculated
for the six-month period
This APM is used to show the average interest rate that is attributable to the
adjusted net debt of the business.
d) Effective cash cost of interest
The effective cash cost of interest is calculated on the same basis as the
effective interest cost except that it excludes finance costs that are not
paid in cash but are accreted to the carrying value of the debt (principally
inflation adjustments on index-linked debt).
2025 2024
£m £m
Net finance costs 161.2 124.6
Net finance costs from pensions (3.4) (5.0)
Indexation adjustments (62.4) (39.7)
Capitalised finance costs 72.0 43.0
167.4 122.9
Annualised* 334.8 245.8
Average adjusted net debt 8,840.1 7,469.1
Effective cash cost of interest 3.8% 3.3%
* the rate is the annualised equivalent interest rate based on that calculated
for the six-month period
This APM is used to show the average finance cost that is paid in cash.
e) PBIT interest cover
The ratio of PBIT to net finance costs excluding finance costs from pensions.
2025 2024
£m £m
PBIT 466.2 297.8
Net finance costs 161.2 124.6
Net finance costs from pensions (3.4) (5.0)
Net finance costs excluding net finance costs from pensions 157.8 119.6
Ratio Ratio
PBIT interest cover ratio 3.0 2.5
This APM is used to show how the PBIT of the business covers the financing
costs associated only with adjusted net debt on a consistent basis.
f) EBITDA and EBITDA interest cover
The ratio of profit before interest, tax, depreciation, amortisation and
impairment to net finance costs excluding net finance costs from pensions.
2025 2024
£m £m
PBIT 466.2 297.8
Depreciation (including right-of-use assets) 220.2 207.0
Amortisation 23.4 18.8
Impairment of property, plant and equipment 6.4 -
EBITDA 716.2 523.6
Net finance costs 161.2 124.6
Net finance costs from pensions (3.4) (5.0)
Net finance costs excluding finance costs from pensions 157.8 119.6
Ratio Ratio
EBITDA interest cover ratio 4.5 4.4
This APM is used to show how the EBITDA of the business covers the financing
costs associated only with adjusted net debt on a consistent basis.
g) Adjusted effective current tax rate
The current tax charge for the year, excluding prior year charges and current
tax on financial instruments, divided by profit before tax, net gains/losses
on financial instruments and share of net profit/loss of our joint venture
accounted for using the equity method.
2025 2024
Current tax thereon Current tax thereon
£m £m £m £m
Profit before tax 307.8 (0.1) 192.3 (0.1)
Adjustments
Share of net loss/(profit) of joint venture 1.6 - (0.6) -
Net gains on financial instruments (4.4) - (18.5) -
305.0 (0.1) 173.2 (0.1)
Adjusted effective current tax rate 0.0% 0.1%
0.0%
This APM is used to remove distortions in the tax charge and create a metric
consistent with the calculation of adjusted earnings per share in note 8.
Share of net profit/loss of joint venture is excluded from the calculation
because the loss is included after tax and so the tax on joint venture
profit/loss is not included in the current tax charge.
h) Operational cashflow
Cash generated from operations less contributions and grants received.
2025 2024
£m £m
Cash generated from operations 655.1 555.6
Contributions and grants received (29.4) (13.7)
Operational cashflow 625.7 541.9
This APM is used to show operational cash excluding the effect of
contributions and grants received as part of capital programmes.
i) Cash capex
Cash paid to acquire property, plant and equipment and intangible fixed assets
less contributions and grants received and proceeds on disposal of property,
plant and equipment and intangible fixed assets.
2025 2024
£m £m
Purchase of property, plant and equipment 794.1 663.5
Purchase of intangible assets 23.1 18.7
Contributions received (29.4) (13.7)
Proceeds on disposal of property, plant and equipment (6.0) (6.5)
Cash capex 781.8 662.0
This APM is used to show the cash impact of the Group's capital programmes.
j) Capital Investment
Additions to property, plant and equipment and intangible fixed assets less
contributions and grants received, assets contributed at no cost and
capitalised finance costs.
2025 2024
£m £m
Additions to property, plant and equipment 910.3 802.5
Additions to intangible assets 23.1 18.7
Contributions and grants received (29.4) (13.7)
Assets contributed at no cost (63.0) (98.6)
Capitalised finance costs (72.0) (43.0)
Capital Investment 769.0 665.9
Includes £1.9 million (2024: £26.8 million) of additions to provisions for
future capital expenditure arising from regulatory obligations.
Responsibility Statement
The directors confirm that these condensed interim financial statements have
been prepared in accordance with UK-adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
(a) an indication of important events that have occurred
during the first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
(b) material related-party transactions in the first six
months and any material changes in the related-party transactions described in
the last annual report.
Signed on behalf of the Board who approved the half yearly financial report on
18 November 2025.
Christine Hodgson Helen Miles
Chair Chief Financial Officer
Independent review report to Severn Trent Plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Severn Trent Plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Half Yearly Financial
Report of Severn Trent Plc for the 6 month period ended 30 September 2025
(the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed consolidated balance sheet as at 30 September 2025;
· the Condensed consolidated income statement and Condensed
consolidated statement of comprehensive income for the period then ended;
· the Condensed consolidated cash flow statement for the period then
ended;
· the Condensed consolidated statement of changes in equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Yearly Financial Report
of Severn Trent Plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half Yearly Financial
Report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the interim financial
statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Yearly Financial Report, including the interim financial statements,
is the responsibility of, and has been approved by the directors. The
directors are responsible for preparing the Half Yearly Financial Report in
accordance with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the Half Yearly
Financial Report, including the interim financial statements, the directors
are responsible for assessing the group's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half Yearly Financial Report based on our review. Our
conclusion, including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
18 November 2025
Glossary
Asset Management Plan (AMP)
Price limit periods are sometimes known as AMP periods. The current period is
known as AMP8 (2025-2030) because it is the eighth cycle since the water
industry was privatised in 1989.
Compliance Risk Index (CRI)
A risk-based monitoring methodology designed to illustrate the risk arising
from treated water compliance failures.
Customer Measure of Experience (C-MeX)
The incentive mechanism for companies to improve the experience of residential
customers. C-MeX comprises two surveys - the customer service survey of
residential customers who have recently contacted their water company and the
customer experience survey of random members of the public in relation to
their experience of their water company.
Developer Services Measure of Experience (D-MeX)
The incentive mechanism for companies to improve the experience of developer
services customers. D-MeX comprises a qualitative element which is a survey of
developer services customers who have recently completed a transaction with
their water company and a quantitative element which measures performance
against a set of Water UK developer services level of service metrics.
Final Determination (FD)
The final outcome of the price review process that sets price, investment and
service packages that customers receive.
Green Recovery
The additional expenditure approved by Ofwat in May 2021 over and above the
Final Determination for AMP7 to fund a number
of programmes aimed at boosting recovery after the Covid-19 pandemic and
providing environmental benefits.
Infrastructure Renewals Expenditure (IRE)
The costs of like-for-like replacement of infrastructure components. These are
recognised in the income statement as they arise.
Outcome Delivery Incentives (ODIs)
A framework made up of outcomes, measures, targets and incentives which
provides companies with rewards for achieving stretching performance targets
and compensates customers if performance is below performance targets.
Price Control Deliverables (PCDs)
A framework which sets expectations for delivery of improvements funded
through enhancement expenditure
allowances. Where water companies fail to deliver these outcomes they will
return funding to customers, and where
they deliver their programme on time they will outturn a reward.
Price limits
The price limits are set to enable water companies to deliver the services
required of them over the AMP period. These include allowing for capital
maintenance of assets, ensuring security of supply and meeting drinking water
and environmental quality requirements.
Price Review 24 (PR24)
A financial review process led by Ofwat to set wholesale price controls for
water and sewerage companies for 2025 to 2030.
Regulatory Capital Value (RCV) / Regulatory Asset Base
The measure of the asset base of a company which is used when setting price
limits. The RCV increases each year by a proportion of total expenditure that
is set at each price review and an adjustment for inflation. The RCV is
reduced each year through the run-off mechanism (which is similar to
depreciation of fixed assets). The run-off amount is recovered through revenue
in the year.
Regulatory Return
The return generated on actual regulatory equity, calculated using average
actual gearing applied to the Final Determination RCV. It encompasses the base
return, outperformance, and the uplift to our regulatory asset base from
inflation, and is stated on the actual company structure.
Reopener
Additional expenditure approved by Ofwat over and above the Final
Determination.
Return on Regulatory Equity (RoRE)
A measure of the return (after tax and interest) that companies have earned by
reference to regulatory equity, where regulatory equity is calculated from the
RCV and net debt.
Transition Expenditure
Amounts spent during AMP7 that relate to programmes included in the AMP8 plan.
Cautionary statement regarding forward-looking statements
This document contains statements that are, or may be deemed to be,
'forward-looking statements' with respect to Severn Trent's financial
condition, results of operations and business and certain of Severn Trent's
plans and objectives with respect to these items.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words as 'anticipates', 'aims', 'due',
'could', 'may', 'will', 'would', 'should', 'expects', 'believes', 'intends',
'plans', 'projects', 'potential', 'reasonably possible', 'targets', 'goal',
'estimates' or words with a similar meaning, and, in each case, their negative
or other variations or comparable terminology. Any forward-looking statements
in this document are based on Severn Trent's current expectations and, by
their very nature, forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future performance and no
assurances can be given that the forward-looking statements in this document
will be realised. There are a number of factors, many of which are beyond
Severn Trent's control, that could cause actual results, performance and
developments to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not limited to: the
Principal Risks disclosed in our latest Annual Report and Accounts (which have
not been updated since the date of its publication); changes in the economies
and markets in which the Group operates; changes in the regulatory and
competition frameworks in which the Group operates; the impact of legal or
other proceedings against or which affect the Group; and changes in interest
and exchange rates.
All written or verbal forward-looking statements, made in this document or
made subsequently, which are attributable to Severn Trent or any other member
of the Group or persons acting on their behalf are expressly qualified in
their entirety by the factors referred to above. No assurances can be given
that the forward-looking statements in this document will be realised. This
document speaks as at the date of publication. Save as required by applicable
laws and regulations, Severn Trent does not intend to update any
forward-looking statements and does not undertake any obligation to do so.
Past performance of securities of Severn Trent Plc cannot be relied upon as a
guide to the future performance of securities of Severn Trent Plc.
Nothing in this document should be regarded as a profits forecast.
Certain information contained herein is based on management estimates and
Severn Trent's own internal research. Management estimates have been made in
good faith and represent the current beliefs of applicable members of Severn
Trent's management. While those management members believe that such estimates
and research are reasonable and reliable, they, and their underlying
methodology and assumptions, have not been verified by any independent source
for accuracy or completeness and are subject to change without notice, and, by
their nature, estimates may not be correct or complete. Accordingly, no
representation or warranty (express or implied) is given to any recipient of
this document that such estimates are correct or complete.
This document is not an offer to sell, exchange or transfer any securities of
Severn Trent Plc or any of its subsidiaries and is not soliciting an offer to
purchase, exchange or transfer such securities in any jurisdiction. Securities
may not be offered, sold or transferred in the United States absent
registration or an applicable exemption from the registration requirements of
the US Securities Act of 1933 (as amended).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
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