REG - Severn Trent PLC - Severn Trent Capital Markets Day

Severn TrentAnnouncement

05/03/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250305:nRSE3642Za&default-theme=true

RNS Number : 3642Z  Severn Trent PLC  05 March 2025

 

Severn Trent Capital Markets Day

 

Today Severn Trent are hosting a Capital Markets Day to bring to life our
ambitious plans for AMP8 and beyond following acceptance of the PR24 Final
Determination in January.

 

We are confident we can deliver a third consecutive AMP(1) of sector-leading
operational performance, including reducing leakage by over 30% in the decade
to 2030(2), and following our installation of 1,500 interventions on storm
overflows in the last year, we are well on our way to delivering our ambition
of halving spills by 2030.

 

As a result, we are guiding to net operational outperformance in AMP8 of over
£300m in nominal prices(3). This includes up to £50m in Price Control
Deliverables (PCDs), with the rest derived from ODI(4) rewards. We anticipate
outperformance rewards to be concentrated towards the later stages of the AMP,
therefore we are guiding to at least £25m in ODI rewards for FY26.

 

As we grow our business, we are committed to driving efficiency to protect
customer bills and enable strategic reinvestment of totex. We are utilising AI
to produce better, greener, more efficient designs and our unique Plug and
Play programme is helping to deliver capital works faster and cheaper together
with our culture of working smarter, which we bring to life at the event.

 

This gives us confidence we will deliver our programme within our totex
allowance with the flexibility to absorb unexpected costs and reinvest in
strategic initiatives that will further improve performance, including:

 

 ·         Improving standards and capacity at over 400 pumping stations, as well as
           hiring a dedicated team of technical experts, to prevent pollution incidents.
 ·         Investing an extra £50m into infiltration programmes to keep groundwater out
           of our sewers and reduce processing and treatment costs.
 ·         Further investment in our Waste Operational Control Centre that is using
           advanced monitoring technology to detect and prevent waste incidents before
           they occur.
 ·         Investing to insource a 450-strong mains renewal team to replace 1,400km of
           pipework, that will support in reducing leakage.

 

Looking beyond AMP8, we see this as the beginning of a multi-decade investment
cycle. In addition to the real RCV(5) growth of 45% in AMP8, our Long Term
Delivery Strategy (LTDS) indicates an RCV growth rate of around 20% on average
each AMP over the next 25 years, underpinned by investment to mitigate and
adapt to climate change, population growth and tightening environmental
standards.

 

Virtual options

 

For those unable to join us in person today, videos from the day will be made
available on our website (severntrent.com) as soon as practicable after the
event.

 

 

Footnotes

 1.  The regulatory cycle is broken up into five-year periods known as AMP (Asset
     Management Plan) periods. The current period is known as AMP7 (2020-2025), and
     AMP8 refers to the next period of 1 April 2025 to 31 March 2030.
 2.  Based on a 2020 baseline.
 3.  Based on all outperformance being recognised in revenue in 2027/28, which is
     the earliest point we can recognise AMP8 ODIs, using November 2026 and 2021
     CPIH. Equivalent to £250m in 2022/23 prices. All figures are presented net of
     tax.
 4.  A framework made up of customer outcomes, measures, targets and incentives
     which provides companies with rewards for achieving stretching performance
     targets and compensates customers if performance is below performance targets.
 5.  RCV is used to measure the capital base of a company when setting price
     limits. The RCV increases each year by a proportion of totex that is set at
     each price review and by 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. RCV
     Growth figure is stated inclusive of AMP8 transition spend, which has been
     accelerated into AMP7 and will be included in the AMP7 closing RCV. Real
     growth of 45% is equivalent to 64% in nominal prices. Excluding transition
     spend, real RCV growth is 40% in AMP8 and nominal RCV growth is 60%.

 

 

 

 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
 Jonathan Sibun              Teneo             +44 (0) 207 353 4200
 Press Office                Severn Trent Plc  +44 (0) 247 771 5640

 

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. The final PR24 Business Plan
determination may be subject to further clarification or verification by
Severn Trent or Ofwat. 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 profit forecast.

Certain information contained herein is based on management estimates,
interpretation 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, interpretation 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
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCUPUBGWUPAPWC