REG - Severn Trent PLC - Severn Trent Plc Trading Update

Severn TrentAnnouncement

19/07/2023 07:00

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RNS Number : 4319G  Severn Trent PLC  19 July 2023

Severn Trent Plc Trading Update

 

Severn Trent Plc today announces the following trading update for the period
to 18 July 2023.

 

Strong operational and environmental performance

 

We are pleased to have been awarded the highest possible 4-star Environmental
Performance Assessment ('EPA')(1) status by the Environment Agency for 2022,
becoming the first company to maintain this position for four consecutive
years.

 

We remain on track with 100% of our environmental performance commitments for
this year and are making good progress with our Get River Positive pledges and
our programme to deliver the world's first carbon-neutral waste water
treatment works in 2024.

 

We have made a strong start to the year operationally and, with reservoir
levels at 77%, more than 10% higher than at this point last year, are
well-positioned for the summer months.

 

Financial performance in line with expectations

 

Financial performance remains on track and we expect to deliver in line with
expectations, including a net reward of at least £50 million in customer
ODIs(2), reflecting our sector-leading performance for customers.

 

Across the Group, our natural economic energy hedge provides protection
against energy price volatility and we now have 45% of our net energy exposure
for 2024/25 locked in at significantly lower rates than those for 2023/24.

 

We continue to manage our totex programme efficiently, benefitting from our
in-house engineering capabilities, advance procurement strategy and direct
relationships with a broad supply chain. Our investment programme is moving at
pace, with capital expenditure expected to be between £850 million and £1
billion this year, as we step up our delivery capacity ahead of AMP8, which is
expected to be one of the most significant investment periods in the sector's
history.

 

We remain well-positioned for this step up in investment with regulatory
gearing(3) of 60% at the most recent financial year end. We are consistently
named in the top category of financial resilience by our economic regulator,
Ofwat.

 

Liv Garfield, Chief Executive, Severn Trent Plc, said:

"We're pleased to have made a good start to the year, as we continue to focus
on delivering the operational, environmental and financial performance our
stakeholders expect of us. We recognise that there is more we can do and we
are committed to going further, faster, to deliver the best possible outcomes
for our customers and the environment. The business is well placed to deliver
the progress needed with a highly engaged workforce, sustained operational
leadership and a strong balance sheet, supporting future investment."

 

Reporting and investor timetable

 

In recent months we have published a number of documents which provide our
investors, customers and wider stakeholders with clear and transparent
information on our performance, including:

-     Annual Report and Accounts

-     Sustainability Report

-     ESG data book

-     Annual Performance Report

These documents can be found on our website at www.severntrent.com
(http://www.severntrent.com) . We welcome stakeholder feedback on our
reporting.

 

Our business plan for AMP8 (1 April 2025 to 31 March 2030) will be submitted
on 2 October 2023 and we look forward to bringing this plan to life at our
Capital Markets Day on 12 October 2023.

 

Footnotes

1.     Environmental Performance Assessment (EPA)

A non-statutory tool for comparing performance between water and sewerage
companies (WaSCs) operating mainly in England. It uses measurable
environmental indicators to provide a meaningful comparison of performance
across the nine WaSCs in England. The 2022 assessment can be found at the
following link:
https://www.gov.uk/government/publications/water-and-sewerage-companies-in-england-environmental-performance-report-2022
(https://www.gov.uk/government/publications/water-and-sewerage-companies-in-england-environmental-performance-report-2022)
.

2.     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. Outcome
Delivery Incentives are quoted pre-tax in 2017/18 prices. We assume a 25% rate
of corporation tax to be in place when ODIs are taken into revenue.

3.     Regulatory Gearing

Shadow regulatory gearing was 60.0% at 31 March 2023 (2022: 59.2%). This
measure is calculated as net debt of our regulated businesses, expressed as a
percentage of estimated RCV, taking into account amounts that will be included
in the RCV at the end of the AMP but which we have already incurred (namely
our Green Recovery programme).

 

Enquiries

 Investors & Analysts
 Rachel Martin               Severn Trent Plc  +44 (0) 7824 624 011
 Head of Investor Relations

 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 and uncertainties detailed in this document; 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.

 

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).

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