Severn Trent Plc - Annual Results for the year ended 31 March 2019
Continued momentum and fast-track status building a strong platform for AMP7
Continuing our leading AMP6 performance:
− Maintaining the lowest bills in England for ten years1, set to continue to at least 2025
− Excellent progress on our capital programme with the largest year of capital spend in a decade of £769 million, supporting our commitment to invest £1,300 for every household we serve over AMP6
− Cumulative AMP6 ODI2 outperformance of £138 million, including net £4.5 million penalty for FY18/19. Without the ODI cap, this would have been our best year to date, with ODI outperformance equivalent to £91 million
− Strong second half of operational improvements in Water gives confidence in FY19/20 and beyond
− On track to exceed 50% renewable energy self-generation target in FY19/20, boosted by acquisition of Agrivert UK renewables business, contributing to Group net carbon emissions reduction of 41% since the beginning of AMP6
Setting ourselves up for the future:
− Received Draft Determination for Severn Trent Water, confirming fast-track status for AMP7
− One of the first companies in the UK to make the triple pledge to achieve net zero carbon, 100% electric fleet3 and 100% of energy from renewable sources by 2030
− Expect to earn at least £25 million in customer ODIs in FY2019/202, increasing the amount of outperformance payments rolled into AMP7 to at least £177 million4
− Partners appointed for around £1.5 billion of our £2 billion AMP7 capital programme. New capital delivery model, with a broader supply chain and in-house design team, progressing well
Delivering strong and resilient financial results:
− Group turnover of £1,767 million, up £71 million (4.2%)
− Group underlying PBIT5 of £574 million, up £34 million (6.3%) having absorbed all hot weather costs
− Group reported PBIT of £563 million6, up £36 million (6.8%)
− Cumulative RoRE of 9.1%7 despite hitting the Waste customer ODI cap
− Reduction in effective interest rate by 60 basis points to 3.9%, driving underlying basic EPS8 of 145.8 pence (up 21.0%), reported basic EPS from continuing operations 133.4 pence (up 31.0%)
− Proposed final dividend of 56.02 pence, in line with policy
Liv Garfield, Chief Executive, Severn Trent Plc, said:
"This has been a year where our teams have really stepped up, whether in response to customer needs in the face of one of the hottest and driest summers we've seen or by being named by Ofwat as one of the top companies in the sector when we received fast-track status for our future plans.
At the heart of all of that is our drive to succeed for all of our stakeholders, which is shown in the results we're announcing today. They demonstrate not only that we can deliver for our investors but also that we're putting ourselves at the heart of the communities in which we live and work by building a lasting legacy for future generations.
Whether that's spending time in our region's primary schools exploring the importance of using water the right way, bringing an employee's idea to life that finds an innovative new way to improve our services, or the investment we make day after day in maintaining our assets. By balancing the needs of everyone in this way, we are confident we are doing the right things for all of our stakeholders."