Preliminary Announcement of Annual Results
19 May 2021
Results for the year to 31 March 2021
Record reward for customer ODIs, and generating long-term RCV growth through investment to support the Green Recovery
Strong operational performance resulting in best ever ODIs for customers
· Sector-leading delivery on customer ODIs1 leading to c.80% of measures in positive territory and a net outperformance reward of £79 million across all operational areas
· Strong year on water measures, with improvements in water quality metrics, resulting in net positive financial reward
· Best ever pollutions performance and consistent top performer in waste, including strong performance on blockages and sewer flooding
· Focused on our customers with top five position for utilities on UK Customer Satisfaction Index, and year-on-year progress in customer complaints and experience measures
· Fast start to AMP72 regulatory period seen through accelerated capital programme, with more than £590 million investment in year
Resilient financial performance in line with expectations
· Group turnover3 of £1,827 million, down 0.9%, with c.£50 million net impact of lowe r consumption due to COVID-19 lockdowns, the regulatory model allows us to recover this later in the AMP
· Adjusted PBIT4 o f £473 million, in line with expectations, down 17.1% as a result of PR19 rebasing of tariffs, the net impact of COVID-19 on consumption and additional investment to drive our customer ODI performance. Reported PBIT of £471 million (2020: £568 million)
· Strong household cash collection, up £61 million (5.2%) year-on-year, helping reduce bad debt charge to 3.0% of household revenue
· Effective interest cost reduced 30 bps to 3.4%; RCF refinanced through our Sustainable Finance Framework; sufficient liquidity through to December 2022
· Adjusted basic EPS5 at 105.4 pence and basic EPS at 89.1 pence, in line with expectations
· Proposed final dividend of 60.95 pence, bringing full year dividend to 101.58 pence
Supporting our environment, our communities, our colleagues
· On track to deliver our Triple Carbon Pledge, with Scope 2 emissions already near zero and gross greenhouse gas emissions reduced by more than 50% since last year6
· £6.9 million awarded to charities and communities in our region, including our response to COVID-19
· Leader in diversity, strong positions in Hampton-Alexander Review, Social Mobility Index, Equileap's 2021 Gender Equality Global Report and Ranking, Tortoise Responsibility100 and Stonewall Index
Creating jobs and helping the region bounce back through the Green Recovery
· Awarded £565 million 7 of new investment from Ofwat's Green Recovery programme; increasing RCV real growth this AMP from 3.8% to 10.4%
· Innovative environmental schemes will help create c.2,500 jobs, support customers and improve the environment
· Projects include plans to promote wild swimming in two rivers in our region, and using natural solutions to protect customers in Mansfield from flooding
· We have separately announced today our intention to conduct an equity placing through the issue of new ordinary shares to raise approximately £250 million of gross proceeds that will be used to fund the Green Recovery projects
Liv Garfield, Chief Executive, said:
“The last year has thrown up multiple challenges for us but it's clear everyone at Severn Trent has responded superbly to the new normal we find ourselves in. Our industry-leading customer ODI performance shows just how much we've been able to improve our services, often while working in very difficult circumstances.
At the same time, we've increased the support we give to our customers and the communities we serve, from schemes for the most vulnerable to the extra funding we've made available to help charities and not-for-profits get through the pandemic.
We took a very early decision to be at the forefront of efforts to help our region bounce back. That is why it was such good news that we'd been successful with our Green Economic Recovery proposal, meaning we can invest even more in sustainable projects and help create thousands of jobs. Add in our ambitious Kickstart programme, the launch of the Great Big Nature Boost, and our sustainability support for the Birmingham Commonwealth Games and it's clear, both operationally and environmentally, that it's been a strong year for Severn Trent.”