Severn Trent Plc - Issue Trading Update
This content has been sourced from: https://www.investegate.co.uk/severn-trent-plc/rns...
Severn Trent Plc
Severn Trent Plc, a leading water and wastewater company in the UK, today announces the following update for the period to 31 March 2020.
- No material change to current year business performance since the 28 January 2020 trading update.
- The health, safety and well-being of our people and the millions of customers we serve throughout the Covid-19 outbreak is absolutely our first priority. Our frontline teams continue to keep essential services flowing across our region, while adhering to strict hygiene and social-distancing protocols.
- We have a robust financial liquidity position extending out to early 2022 to manage through the current uncertainty, recently supplemented by £200 million of US Private Placement receipts in the week commencing 23 March 2020.
- We remain on track to deliver at least £25 million of net customer ODI outperformance payments for 2019/20, as previously guided.
Our people have shown amazing commitment and dedication to ensure our customers have continued access to one of life's essentials, including those who need it most, in hospitals, care homes and schools. We are doing all that we can to protect them as they do so, with strict hygiene and social-distancing protocols in place for all our field teams and production sites, and only essential customer visits taking place. All of our people who can work from home have the necessary equipment to do so.
In response to the outbreak, we have enacted robust incident management and business continuity plans throughout our business, we are working closely with our local resilience forums and collaborating with others in the water sector.
We have increased communications to our customers, highlighting the ways that we can support them through our priority services register. We also recognise this will be a difficult time financially for some of our household customers; we are here to help and are actively promoting our range of existing social tariff and vulnerable customer schemes to help them with their bills.
But we think we need to do even more to support our communities in these unprecedented times. So today we are committing £1 million to support groups and charities helping those impacted the most in our region1. Our aim is to make this available as quickly as possible, so that we can start to make a difference straightaway.
Financial and operational performance
There has been no material change to current year business performance since the trading update announced on 28 January 2020, and we continue to expect the Group will deliver full-year trading performance in-line with previous guidance.
We remain on track to deliver at least £25 million of net customer ODI outperformance payments for 2019/20, as previously guided. As a result, across AMP6 we will have earned at least £163 million (pre-tax, 2012/13 prices) in net customer ODI outperformance payments, enabling us to defer £177 million (pre-tax, nominal prices) into revenue in AMP7.
As a result of increased levels of capitalised interest and lower RPI, we now expect net financing costs to be broadly flat in comparison to last year, despite the increase in overall net debt (previous guidance: higher year-on-year).
The restrictions implemented by the Government to limit the spread of Covid-19 are likely to have a material impact on many of the business customers of our joint venture company, WaterPlus. The company has been making good progress on improving its underlying operating performance, however this new challenge will significantly impact the pace and certainty of its recovery plan.
At the start of this month, Severn Trent Plc successfully raised £200 million in the US Private Placement market, with an average tenor of around 18 years - the first debt issue under our Sustainable Finance Framework and the first debt raising for the Holding Company since 2012. We received the funds in the week commencing 23 March 2020.
Overall, we have a robust financial position which, supplemented by the USPP cash, extends our liquidity out to early 2022. With less than 2.5% of our debt requiring re-financing in 2020, and cash and committed facilities of over £1.1 billion, we have good financial resilience with which to manage the impact of the outbreak. Given the uncertainty of how the situation will develop, we will continue to closely monitor our cash flows and update our contingency planning accordingly.