Severn Trent Plc · LSE:SVT
Severn Trent — Investor Presentation (September 2023)
25 slides from Severn Trent's investor presentation, Sep 29, 2023
Slide 1: Severn Trent Water Business Plan 2025-30
Severn Trent Water Business Plan 2025-30 29 September 2023
Slide 2: Important Notice
Important Notice This document is provided solely for information on Severn Trent Plc and the Severn Trent Water PR24 Business Plan (the "PR24 Business Plan"). This document does not constitute or form part of, and should not be construed as, any offer, invitation or recommendation to purchase, sell
Slide 3: We're Sharing With You Today…
WE’RE SHARING WITH A fully funded equity plan YOU TODAY… Delivering scale RCV growth Providing the opportunity for outperformance Delivering what our customers want Investing in the environment Satisfying our regulators We’re ready to deliver now 3
Slide 4: Delivering for Our Stakeholders
DELIVERING FOR OUR STAKEHOLDERS
Slide 5: A Plan for Our Customers
A PLAN FOR OUR CUSTOMERS We want to play a leading role in restoring the sector’s credibility, delivering the outcomes our customers care about, while minimising the impact on bills… and our customers approve Over 68,000 customers informed our plan Investment will transform the environment we operat
Slide 6: A Plan Which Addresses Our Regulators' Priorities
A PLAN WHICH ADDRESSES OUR REGULATORS’ PRIORITIES We’re submitting a plan that pushes the sector frontier, meets Ofwat’s expectations on Quality and Ambition and fully addresses the three areas that Ofwat will judge plans on 1. Affordability 2. Deliverability 3. Financeability ✓ Our current bill is
Slide 7: A Plan for Our Shareholders
A PLAN FOR OUR SHAREHOLDERS PR24 presents a valuable investment proposition with scale RCV growth and the opportunity to consolidate our leading position, delivering attractive returns while making us stronger for the long term Our plan delivers scale RCV growth, with £5bn Consolidating our sector l
Slide 8: A Compelling Plan
A COMPELLING PLAN
Slide 9: We Have a High Degree of Confidence in Securing Much of Our £12.9bn Totex Plan
WE HAVE A HIGH DEGREE OF CONFIDENCE IN SECURING MUCH OF OUR £12.9BN TOTEX PLAN AMP8 totex £bn (2022/23 prices) 93% PR19 0.3 of spend relates to - we received more 0.6 93% running costs or AMP8 base costs than asked of totex statutory requirement for 4.1 Totex breakdown: 0.9 12.9 • Base and modelled
Slide 10: Which Includes Transformative Investment in the Environment
WHICH INCLUDES TRANSFORMATIVE INVESTMENT IN THE ENVIRONMENT Case Study: Transforming our Case Study: Meeting future Case Study: Delivering Net Zero natural environment (£3.1bn) water needs (£0.7bn) (£0.4bn) WINEP will be significantly larger in AMP8 Our WRMP projects a deficit of 600Ml/d (a quarter
Slide 11: Delivering a Financeable Step Change in Growth
DELIVERING A FINANCEABLE STEP CHANGE IN GROWTH Scale RCV growth anticipated on base + statutory alone While maintaining robust financial resilience 25% 36% 31% 43% ✓ Financeability enabled through equity, maximising growth opportunity ✓ Maintaining gearing levels below sector average and in line wit
Slide 12: We Have a Track Record of RORE Outperformance
WE HAVE A TRACK RECORD OF RORE OUTPERFORMANCE ODIs Totex Financing We have generated significant returns on ODIs We’ve managed our totex efficiently through Our strategic treasury management has delivered and confident we can continue into AMP8 inflationary environment, enabling us to do more outper
Slide 13: Resulting in Attractive Returns for Shareholders
RESULTING IN ATTRACTIVE RETURNS FOR SHAREHOLDERS Return on Regulated Equity (‘RoRE’) We have delivered upper quartile RoRE since the beginning AMP6(1) AMP7 to date (2) of AMP6 8.5% 8.9% 0.5% 1.3% We are the sector leader on AMP7 cumulative RoRE with 8.9% 0.9% 6.1% real returns – 5% above the base re
Slide 14: And We're Ready to Deliver Our Plan Now
AND WE’RE READY TO DELIVER OUR PLAN NOW We have an experienced and established management team Our business is engaged and ready for the challenge Our people are the most engaged they’ve ever been We consistently score above 8 out of 10 in our annual engagement survey 2022/23 8.4 2021/22 8.2 2020/21
Slide 15: Source of Funding
SOURCE OF FUNDING Raising capital to responsibly fund our growth through AMP8 • Non pre-emptive equity placing to raise £1.0bn, including: Equity • A £500m investment from QIA Placing • A retail offering to retail investors in the UK through PrimaryBid • Provides the equity portion of the AMP8 fundi
Slide 16: Summary
SUMMARY £12.9bn Sector leading totex including significant 31% RoRE real RCV growth well placed to investment in the environment continue Financially 76% of ✓ Affordable resilient plan, to customers target ✓ Deliverable surveyed find our ✓ Financeable BBB+/Baa1 plan acceptable 16
Slide 17: Appendix
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Slide 18: Our Plan Further Supports Our Leading ESG Credentials
OUR PLAN FURTHER SUPPORTS OUR LEADING ESG CREDENTIALS We are a sustainability-led Recognised by regulators and leading We voluntarily disclose under the EU organisation indices taxonomy Some of our key commitments: 4* EPA Status Over 95% of our key financial metrics are ✓ Get River Positive pledges
Slide 19: The Severn Trent Plc Group
THE SEVERN TRENT PLC GROUP Operating Property Green Power Services Development Hafren Dyfrdwy • The PR24 plan referred to in this document Severn Trent Water – non appointed business relates to the Severn Trent Water appointed business • Financial Statements for the Appointee business can be found i
Slide 20: PR24 in Figures
93% £12.9bn running costs BBB+/Baa1 PR24 in Totex STW targeted and AMP8 (2022/23 prices) statutory spend credit rating figures £518 31% 2030 average 65% 30% RCV Growth annual household reduction in average gearing (2022/23 prices) bill (2022/23 pollutions prices) 76% 30% 16% 5.5% reduction in custom
Slide 21: STW Regulated Capital Value
STW REGULATED CAPITAL VALUE Opening Closing Growth CAGR Regulated Capital Value Price base (£m) (£m) (%) (%) Nominal FYA 13,510 18,567 37% 6.6% AMP8 RCV growth with transition expenditure included in Real FYA 12,387 15,697 27% 4.9% opening RCV Nominal FYE 13,597 18,753 38% 6.6% Real FYE 12,766 16,17
Slide 22: STW Summary Income Statement
STW SUMMARY INCOME STATEMENT £m, nominal 2025/26 2026/27 2027/28 2028/29 2029/30 Revenue 2,466 2,731 2,883 3,099 3,124 Operating Profit 864 1,040 1,095 1,189 1,095 Profit for the year 405 582 552 579 441 Regulatory dividend(1) 209 217 228 241 248 (1) Indicative regulatory dividend is equivalent to 4
Slide 23: STW Totex Profile
STW TOTEX PROFILE £m, 2022/23 prices 2025/26 2026/27 2027/28 2028/29 2029/30 Total Base operating expenditure 899 925 953 978 992 4,746 Base capital expendiuture 320 339 329 341 292 1,621 Enhancement operating expenditure 69 78 86 89 109 432 Enhancement capital expenditure 933 1,055 1,311 1,276 850
Slide 24: STW Gearing / Credit Metrics
STW GEARING / CREDIT METRICS Actual company structure AMP8 WACC + 50bps 2025/26 2026/27 2027/28 2028/29 2029/30 (excluding non-appointed) Average 40bps Outperformance Ratio of debt to RCV (Ofwat) 63.4% 64.4% 65.5% 66.2% 66.6% 65.2% 64.4% 64.4% ICR adjusted for charges (Moody's) 1.8 1.6 1.4 1.3 1.1 1
Slide 25: Other Information
OTHER INFORMATION Bill profile (£, 2022/23 prices) 2025/26 2026/27 2027/28 2028/29 2029/30 Average combined household bill(1) 444 485 502 527 518 Average combined household bill (reprofiled)(2) 438 481 508 533 518 (1) The bill profile is calculated in line with the methodology used to calculate actu
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