Severn Trent Plc · LSE:SVT
Severn Trent — FY2009 Earnings Presentation
47 slides from Severn Trent's earnings presentation, May 29, 2009
Slide 1: Preliminary Results
Preliminary Results Year ended 31 March 2009 Presentation – 29 May 2009
Slide 2: Disclaimers
Disclaimers For the purposes of the following disclaimers, references to this "document" shall be deemed to include references to the presenters' speeches, the question and answer session and any other related verbal or written communications. This document contains certain “forward-looking statemen
Slide 3: Sir John Egan, Chairman
SEVERN TRENT Sir John Egan Chairman
Slide 4: Mike McKeon, Finance Director
Mike McKeon Finance Director 3
Slide 5: Highlights
Highlights 2007/08 2008/09 Change £m £m % Group Turnover 1,552 1,642 5.8% Profit Before Interest and Tax (PBIT*) 470 470 - Profit Before Tax (PBT**) 292 274 (6.2%) Adjusted Basic EPS*** (pence) 97.8p 92.7p (5.2%) Basic EPS (pence) 89.7p (24.6p) (127.4%) Total Ordinary Dividend 65.63p 67.34p 2.6% (pe
Slide 6: Severn Trent Water Turnover
Severn Trent Water Turnover Severn Trent Water Turnover* £m 53.9 +4.7% 67.6 (20.8) 4.5 2.6 5.7 1324.9 1279.2 (13.9) 1265.3 20 C N R 20 A O R 20 on et et llo th en 07 07 08 a er g s w e /0 il /0 /0 um ro w ed 8 a 8 9 ab w nd (A (A pt Pr th el s io s Ut /m ic en pr n re e il et ev ity st er (R er at g
Slide 7: Severn Trent Water PBIT
Severn Trent Water PBIT Severn Trent Water PBIT* £m 53.9 (12.5) (6.6) (18.9) (11.5) 462.3 (5.9) (4.8) 456.4 456.0 20 Tu En B D N R 20 In 20 ad ep et et f 07 07 08 rn er ra a re C De /0 ov gy il s /0 /0 os c tru 8 a 8 9 e ia b nd & tI (A r* (A ts c tio Co m tu ** s s Ut n pa re pr re m il ct ev ity s
Slide 8: Severn Trent Services performance
Severn Trent Services performance Turnover PBIT* 2007/08 2008/09 Change 2007/08 2008/09 Change £m £m % £m £m % 313.0 339.3 8.4% As reported 26.4 30.5 14.7% (15.7) (12.5) STRS (5.9) (4.0) 297.3 326.8 9.9% Excluding STRS 20.7 26.5 28.0% 31.0 - Exchange rate impact 1.9 - (10.8) (7.6) Sale of business 1
Slide 9: Corporate & Other
Corporate & Other 2007/08 2008/09 £m £m Corporate costs (10.9) (12.7) Other (0.3) (3.7) PBIT* (11.2) (16.4) * PBIT before exceptional items 8
Slide 10: Exceptional items
Exceptional items 2007/08 2008/09 £m £m Flooding income/(costs) Gross costs (29.6) (13.1) Insurance recoveries 16.0 14.6 (13.6) 1.5 Legacy issues Ofwat fine (35.8) - Court imposed fine and costs - (2.2) Contribution to Charitable Trust - (5.0) (35.8) (7.2) Severn Trent Services Third party legal cos
Slide 11: Cash Flow
Cash Flow 2008/09 operating cash flow £m Includes: £m 643.5 RPI rolled up (19.1) (465.0) Fair value adjustments (222.7) Foreign exchange 5.9 Other 19.9 178.5 (173.9) (216.0) 1.1 (158.8) 6.2 (1.3) (148.2) (216.0) (364.2) ts t st s re x s s ow ts ns eb nd w Ta e e en en tu su tio flo er Fl td e i em m
Slide 12: Group finance charges and net debt
Group finance charges and net debt Interest Net debt** £m £m 177.4 196.4 3,797 248 3,476 3,433 62 190.2* 154.3 175.2 46 194.3* 3,549 3,387 3,414 35.9 19.1 2007/08 2008/09 'Cash' interest 31 Mar 2008 30 Sept 2008 31 Mar 2009 RPI rolled up Net pension (debit)/credit* Economic net debt Fair value adjus
Slide 13: Liquidity position
Liquidity position AMP5 fund raising continues £400m 6% 9 year Sterling bond issued in January 2009 £150m EIB facility signed post year end Cash on deposit £648m Bank deposits A+ or better, liquidity funds AAA £500m 5 year bank facility maturing 2013 (undrawn) Average debt maturity 19
Slide 14: Effective rate of current tax
Effective rate of current tax 2007/08 Effective current tax rate% 2008/09 Effective current tax rate% 6.4% 3.6% 29.2% 31.1% 25.6% 24.7% Effective rate* Adjustments 2007/08 full tax rate** Effective rate* Adjustments 2008/09 full tax rate** 2009/10 Full Year effective current tax rate in range of 24%
Slide 15: Financial summary
Financial summary Sustained operating performance Strong liquidity position – funded for up to the next two years Delivering on dividend commitment 14
Slide 16: Tony Wray, Chief Executive
SEVERN TRENT Tony Wray Chief Executive 15
Slide 17: Focus on continuous improvement delivering results
Focus on continuous improvement delivering results 14 KPIs now upper quartile 9 maintained at high standards 7 improved 4 static Higher standards Greater efficiency Continuous improvement 16
Slide 18: Improving the customer experience
Improving the customer experience Upper Quartile Upper Quartile Upper Quartile Reducing customer Resolving jobs first time* Better call handling** written complaints*** 96% 88% 10.9 85% GOOD GOOD 85% 6.4 GOOD Mar 08 Mar 09 Mar 08 Mar 09 Mar 08 Mar 09 Improved performance in KPIs and Ofwat’s DG servi
Slide 19: Improving security of supply
Improving security of supply Outperformed Ofwat leakage target for 2008/09 by 8 Ml/d Improved response times, resource allocation and targeted maintenance Target delivered without additional resource despite coldest winter for 13 years. SOSI* of 98, ahead of 2010 SOSI commitment to Ofwat * SOS
Slide 20: Improving our environmental performance
Improving our environmental performance Upper Quartile Upper Quartile Upper Quartile Improving net Reducing pollution Maintaining sewage energy use* incidents** treatment compliance*** 608 622 0.11 622 GOOD 0.08 GOOD Nil both years 0.00% 0.00% Mar 08 Mar 09 Mar 08 Mar 09 Mar 08 Mar 09 Upper quartile
Slide 21: Improving management of operating costs
Improving management of operating costs Operating costs £m £5m of additional cost savings 490 targeted for 2009/10 440 2005/06 2006/07 2007/08 2008/09 2009/10 Ofwat FD (Interims RPI assumptions) Severn Trent (Interims actual/objective) Severn Trent (Prelims actual/objective) Process improvements dri
Slide 22: Delivering capital efficiencies
Delivering capital efficiencies FY 2008/09 gross capex.* £635.3m Delivery of Water and Waste AMP4 obligations on track £58m investment in Frankley GAC** plant delivering SOSI commitments and maximising efficiencies Investing efficiencies: Renewable energy AMP5 investment programme – smoo
Slide 23: Sustaining our improvements
Sustaining our improvements Investing today for future efficiencies: Processes Standardised working practices and reduced complexity Strategic accommodation review A modern working environment with 1,700 staff at one site Technology A common IT platform driving consistency and process co
Slide 24: Well placed for AMP5
Well placed for AMP5 Developing the Final Business Plan Focused modelling of maintenance Acceleration of capex into AMP4 to £2.6bn 100% capitalise on efficiencies Enhanced Service Quality refinements agreed with DWI & EA 80% Supply demand Climate change driver removed Quality Reprioritis
Slide 25: Outlook
Outlook Severn Trent Water Targeting additional £5m of operating cost savings in 2009/10 Remain on track to deliver AMP4 capital programme Severn Trent Services Continued growth through organic and other opportunities Severn Trent Plc Strong liquidity position – funded for up to the ne
Slide 26: Delivering continuous improvement
Delivering continuous improvement Improving against our KPIs and ensuring improvement is sustained Delivering our investment programme and investing in further efficiencies Delivering on our dividend commitment Well placed for PR09 25
Slide 27: Q&A
TRENT SEVERN Q&A 26
Slide 28: SEVERN
SEVERN TRENT
Slide 29: Appendix
SEVERN TRENT Appendix 28
Slide 30: Contact Details – Investor Relations
Contact Details – Investor Relations Jonathan Davies Investor Relations Severn Trent Plc 2297 Coventry Road Birmingham B26 3PU United Kingdom Tel: +44 (0)121 722 4295 Fax: +44 (0)121 722 4294 e:mail jonathan.davies@severntrent.co.uk www.severntrent.com 29
Slide 31: Key Performance Indicators
Key Performance Indicators 2007/08 2008/09 Lower Upper Lower Upper Description Quartile Median Quartile Quartile Median Quartile Lost time incidents per 100,000 hrs worked 0.61 0.43 Employee motivation % 77% 83% Water quality (test failure rate) ppm 240.1 200.4 Customer written complaints per 1,000
Slide 32: Group income statement summary
Group income statement summary Year ended 31 March 2009 2007/08 2008/09 Variance Variance £m £m £m % 1,552.4 Turnover 1,642.2 89.8 5.8 (1,082.9) Operating costs (1,172.3) (89.4) (8.3) 469.5 Profit before exceptional items, interest and tax 469.9 0.4 0.1 (68.8) Exceptional items (18.9) 49.9 72.5 400.
Slide 33: Group Earnings
Group Earnings Year ended 31 March 2009 2007/08 2008/09 £m £m 211.4 Profit/(loss) for the period (56.0) 209.5 Attributable to: - Equity holders of the company (57.8) 1.9 - Minority Interests 1.8 Variance Variance Pence Pence pence % Basic EPS from continuing operations 97.8 Adjusted basic EPS (befor
Slide 34: Group balance sheet
Group balance sheet Year ended 31 March 2009 31 Mar 31 Mar Movement since 2008 2009 31 Mar 2008 £m £m £m 5,731.2 Property, plant and equipment 5,980.1 248.9 157.4 Intangible assets 184.6 27.2 4.3 Other non-current assets 5.2 0.9 (388.1) Working Capital/provisions (478.7) (90.6) 5,504.8 Capital emplo
Slide 35: Movements on shareholders' equity
Movements on shareholders’ equity Year ended 31 March 2009 2008/09 £m At 1 April 1,205.2 Total recognised income for the financial period (104.0) Dividends (158.8) Credit from share based payments charge 5.3 Tax on share based payments posted directly to reserves (4.5) Shares issued 8.9 At 31 March
Slide 36: Credit ratings
Credit ratings 31 March 2009 Long-Term Severn Trent Water Severn Trent Plc Moody’s A2 A3 Standard & Poor’s A A- Short-Term Severn Trent Water Severn Trent Plc Moody’s P1 P2 Standard & Poor’s A1 A1 Moody’s and Standard & Poor’s – negative outlook. 35
Slide 37: Debt maturity profile
Debt maturity profile £m 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 2010 2015 2020 2025 2030 2035 2050 2055 2060 2065 Average maturity of around 19 years 36
Slide 38: Gearing
Gearing* Actual at Actual at Net debt/RCV 31 Mar 2008 30 Mar 2009 Severn Trent Plc 57.2% 57.3% Severn Trent Water 58.8% 59.6% * Economic net debt (ie excluding fair value adjustments) divided by RCV at year average RPI 37
Slide 39: Segmental analysis of capital employed
Segmental analysis of capital employed Year ended 31 March 2009 Total Net operating (As restated) assets Goodwill Total 31 Mar 2008 31 Mar 2009 31 Mar 2009 31 Mar 2009 £m £m £m £m 5,431.0 Severn Trent Water 5,578.1 - 5,578.1 135.1 Severn Trent Services* 121.2 63.3 184.5 (61.3) Other (71.4) - (71.4)
Slide 40: PBITD analysis
PBITD* analysis Year ended 31 March 2009 Group (As restated) Group 2007/08 2008/09 £m £m 683.6 Severn Trent Water 698.9 33.2 Severn Trent Services 37.9 (15.5) Other (19.0) 701.3 Group 717.8 * Profit before interest, tax, depreciation and amortisation of intangible assets, excluding exceptional items
Slide 41: Depreciation analysis
Depreciation* analysis Year ended 31 March 2009 Group (As restated) Group 2007/08 2008/09 £m £m 227.2 Severn Trent Water 242.9 6.6 Severn Trent Services 7.4 (2.0) Other (2.4) 231.8 Group 247.9 * Including amortisation of intangibles, excluding profit/loss on disposal of fixed assets and deferred inc
Slide 42: Capital expenditure (net cash)
Capital expenditure (net cash)* Year ended 31 March 2009 Group (As restated) Group 2007/08 2008/09 £m £m (436.6) SevernTrent Water (458.6) (7.0) Severn Trent Services (7.9) 4.0 Other 1.5 (439.6) Group (465.0) * Net of grants received and proceeds of sale 41
Slide 43: Severn Trent Water – turnover
Severn Trent Water – turnover Year ended 31 March 2009 £'m % Year to 31 March 2008 1265.3 RPI + K 67.6 5.3 1,332.9 5.3 Consumption Reduced consumption (20.8) (1.6) Net Growth/Meter Optants New customers/Income protection 9.8 0.8 Meter optants (5.3) (0.4) 1,316.6 4.1 Other (0.1) (0.1) Year to 31 Marc
Slide 44: Severn Trent Water – operating costs
Severn Trent Water – operating costs Year ended 31 March 2009 2007/08 2008/09 Variance Variance £m £m £m % 475.6 Direct Operating Costs 505.2* 29.6 6.2 222.1 Depreciation 233.6 11.5 5.2 111.2 Infrastructure Renewals 130.1 18.9 17.0 808.9 STW operating costs** 868.9 60.0 7.4 * Includes IFRS ROC adjus
Slide 45: Severn Trent Water – capex reconciliation
Severn Trent Water – capex reconciliation Year ended 31 March 2009 Total (as restated) 2007/08 2008/09 £m £m 566.7 UK GAAP gross capex 635.3 (45.6) Less grants and contributions (27.9) 521.1 UK GAAP net capex* 607.4 (111.3) Treated as IFRS infrastructure operating expenditure (130.1) 409.8 477.3 29.
Slide 46: Severn Trent Water – RCV
Severn Trent Water – RCV Year ended 31 March 2009 £'m 2005/06 2006/07 2007/08 2008/09 2009/10 Per Determination* 4,853 4,981 5,107 5,191 5,292 Actual/Estimated Outturn** 5,209 5,546 5,922 6,198 6,173 Ofwat Actual/Projected Outturn*** 5,209 5,546 5,922 6,097 6,215 * 2002/03 prices ** At year-average
Slide 47: SEVERN
SEVERN TRENT