Severn Trent Plc · LSE:SVT
Severn Trent — FY2024 Earnings Presentation
35 slides from Severn Trent's earnings presentation, May 22, 2024
Slide 1: Full Year Results 2023/24
Full Year Results 2023/24 22 May 2024
Slide 2: Disclaimers
DISCLAIMERS Cautionary statement regarding forward-looking statements This document contains statements that are, or may be deemed to be, 'forward-looking All written or verbal forward-looking statements, made in this document or made statements' with respect to Severn Trent's financial condition, r
Slide 3: Liv Garfield, Chief Executive
LIV GARFIELD Chief Executive 3
Slide 4: 2023/24 Highlights
2023/24 HIGHLIGHTS Highly confident of retaining Delivered Strongford Net a record £1.2bn Zero Hub 4* EPA status of capital live and for fifth investment operational consecutive year Accelerating Earned £55m net ODI £450m of investment into reward AMP7 4
Slide 5: Helen Miles, Chief Financial Officer
HELEN MILES Chief Financial Officer 5
Slide 6: 2023/24 Financial Highlights
2023/24 FINANCIAL HIGHLIGHTS 8.1% £1bn £1bn equity raise cumulative added to the supporting RoRE RCV this year long-term performance 36% growth 116.84p 59.7% adjusted EPS proposed full shadow growth, year dividend, regulated including in line with gearing £512m Group policy PBIT 6
Slide 7: Regulated Water and Wastewater PBIT
REGULATED WATER AND WASTEWATER PBIT PBIT up despite cost pressures and planned increase in investment £3m Inflationary costs Opex impacted by higher power and £78m employee pay deal, but pressure IRE reducing Efficiencies and shift from IRE to capital work driving reductions £157m £28m £3m £9m £32m
Slide 8: Energy Generation
ENERGY GENERATION Long-term investments driving 34% increase in generation 17% GWh growth 302 Four Thermal Hydrolysis Plants enhancing our generation GWh output 310 Energy generation Taken imports from five WASCs in FY24 290 Bioresources GWh 270 Maximising non-appointed opportunities 250 AMP8 plans
Slide 9: Financing
FINANCING Strong financing performance, as we continue to go to market effectively Effective cost of interest1 Effective cash cost of interest2 Strong liquidity, with access to global markets 4.7% down 150bps 3.2% up 20bps FY23: ↓ 22% in net finance costs £2.1bn ✓ ✓ £363m In cash and undrawn 59.7%³
Slide 10: Return on Regulated Equity
RETURN ON REGULATED EQUITY Continued strong RoRE, with 8.1% cumulative return FY24 cumulative outperformance1: ODIs2 Continued focus on operational excellence achieving net £55m ODI reward in FY24 4.2% Consistent financing outperformance through inflation strategy and 1.1% Financing active treasury
Slide 11: Substantial RCV Growth
SUBSTANTIAL RCV GROWTH A growing platform for future returns Record year of capital Investment and inflation driving PR24 plan proposes largest ever investment significant AMP7 growth capital investment programme £1bn c. 40% 31% added to Economic RCV1 in FY24 Nominal RCV2 growth in AMP7 Proposed rea
Slide 12: Technical Guidance 2024/25
TECHNICAL GUIDANCE 2024/25 Regulated Water and Wastewater FY24 Year-on-year Turnover1 Higher year-on-year including inflation increase, partly offset by an expected reduction of diversions income mainly relating to HS2. £2.15bn ▲ Lower year-on-year, driven by a reduction in energy cost and diversion
Slide 13: Liv Garfield, Chief Executive
LIV GARFIELD Chief Executive 13
Slide 14: Tackling Spills
TACKLING SPILLS Delivering improvements at 900 sites over the next 12 months Investment Interventions Innovation • Accelerating investment to average • 700 storage solutions to increase • Zero Spills Hub partnering with world- below 20 spills by 2025 capacity at treatment works leading companies on
Slide 15: Driving Efficient Growth
DRIVING EFFICIENT GROWTH Record capital investment of £1.2 billion positioning us well as we approach AMP8 FY24 capital investment delivered across c. 2,000 schemes Examples of schemes • £4m on a new rising main to improve river quality and 84% £352m £165m increase storm water storage at Toton (Nott
Slide 16: Continued Strength in Water
CONTINUED STRENGTH IN WATER Green on >80% of water ODIs, delivering over £35m net reward ODI metrics Leakage Best ever performance, targeted Low pressure investment across capital schemes • Best ever performance, and highest ever year-on-year reduction • £56m capital investment deployed on repairs S
Slide 17: Driving Performance in Wastewater
DRIVING PERFORMANCE IN WASTEWATER Demonstrating operational leadership across EPA and ODIs Confident of a record five consecutive years of EPA 4* Best ever blockages performance, well ahead of sector average… Sector average y3 Serious Sludge use and WINEP delivery Total pollutions pollutions disposa
Slide 18: Environmental Leadership
ENVIRONMENTAL LEADERSHIP Delivering our ambitious environmental plans Rivers Green Recovery Biodiversity Net Zero Triple Carbon Pledge We are now responsible for Investing £76m in Hit upgraded Biodiversity Technology operational at By 2030: 14% of the RNAGS¹ in our Mansfield to prevent target of imp
Slide 19: Customers, Colleagues and Communities
CUSTOMERS, COLLEAGUES AND COMMUNITIES Embracing our responsibilities to our customers, colleagues and community Supporting our colleagues Engagement score of 8.6 – in top 3% of utilities 27% of workforce promoted in the past 2 years Supporting our customers Supporting our communities 72% of employee
Slide 20: PR24 Upcoming Dates
PR24 UPCOMING DATES 12 June Draft Determination 20 June Investor presentation and Q&A 20
Slide 21: Appendix
APPENDIX
Slide 22: Regulated Water and Waste Water Revenue
REGULATED WATER AND WASTE WATER REVENUE Driven by in-AMP fast money Annual CPIH + K for Green Recovery and ODI increase in tariffs reward recognised 21.7 131.4 91.7 138.6 Lower NHH consumption, 2,152.0 increased support on Big Difference Scheme, and lower Representing the recovery of energy export i
Slide 23: EBITDA
EBITDA¹ 2023 2024 Variance Variance £m £m £m % 868.2 Regulated Water and Wastewater 889.9 21.7 2.5 65.8 Business Services 59.2 (6.6) (10.0) (7.9) Corporate and other (9.2) (1.3) (16.5) – Eliminations 0.2 0.2 – 926.1 Severn Trent Group 940.1 14.0 1.5 1. Earnings before interest, tax, depreciation and
Slide 24: Business Services EBITDA
BUSINESS SERVICES EBITDA¹ Non Regulated Regulated Total £m £m £m Operating Services – 19.9 19.9 Green Power 0.8 28.7 29.5 Property Development 3.8 0.3 4.1 Other 3.8 1.9 5.7 EBITDA 8.4 50.8 59.2 Depreciation (0.2) (17.6) (17.8) PBIT 8.2 33.2 41.4 1. Earnings before interest, tax, depreciation and amo
Slide 25: Segmental PBIT
SEGMENTAL PBIT¹ 2023 2024 Variance Variance £m £m £m % 467.5 Regulated Water and Wastewater 479.6 12.1 2.6 49.2 Business Services 41.4 (7.8) (15.9) (8.0) Corporate and other (9.4) (1.4) (17.5) 0.1 Consolidation adjustments 0.2 0.1 100.0 508.8 Severn Trent Group 511.8 3.0 0.6 1. Profit before interes
Slide 26: Depreciation
DEPRECIATION¹ 2023 2024 Variance Variance £m £m £m % 400.6 Regulated Water and Wastewater 410.3 9.7 2.4 16.6 Business Services 17.8 1.2 7.2 0.1 Corporate and other 0.2 0.1 100 417.3 Severn Trent Group 428.3 11.0 2.6 1. Including amortisation of intangible assets and depreciation of right-of-use asse
Slide 27: Net Finance Costs
NET FINANCE COSTS 2023 2024 Income Gross Income statement Capitalise interest statement Capitalised Gross interest charge d interest incurred charge interest incurred £m £m £m £m £m £m 143.3 56.6 199.9 Cash interest (including accruals) 160.1 69.6 229.7 3.6 3.6 Net pension finance cost 13.4 13.4 – –
Slide 28: Adjusted Earnings Per Share
ADJUSTED EARNINGS PER SHARE 2023 2024 Variance Variance £m £m £m % 508.8 Profit before interest and tax 511.8 3.0 0.6 (362.6) Net finance costs (281.5) 81.1 22.4 – Increase in expected credit loss on loan receivable (2.5) (2.5) – 146.2 Adjusted profit before tax 227.8 81.6 55.8 – Tax at the adjusted
Slide 29: Group Balance Sheet
GROUP BALANCE SHEET 31 March 2023 31 March 2024 Variance Variance £m £m £m % 11,124.8 Property, plant and equipment, right-of-use assets, intangible assets and goodwill 12,209.2 1,084.4 9.7 – Biological assets 5.7 5.7 – 16.5 Investment in joint venture 12.4 (4.1) (24.8) 81.6 Working capital 115.6 34
Slide 30: Capital Expenditure (Net Cash)
CAPITAL EXPENDITURE (NET CASH)1 2023 2024 Variance Variance £m £m £m % 689.7 Regulated Water and Waste Water 1,138.3 448.6 65.0 (3.1) Business Services 7.9 11.0 354.8 686.6 Severn Trent Group 1,146.2 459.6 66.9 1. Including purchases of property, plant and equipment, intangible assets, proceeds on d
Slide 31: Adjusted Net Debt
ADJUSTED NET DEBT 31 March 2023 31 March 2024 Variance Variance £m £m £m % (713.0) Bank loans (783.5) 70.5 9.9 (6,474.2) Other loans (7,357.9) 883.7 13.6 (110.9) Lease liabilities (120.0) 9.1 8.2 28.7 Net cash and cash equivalents 951.4 922.7 3,215.0 47.9 Fair value accounting adjustments 29.8 (18.1
Slide 32: Fair Value of Debt
FAIR VALUE OF DEBT 1 31 March 2023 31 March 2024 Variance Variance £m £m £m % (708.9) Floating rate debt 2 (788.7) 79.8 11.3 (4,287.9) Fixed rate debt (5,049.5) 761.6 17.8 (1,935.1) Index-linked debt (1,957.9) 22.8 1.2 (6,931.9) (7,796.1) 864.2 12.5 28.7 Net cash and cash equivalents 951.4 922.7 3,2
Slide 33: Analysis of Borrowings & Net Debt
ANALYSIS OF BORROWINGS & NET DEBT 8,261.4 (72.6) (951.4) (29.8) (19.7) 8.0 (220.1) 7,187.9 (253.2) 6,722.6 Bank loans, other Loans due from Net cash and cash Fair value Exchange on Adjusted net debt Floating debt fair Fixed debt fair Index-linked debt Fair value of loans & lease joint venture equiva
Slide 34: Debt Maturity
-100 0 100 200 300 400 700 500 600 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 DEBT MATURITY 2036 2037 2038 2039 2040 2041 2042 Debt 2043 2044 2045 2046 2047 2048 Maturing Debt 2049 Debt issued in FY24 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 2061 2062 2063 2064 2065 2066 20
Slide 35: Gearing and Credit Ratings
GEARING AND CREDIT RATINGS 31 March 2023 Adjusted net debt/RCV¹ 31 March 2024 61.8% Severn Trent Plc Group Shadow Gearing² 58.3% 59.8% Shadow Regulated Gearing³ 59.7% 59.6% Economic Shadow Regulated Gearing⁴ 58.7% 31 March 2023 31 March 2024 Severn Trent Water Severn Trent Plc Severn Trent Water Sev