Severn Trent Plc · LSE:SVT
Severn Trent — H1 2024/25 Earnings Presentation
34 slides from Severn Trent's earnings presentation, Nov 20, 2024
Slide 1: Half Year Results 2024/25
Half Year Results 2024/25 20 November 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: AMP7 Reflections
AMP7 REFLECTIONS A successful AMP7 setting us up for a strong AMP8 Generating Growth Enhancing the Environment Driving Performance Giving Back Nominal RCV growth of 40%, 30% reduction in emissions1 and Awarded 4* EPA status each and Supported families with c. £200m boosted by Green Recovery created
Slide 5: Half Year Highlights
HALF YEAR HIGHLIGHTS Delivered Expect to deliver Achieved 900 >£100m1 Outstanding interventions net ODI reward this status to reduce spills year, pre-sharing for our PR24 plan this year On track for upper 4* EPA status end of confirmed for a £1.3-£1.5bn fifth consecutive capital investment year guid
Slide 6: Helen Miles, Chief Financial Officer
HELEN MILES Chief Financial Officer 6
Slide 7: Half Year Financial Highlights
HALF YEAR FINANCIAL HIGHLIGHTS Strong financials Interim including PBIT and 58.6% dividend of economic EPS growth 48.68p regulated gearing¹ year-on-year in line with policy £13.6bn Strong liquidity, expected closing with over £2bn in AMP7 RCV cash and facilities 7 1 Economic regulated gearing includ
Slide 8: Cost Efficiency
COST EFFICIENCY Driving efficiency to deliver more today while investing for the future Delivering more for our allowance Investing totex to drive long-term success Supplying Treating 30% £220m 10% 15% more direct labour in in Net Zero and more water than more waste than operations and climate chang
Slide 9: Regulated Water and Wastewater PBIT
REGULATED WATER AND WASTEWATER PBIT 21% higher PBIT with higher turnover and lower power costs Turnover Pricing Investment Inflationary increase in Benefitting from easing energy Planned increase in Green Recovery revenue, with bad debts flat at prices, partially offset by 5% and insourcing activiti
Slide 10: Business Services
BUSINESS SERVICES Supporting our net zero ambitions and contributing £242m EBITDA to the Group during AMP7 EBITDA: reliable earnings supporting the group Green Power: growth in generation offsets lower energy prices Asset optimisation and Andigestion acquisition significantly boosting Business Servi
Slide 11: Financing Strategy
FINANCING STRATEGY Resilient financial position and access to markets gives confidence in AMP8 outperformance Balance sheet Credit ratings reaffirmed by Moody's and S&P Shadow regulated gearing well below sector average strength Ahead of pension funding plan 85% 80% 75% Stable debt 68% of debt is fi
Slide 12: Strong Financing Performance
STRONG FINANCING PERFORMANCE Strong track record on financing performance and well positioned versus sector Strong position on embedded debt compared to the sector 3.4% RoRE Financing outperformance AMP to date (real) Industry Comparison – Effective Cost of Interest 7% 6% 4.4% Effective cost of inte
Slide 13: Long-Term RCV Growth
LONG-TERM RCV GROWTH Highest ever RCV growth in AMP7 Step change in growth in AMP8 Capital structure £1.4bn end-of- Green Recovery At least 28% Equivalent to c. 40% increasing AMP RCV boosting growth real RCV growth1 nominal RCV growth1 inflation benefit adjustments £1bn Closing AMP7 with 12% real a
Slide 14: Technical Guidance
TECHNICAL GUIDANCE FY24 FY25 Turnover £2.15bn Higher year-on-year Regulated Water and Wastewater Operating costs & IRE £1.3bn Lower year-on-year ODIs £55m Over £100m pre-sharing Economic RCV £12.5bn Growing to £13.6bn Interest charge £282m Lower year-on-year Group Capital investment £1.2bn Higher: £
Slide 15: Liv Garfield, Chief Executive
LIV GARFIELD Chief Executive 15
Slide 16: Tackling Spills
Watch: Our progress so far TACKLING SPILLS Watch: Our YouTube Playlist Delivering solutions at speed and at scale, innovating to reach global best practice 2,472 900 Over 500 £1.2bn 24.9 Storm overflows in our Interventions delivered People working on our Storm Overflow spend Average spills last yea
Slide 17: Scaled Up Investment
SCALED UP INVESTMENT In a strong position to deliver our AMP8 capital programme • Delivering a record year of investment Record capital run • £600m Green Recovery programme, enabling step up in capacity rate • £450m transition spend providing head start on AMP8 commitments • Embedded design team unl
Slide 18: Sustaining Operational Excellence in Water
SUSTAINING OPERATIONAL EXCELLENCE IN WATER Green on c. 90% of water measures Spotlight: Leakage Significant progress on water measures over AMP7 • Increased internal resource enabling us to detect leaks Low pressure Expected outturn of a 95% total reduction significantly earlier • Brought over 300 l
Slide 19: Continued Strength in Wastewater
CONTINUED STRENGTH IN WASTEWATER Strategic investments to maintain leading performance into AMP8 Spotlight: Insourcing in Wastewater FY24 60 110 50 43.9 40 jobs created in new Waste c. 400 jobs insourced in 40 Pollutions performance leading Control Centre Networks last year 30 25.6 the sector ahead
Slide 20: Improving Customer Service
IMPROVING CUSTOMER SERVICE Good progress in AMP7 But more to do to improve C-MeX Total Complaints Issue identified Solution underway >40% down over AMP7 Outdated Rolling out Kraken, improving customer service through AI and new system operating model Insourcing to drive end-to-end Too many ownership
Slide 21: Sustaining Our Performance
SUSTAINING OUR PERFORMANCE Our unique culture positions us strongly for the future Invested in skills Performance-driven culture An experienced and engaged workforce Direct access to critical skills gives us Embedded ‘Communication Cells’ drive Engagement score of 8.6 out of 10, placing additional c
Slide 22: Summary
SUMMARY Final Determination: 19 December 2024 PR24 Investor presentation and Q&A: 20 December 2024 AMP7 Closing a successful AMP as the standout performer AMP8 Well positioned to outperform as we grow SPILLS Made major progress on key sector reputational issue Capital Markets Day: 5 March 2025 22
Slide 23: Appendix
APPENDIX
Slide 24: 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 25: Regulated Water and Wastewater Revenue
REGULATED WATER AND WASTEWATER REVENUE Mainly representing reduction in HS2 activity, which offsets in expenditure Annual CPIH + K increase in tariffs 12.9 9.8 5.4 42.1 RFI mechanism reduced turnover less this year, as the previous year reflected the 1,130.9 over-recovery in 2021/22 post Covid-19 as
Slide 26: EBITDA
EBITDA¹ H1 2023 H1 2024 Variance Variance £m £m £m % 450.2 Regulated Water and Wastewater 510.6 60.4 13.4 24.7 Business Services 24.4 (0.3) (1.2) 12.6 Operating Services and Other 13.0 0.4 3.2 10.7 Green Power 10.5 (0.2) (1.9) 1.4 Property Development 0.9 (0.5) (35.7) (3.9) Corporate and other (10.8
Slide 27: Net Finance Costs
NET FINANCE COSTS H1 2023 H1 2024 Income Gross Income Gross statement Capitalised interest statement Capitalised interest charge interest incurred charge interest incurred £m £m £m £m £m £m 90.3 31.1 121.4 Cash interest (including accruals) 79.9 43.0 122.9 6.6 – 6.6 Net pension finance cost 5.0 – 5.
Slide 28: Adjusted Earnings Per Share
ADJUSTED EARNINGS PER SHARE H1 2023 H1 2024 Variance Variance £m £m £m % 255.1 Profit before interest and tax 297.8 42.7 16.7 (179.2) Net finance costs (124.6) 54.6 30.5 (1.1) Share of current year profit/(loss) of joint venture 0.6 1.7 154.5 74.8 Adjusted profit before tax 173.8 99.0 132.4 – Curren
Slide 29: Adjusted Net Debt
ADJUSTED NET DEBT 31 March 2024 30 September 2024 Variance Variance £m £m £m % (783.5) Bank loans (785.1) (1.6) (0.2) (7,357.9) Other loans (7,904.4) (546.5) (7.4) (120.0) Lease liabilities (119.1) 0.9 0.8 951.4 Net cash and cash equivalents 1,046.0 94.6 9.9 29.8 Fair value accounting adjustments 26
Slide 30: Fair Value of Debt
FAIR VALUE OF DEBT 1 31 March 2024 30 September 2024 Variance Variance £m £m £m % (788.7) Floating rate debt 2 (791.9) (3.2) (0.4) (5,049.5) Fixed rate debt (5,357.0) (307.5) (6.1) (1,957.9) Index-linked debt (1,777.0) 180.9 9.2 (7,796.1) (7,925.9) (129.8) (1.7) 951.4 Net cash and cash equivalents 1
Slide 31: Gross Debt Mix
GROSS DEBT MIX £2.9bn Sep-24 6% 26% Mar-24 £2.7bn 6% 27% Sep-23 5% 27% Fixed Floating Index-linked 31
Slide 32: Debt Maturity
0 100 200 300 400 500 600 700 800 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 Debt 2045 2046 2047 2048 2049 FY25 Funding 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060 2061 2062 2063 2064 2065 2066 2067 2068 2069 DEBT MATURITY 32
Slide 33: Gearing
GEARING 31 March 2024 Adjusted net debt/RCV 30 September 2024¹ 58.3% Severn Trent Plc Group Shadow Gearing² 60.7% 59.7% Shadow Regulated Gearing³ 60.6% 58.7% Economic Regulated Gearing⁴ 58.6% 61.3% Regulated Gearing⁵ 62.8% 1. Based on estimated RCV at 30 September 2024. 2. Based on statutory adjuste
Slide 34: Credit Ratings
CREDIT RATINGS 31 March 2024 30 September 2024 Severn Trent Water Severn Trent Plc Severn Trent Water Severn Trent Plc Outlook Baa1 Baa2 Moody's Baa1 Baa2 Stable BBB+ BBB Standard and Poor's BBB+ BBB Stable BBB+ BBB Fitch BBB+ BBB Stable 34