Severn Trent PLC · LSE:SVT
Severn Trent — FY1999/00 Earnings Presentation
22 slides from Severn Trent's earnings presentation, Jun 5, 2000
Slide 1: Preliminary Results Announcement
Preliminary Results Announcement 5 June 2000 Media Presentation
Slide 2: Transforming the Group
Transforming the Group Since privatisation, transformation from Regulated Water Utility into International Environmental Services Group Three main operating arms Severn Trent Water Integrated Environmental Biffa Business Solutions Severn Trent Services The Environment is Our Business
Slide 3: Building a platform for future growth
Building a platform for future growth Acquisitions make Severn Trent (Biffa) the UK waste leader - Total combined turnover now almost £500m UK Waste acquired for £380m Severn Trent Services already secured the leading positions in environmental laboratories in the US and the UK Excellent management
Slide 4: International Environmental Services Group
International Environmental Services Group New shape of Severn Trent Increased focus on business customers - now 66% of Group turnover Annual turnover rate of non-regulated operating arms - around £1 billion (over 50% of total Group turnover)
Slide 5: Group Financial Highlights
Group Financial Highlights Group turnover up 14.8% to £1.566.6m (£1,364.3m) Turnover from the non-regulated businesses increased by 30% to £698.3m (£537.3m) and made up 42% of revenues against 36.0% last year Final year dividend of 28.0p per ordinary share - total for the year 45.0p (43.0p)
Slide 6: Medium Term Business Mix
Medium Term Business Mix Revenue (%) mix PBIT (%) mix 43 58 68 64 70 90 89 89 57 42 32 36 30 10 11 11 1997/98 1998/99 1999/00 2004/05 1997/98 1998/99 1999/00 2004/05 Non regulated Regulated
Slide 7: Platform for future growth
Platform for future growth Severn Trent Water - well positioned for AMP3 Strong non-regulated businesses Organisational capability Cost competitiveness
Slide 8: Severn Trent Water
Severn Trent Water Turnover in Severn Trent Water rose 3.1% to £982.1 million with operating profits before exceptionals steady at £423.5 million. Water quality and customer service levels improved Capital investment delivery was £556 million Major restructuring programme on track to meet new regula
Slide 9: Ready for Competition
Ready for Competition Network Access Code published New national accounts targeted New business ventures • ST Searches • ST Energy • ST Talks New billing system with e-commerce functionality
Slide 10: Severn Trent Services: A Growth Story
Severn Trent Services A Growth Story Strong growth with revenues rising 63% to £242.8 million and profit before interest and exceptionals up by 43% to £15.7 million Laboratory Services - run rate of almost $200 million - three times the size of its nearest competitor. Market leader in environmental
Slide 11: US market focus
US market: $80bn p.a. US market focus 6% 4% 2% 2% Pipeline 4% services Medium term margin 3% 10% W & WW target :10% Purification 19% Significant progress Water/WW utilities 50% President/CEO - Bill Cook New organisation structure Contract services Lab service Meters/instruments Chemicals Lower cost
Slide 12: Medium Term Goals
Medium Term Goals £m Revenue £m* 700 Segment focus 600 600 – Leadership positions 500 400 350 Analytical laboratories 300 243 Purification solutions 200 Operating services 100 0 19 20 ru n 99 04 ra /0 /0 te 0 5
Slide 13: Biffa Waste Services
Biffa Waste Services Between 1991 - 2000 Biffa almost TRIPLED revenues and profits (until now primarily through organic growth) Strategy to become a leading integrated waste management company In 1999, Biffa increased turnover by 17.5% to £291.1 million Collection division excellent year - turnover
Slide 14: A Waste Business for the Future
A Waste Business for the Future Biffa/UK Waste - strategic imperative Redefines future shape of Waste Industry – acquired businesses predominantly collection and recycling and will help to progress Government’s new waste strategy Collection drives growth Significant synergies Earnings enhancing in f
Slide 15: Business Acquired (UK)
Business Acquired (UK) Collection Depots 26 Collection Depots Municipal Contracts Landfill Sit es Special Waste Treatment 35 Municipal Contracts 8 Landfill Sites 14 Special Waste Transfer Stations/Bulk Liquid Tanker Depots 11 MRF’S/Transfer Stations
Slide 16: UK Waste & Biffa Combined
UK Waste & Biffa Combined Biffa Depots UK Depots UK’s leading waste company UK Recycling - 61 Collection depots - 1,200 vehicles - Over 58,000 Industrial/commercial customers Leeds Manchester - 35 Municipal contracts Birmingham - 20 Recycling centres/transfer stations and 6 paper recycling plants –
Slide 17: The Future
The Future Transformation of Severn Trent into one of the world’s leading environmental services Groups Strong non-regulated portfolio Biffa/UK Waste Services Integrated Environmental Solutions Provider
Slide 18: Appendix
SEVERN TRENT ENVIRONMENTAL LEADERSHIP
Slide 19: Non regulated Companies Profit before interest
Non regulated Companies Profit before interest 60 51.6 52.0* 50 45.1 40.8 40 30 27.9 20 19.1 13.4 13.5 10 0 1993 1994 1995 1996 1997 1998 1999 2000 * Application of FRS 15 reduced profit by £1.8 million
Slide 20: OPEX savings – with stretch
OPEX savings – with stretch 80 70 OFWAT assumed 60 STW programmed 50 STW stretch in planning 40 30 20 10 0 00 3 4 5 1 2 /0 /0 /0 /0 /0 20 02 03 04 00 01 20 20 20 20 20 Current programme of efficiency savings beats the determination OFWAT £220m STW £230m Now looking for stretch of c £20m
Slide 21: Severn Trent Water - CAPEX
Severn Trent Water - CAPEX Outperformance on track CAPEX 2000- 2000-2005 Financial profile finalised; programmed efficiencies of 5% (=£100m) 400 All outputs agreed - 8,000 schemes 300 New Capex delivery model 200 standardisation 2001 2002 2003 2004 2005 strategic procurement (May '00 prices) signifi
Slide 22: Transaction Multiples
Transaction Multiples UK UK Pre-synergy Post- synergy Turnover multiple 2.0x 2.0x EBITDA multiple 9.0x 6.6x EBITA multiple 16.5x 10.0x - Post synergy multiples based on minimum cost synergies of £15million