TIDMSVT
RNS Number : 1172E
Severn Trent PLC
07 February 2018
Severn Trent Plc
Trading Update for the period 1 October 2017 to 7 February
2018
Severn Trent, a leading UK water and waste water company, today
provides its trading update.
Financial outlook: The Board continues to expect that the Group
will deliver FY17/18 trading performance in line with its
expectations and guidance previously disclosed at the HY17/18
results presentation on 23(rd) November 2017. We also reaffirm that
at least GBP50 million customer ODI(1) outperformance payments are
expected to be earned this year.
Delivering sustainable performance for all stakeholders:
AMP6(2) : We are focused on providing benefits to our customers,
communities, colleagues and investors, and we have generated
sector-leading outperformance payments on key customer ODIs and
continue to do well year-to-date.
We have positive momentum on Waste, particularly on internal and
external sewer flooding, category 3 pollutions and serious
pollution incidents. We re-confirm that we will hit the AMP6
outperformance cap(3) . On Water, we have had more supply
interruptions than normal in the last quarter, but are encouraged
by the reduction in water quality complaints, which were down 12%
year on year. We confirm that we expect to earn at least GBP50
million customer ODI(1) outperformance payments across Waste and
Water this year.
We continue to work hard on improving our SIM(4) scores. We also
note that we have one of the sector-leading scores in CCW's(5)
independent annual survey on what our customers think.
We have delivered material reductions in our cost of finance.
Since our HY17/18 results announcement, a GBP400m fixed-rate
sterling bond with a coupon of 6% matured and was refinanced in
part with a GBP250m five-year sterling bond with a coupon of
1.625%. We continue to explore varied sources of finance to help
positon us as an upper-quartile performer in AMP7.
AMP7(2) : Ofwat announced its PR19(6) Final Methodology in
December 2017, providing welcome clarity on upcoming plans. We
expected a tough review, recently restructuring our wholesale
business to improve operational effectiveness and our customers'
experience. We are encouraged by the enhanced incentive regime,
creating strong outperformance opportunities. We are positioning
ourselves for continued success in AMP7.
To assist AMP7 planning, we have launched our largest ever
customer engagement programme, including a community panel of
10,000 customers, a review of two million customer contacts and
analysis of over seven million social media conversations. This
helps us understand the core service improvements and wider social
and environmental initiatives our customers expect, thereby
underpinning future growth in our RCV(7) .
Corporate social responsibility: We are conscious of Severn
Trent's role in society through the impact on our community, the
wider environment, and the importance of workplace diversity. Our
work in the community delivers benefits through our extensive
customer education and employee volunteering programmes. We are
keen to play our part in supporting social mobility and we have a
highly-rated apprentice programme. We have reported a gender pay
gap of 2.4% and, while we have even further to go, we have made
strong progress in supporting workplace diversity and gender pay
equality. We have a strong record of environmental performance and
through our renewable energy business we are on track to generate
the equivalent of 50% of our energy needs by 2020.
Footnotes
1. ODIs = Outcome Delivery Incentives
2. AMP6 = regulatory period for 2015-2020. AMP7 = regulatory period for 2020-2025
3. For AMP6, our customer ODI outperformance payments for Waste
are capped at GBP190m (pre-tax at 2012/13 prices). To the end of
2016/17, we had earned GBP75m from our Waste customer ODIs, with
GBP115m remaining
4. SIM = Service Incentive Mechanism, Ofwat's measure of customer experience in AMP6
5. CCW = Consumer Council for Water
6. PR19 = Price Review for AMP7
7. RCV = Regulatory Capital Value
Enquiries:
Investors & Analysts
Ruban Chandran Severn Trent Plc +44 (0) 7957 166615
Head of Investor
Relations
Richard Tunnicliffe Severn Trent Plc +44 (0) 7834 419722
Investor Relations
Manager
Media
+44 (0) 207 353
Jonathan Sibun Tulchan Communications 4200
+44 (0) 247 771
Press Office Severn Trent Plc 5640
Cautionary statement regarding forward-looking statements
This document contains statements that are, or may be deemed to
be, 'forward-looking statements' with respect to Severn Trent's
financial condition, results of operations and business and certain
of Severn Trent's plans and objectives with respect to these
items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would',
'should', 'expects', 'believes', 'intends', 'plans', 'projects',
'potential', 'reasonably possible', 'targets', 'goal', 'estimates'
or words with a similar meaning, and, in each case, their negative
or other variations or comparable terminology. Any forward-looking
statements in this document are based on Severn Trent's current
expectations and, by their very nature, forward-looking statements
are inherently unpredictable, speculative and involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance and no assurances can be given that the forward-looking
statements in this document will be realised. There are a number of
factors, many of which are beyond Severn Trent's control that could
cause actual results, performance and developments to differ
materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to: the
Principal Risks disclosed in our latest Annual Report and Accounts
(which have not been updated since the date of its publication);
changes in the economies and markets in which the group operates;
changes in the regulatory and competition frameworks in which the
group operates; the impact of legal or other proceedings against or
which affect the group; and changes in interest and exchange
rates.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to Severn
Trent or any other member of the group or persons acting on their
behalf are expressly qualified in their entirety by the factors
referred to above. No assurances can be given that the
forward-looking statements in this document will be realised. This
document speaks as at the date of publication. Save as required by
applicable laws and regulations, Severn Trent does not intend to
update any forward-looking statements and does not undertake any
obligation to do so. Past performance of securities of Severn Trent
Plc cannot be relied upon as a guide to the future performance of
securities of Severn Trent Plc.
Nothing in this document should be regarded as a profits
forecast.
This document is not an offer to sell, exchange or transfer any
securities of Severn Trent Plc or any of its subsidiaries and is
not soliciting an offer to purchase, exchange or transfer such
securities in any jurisdiction. Securities may not be offered, sold
or transferred in the United States absent registration or an
applicable exemption from the registration requirements of the US
Securities Act of 1933 (as amended).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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