Severn Trent PLC is reporting operational excellence supported by strong financials with the publication this morning of its half yearly interim results for the six months to 30 September 2021.

The company, which owns Severn Trent Water and Hafren Dyfrdwy, said it is continuing to deliver strong operational performance and is ahead of plan - over 90% of Severn Trent 's Customer ODI measures are on track across water, waste, customer, and the environment.

Group turnover of £958 million is in line with expectations, up £71 million (8.0%), as a result of a strong recovery in non-household consumption following the lifting of lockdown restrictions, while Group PBIT of £256 million was up £31 million, a rise of 13.8% compared to the same period last year ((2020/21: £224.6 million).

Net cash capital expenditure was £238.0 million (2020/21: £283.5 million). Net pension deficit at 30 September decreased to £291.5 million, benefiting from strong asset growth of £167.1 million and planned contributions of £35.6 million.

To fund its planned Green Recovery programme in line with its capital structure, Severn Trent completed a successful equity placement in the period raising net proceeds of £245 million.

Power costs were £8.2 million or 17.7% higher than the previous period, much less than the average wholesale energy prices increase of more than 200% year-on-year. The company has benefited from self-generation in bioresources and internal hedges between the regulated business (a net consumer of energy) and the non-regulated business (a net generator).

More than £800 million invested to date in AMP7 capital programme

To date in AMP7 the utility has invested more than £800 million in its capital programme, in line with its plans, saying it had benefitted from signing early agreements with framework partners and from insourcing its capital design team, helping to set itself up for the rest of the AMP.

The utility has invested over £50 million on Water Framework Directive schemes, including work to reduce phosphate levels and to improve river quality. Alongside this it is also investing over £500 million on Water Industry National Environment Programme (WINEP) schemes throughout the AMP. The company is currently in the process of commissioning two new thermal hydrolysis plants improving the yield on its biogas digestion.

Commenting on the results, Liv Garfield, Chief Executive Severn Trent Plc, said:

"We've made another strong start to the year as we focus on delivering for stakeholders across our region and delivering for customers in the areas that matter most to them, all while driving the financial performance of our business.

“We've continued to invest significantly in our network, in our people and to support our strong commitment to the environment. Our environmental ambitions remain at the heart of our company, whether planting over a million trees, reducing our carbon emissions, or producing an extra 95 million litres of water to tackle the threat of water scarcity.”

Severn Trent has had a strong operational start to the year, with more than 90% of Severn Trent Water Customer ODI measures either ahead of, or on target, with performance driven by improvements in data and innovation.

The company said its reinvestment plans were continuing to drive efficient and more effective methods of operation. following on from a sector-leading performance last year, Severn Trent is increasing its ODI guidance for the full year to at least £75 million.

At its recent Capital Markets Day, the utility outlined plans to reduce baseline carbon emissions by 470 ktonnes and to fulfil its Net Zero pledge by 2030.

Leakage performance remains on track for a 15% reduction across the AMP. The firm’s dedicated teams have a deeper understanding of their region and are aided by real-time data provided by acoustic loggers and AI predictive data on where leaks may occur.

On the waste side, where operational performance has remained very strong, data and analytics continue to be the focus of investments and innovation. As part of Severn Trent’s strategy to become even more data driven, the utility is on track to install 40,000 sewer sensors by the end of 2025.

Leading with environment plans and accelerated river water quality improvements

Severn Trent said environmental ambitions remain at the heart of its business, from plans to plant over a million trees, to enhance over 5,000 hectares of land, restoration of more than 2,000 acres of peatlands across England and Wales by 2025, and to produce an extra 95 million litres of water in a low-carbon way to tackle the threat of water scarcity.

Severn Trent has also announced that it plans to fulfil all its actions set out in the Environment Act to improve river quality in a nine-year timeframe, rather than the 25-year target.

The company is collaborating with the sectors that have the greatest impact on river health, such as agriculture. Severn Trent is working with 9,000 farmers in its region to focus on the negative effects on river quality caused by fertiliser and other chemical runoff.

The water company said it also welcomes the opportunity to work constructively and collaboratively with regulators following the recent announcement by Defra, Ofwat and the Environment Agency of an industry-wide investigation into sewage treatment works.

The Board has declared an interim ordinary dividend of 40.86p per share (2020/21: 40.63p per share), which will be paid on 7 January 2022 to shareholders on the register at 3 December 2021.

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