Severn Trent PLC is reporting strong operational and environmental performance made possible by its financial strength with the publication of its Annual Results for the year ended 31 March 2025, the final year of AMP7.

During the year the Group delivered a record £1.7 billion capital investment, 40% higher year-on-year and around treble the level of investment at the start of AMP7. This brings investment levels in-line with the average required in AMP8, putting it in a strong position to deliver next year's guidance of £1.7 billion - £1.9 billion.

In 2021 the utility was awarded an additional £566 million by the regulator for its Green Recovery programme – over 70% of all Green Recovery funding awarded to the sector – across six workstreams aimed at driving innovation. Severn Trent said that work has scaled-up across AMP7, culminating in delivery this year, giving it a wealth of experience in a number of emerging areas where it will do much more work in AMP8.

The company has also been able to accelerate over £450 million of investment from AMP8 and delivered customer and environmental benefits sooner, while generating early growth in its asset base.

Describing FY 2024-25 as a record year, with a new era of growth underway, having secured its Final Determination for AMP8 and delivering 59% Regulatory Capital Value growth by 2030, Severn Trent is giving an earnings outlook of adjusted EPS doubling between 2025 and 2028 and guide to operational outperformance of £300 million across five years.

In December Ofwat approved £15 billion of expenditure across the next five years, around twice the amount that was approved five years ago for the AMP7 period.

Key financial highlights during the year include:

• Accelerated more than £450 million of AMP8 investment, including substantial improvements to storm overflows.
• AMP7 closing regulatory asset base grown to £13.7 billion, a 46% increase over the past five years
• Investment strategy has underpinned a record £150 million in performance incentives this year
• Sector-leading £434 million of operational performance rewards achieved across the AMP7 five-year regulatory period, ahead of guidance and “significantly more” than any other water company.
• Delivered a record year on ODIs, with £150 million earned, meaning across AMP7 the company will have earned over twice as much in ODI rewards as any other company.
• Stable credit ratings reaffirmed by S&P, Moody’s and Fitch, and regulated gearing of 62.7%.

Operational performance

Severn Trent is also reporting record performance in water operations, saying it has significantly reduced leakage year-on-year, contributing to a total leakage reduction of 16.8% across AMP7.

The company has met or exceeded its targets on 83% of performance commitments, including its best ever performance on leakage, supply interruptions, and internal sewer flooding.

Using the most recently available data, the utility said it believes it is now outperforming many European countries, including France and Spain. According to Severn Trent, this reflects the strategic investment it made early in AMP7 to insource leakage technicians and dramatically expand its find-and-fix programmes – increasing detection activity by 102% and repairing significant visible leaks 60% faster than at the end of AMP6.

The company has also now started to implement innovative technologies such as no-dig fixes, which can reduce the repair time spent on site to 20 minutes or less, giving it a head start on its AMP8 target to reduce leakage by 31.6% in the ten years to 2030.

Supply interruptions are also at their lowest ever level, with the Group achieving its regulatory target for the first time in AMP7 after a 32% year-on-year reduction.

Severn Trent has once again outperformed on low pressure events. This year against a target of 17,062 low pressure days it had a total of only 325 attributed to investment over the course of AMP7, implementing capital improvements across thousands of properties. The company has also hit its target every year in AMP7 on water quality complaints, as this changes from being a bespoke ODI in AMP7 to a common ODI for all companies in AMP8.

The Group is reporting sector-leading environmental performance as it starts AMP8 – Severn Trent has achieved 'industry-leading' four star environmental performance from the Environment Agency for a record five consecutive years, and is confident of achieving a sixth year for 2024.

It has also delivered frontier storm overflow spills performance for 2024, with the delivery of 1,800 interventions putting it firmly on track to reduce average spills by at least 25% to below 18 in 2025.

The utility believes its share of RNAGS (Reasons for rivers Not Achieving Good ecological Status) is now 10.8%, compared to 24% in 2022, and that its planned AMP8 investment will deliver a reduction to below 2% by 2030.

On serious pollutions, while performance for the year once again meets the Environment Agency’s ‘industry-leading’ standard, Severn Trent has missed its overall regulatory pollutions target. The company said it understands that its assets need to be future-proofed to deal with more frequent extreme weather events. The firm is therefore investing £400 million in its Pollutions Incident Reduction Plan to drive performance improvements at the pace customers expect, including:

• improving 400 sewage pumping stations
• insourcing the capability to undertake complex sewer repairs
• creating a ‘repeat prevention team’ to reduce follow-up incidents
• increasing the level of proactive interventions.

Severn Trent's expanded and diversified supply chain contains over 150 suppliers, giving it fast and lower cost delivery, with work ialready underway on £4.1 billion of AMP8 investment. In addition, its advance procurement strategy has secured critical items, derisking its capital programme.

Liv Garfield, Chief Executive, commented:

"Our strong operational and environmental performance has been made possible by our financial strength. The £1 billion equity raise we secured ahead of this five-year business cycle, combined with strong financing and cost control, has given us the firepower to invest in our growth plan and will see us create 7,000 new jobs in our communities and through our supply chain.