Severn Trent Plc (LON:SVT) has announced its results for the year to 31 March 2025.
A record year, with a new era of growth underway
Having secured our regulatory outcome for AMP8, delivering 59% Regulatory Capital Value growth by 2030,¹ we are giving an earnings outlook of adjusted EPS doubling between 2025 and 2028² and guide to operational outperformance of £300m across five years.³
Accelerated investment to grow our asset base and deliver benefits early
| · | Record £1.7bn capital investment delivered this year, 40% higher year-on-year, growing our regulatory asset base and putting us in a strong position to deliver next year’s guidance of £1.7bn – £1.9bn. |
| · | Accelerated more than £450m of AMP8 investment, including substantial improvements to storm overflows. |
| · | Grown regulatory asset base to £13.7bn⁴, a 46% increase over the past five years. |
Investment strategy has underpinned a record £150m⁵ in performance incentives this year
| · | Sector-leading £434m⁶ of operational performance rewards achieved across five-year regulatory period, ahead of guidance and significantly more than any other water company. |
| · | Met or exceeded our targets on 83% of performance commitments, including our best ever performance on leakage, supply interruptions, and internal sewer flooding. |
Leading operational performance and careful cost management driving strong financial results
| · | Year-on-year adjusted EPS growth of 41% and PBIT growth of 15%, both the highest in a decade. |
| · | Prudent balance sheet management, with stable credit ratings reaffirmed by S&P, Moody’s and Fitch, and regulated gearing of 62.7%. |
| · | Earnings growth outlook underpinned by revenue profile, energy hedging position and level of insourcing. |
| Group Results | 31 March 2025 | 31 March 2024 | Improvement |
| Revenue | £2,426.7m | £2,338.2m | 3.8% |
| PBIT | £590.2m | £511.8m | 15.3% |
| Net finance costs | £243.9m | £281.5m | 13.4% |
| Basic EPS | 76.6p | 51.0p | 50.2% |
| Adjusted basic EPS⁷ | 112.1p | 79.4p | 41.2% |
| Full year dividend per ordinary share | 121.71p | 116.84p | 4.2% |
| Capital investment | £1,673.5m | £1,199.7m | 39.5% |
Strong results generated attractive actual Return on Regulated Equity (RoRE)
| · | In real terms, delivered 9.7% actual RoRE in FY25, and 9.1% across five-year regulatory period. ⁸ |
| · | Strong run-rates on performance incentives and securing second highest totex allowance in the sector for AMP8 support future returns. |
Sector-leading environmental performance as we start AMP8
| · | Achieved ‘industry-leading’ four star environmental performance from the Environment Agency for a record five consecutive years, and confident of achieving a sixth year for 2024. |
| · | Frontier storm overflow spills performance for 2024, and having delivered 1,800 interventions we are firmly on track to reduce our average spills by at least 25% to below 18 in 2025. |
| · | We believe our share of RNAGS (Reasons for rivers Not Achieving Good ecological Status) is now 10.8%, compared to 24% in 2022, and our planned AMP8 investment will deliver a reduction to below 2% by 2030. |
| · | Record energy generation of 912 GWh,⁹ an increase of 11% year-on-year. |
Liv Garfield, Severn Trent Plc Chief Executive, said:
“We’re proud to be a successful Midlands business, sharing another year of record performance and continually improving service and value for our customers. We’re focused on getting things done – with our largest ever investment of £1.7bn in the people and places we serve, delivering major infrastructure improvements across the region.
“Our strong operational and environmental performance has been made possible by our financial strength. The £1bn 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.
“These results are testament to the dedication of our brilliant people at Severn Trent who live and breathe a commitment to delivering better services, protecting and improving river health and cutting leakage with major upgrades to the network. We look forward to building on this momentum, helping to power future growth and playing our part to boost the regional economy.”
Footnotes to page 1 of this RNS
| 1. | Growth in RCV (see glossary) is stated in nominal prices and exclusive of transition spend, which was accelerated into AMP7 and is therefore included in our AMP7 closing RCV of £13.7bn. |
| 2. | We project adjusted EPS to double in the 3-year period to 2027/28, from 112.1 pence in 2024/25, benefiting from regulated revenue growth including Outcome Delivery Incentive (ODI – see glossary) outperformance, continued cost management, and our strategic approach to financing. We expect this adjusted EPS growth to be weighted towards 2025/26 reflecting our bill profile. |
| 3. | Outperformance guidance is presented net of tax and in 2027/28 prices, which is the earliest point we can recognise revenue from AMP8 ODIs and Performance Commitment Deliverable (PCD) incentives. Equivalent to £250m in 2022/23 prices. |
| 4. | Closing RCV of £13.7bn after midnight adjustments, calculated in accordance with Ofwat guidance in IN25/02. |
| 5. | FY25 ODI performance of £150m quoted pre-tax, pre-sharing and in 2017/18 prices, exclusive of end-of-AMP ODI rewards accrued in the first four years of AMP7. This equates to £68m post customer sharing. |
| 6. | AMP7 ODIs of £434m stated pre-tax, post-sharing and in nominal prices – the same basis on which we previously issued guidance of at least £420m. |
| 7. | Adjusted EPS is set out in note 10. |
| 8. | Real RoRE is stated on an actual company basis. Actual company RoRE uses actual regulated equity calculated using average actual gearing including the impact of midnight adjustments, applied to the average FD RCV which does not include midnight adjustments. RoRE on a notional company basis can be found in the CFO review. |
| 9. | Generation number excludes biogas, based on an updated generation methodology. |
Preliminary Results Presentation and Webcast
A presentation of these results hosted by Liv Garfield, CEO, and Helen Miles, CFO, will be available on our website (severntrent.com) from 7.00am BST today, 21 May 2025.
We will be hosting a live Q&A session with Liv, Helen and our wider executive team at 8:30am BST today via video call which you can register for through the Severn Trent Plc website.
