Half Yearly Financial Report

19 November 2025

Interim results for the six months to 30 September 2025

First half adjusted EPS¹ growth of 74% and upgrading FY26 ODI guidance

Severn Trent delivers strong financial performance in the first six months of AMP8 with year-on-year PBIT growth of 57% and record levels of investment. We will grow our regulatory asset base by 13% this year, increasing the value on which we earn future returns.

Liv Garfield, Chief Executive, said:

"The next five years will be a period of exceptional growth for Severn Trent. We have made a strong start to our largest-ever investment programme, frontloading our investments to deliver faster for customers. Thanks to these early investments, we've upgraded our forecasts for this year's performance incentives to drive improvements in the things our customers care about most, and delivered an unprecedented sixth consecutive year of top-rated environmental performance.

"We're investing in people, technology, and new businesses to secure the capabilities we need for the future. Backed by the financial strength of our group, we're accelerating growth in our asset base which flows through to earnings. We're confident we can deliver earnings growth and returns while investing even more for our customers, creating new jobs across our region and improving the environment for the communities we serve."

Strong first half financial performance delivering PBIT growth of 57%

Improved FY26 guidance

Regulatory period (AMP8) outlook

Delivering customer priorities through excellence in operational performance

Footnotes to page 1 of this RNS

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 GMT today, 19 November 2025.

We will be hosting a live Q&A session with Liv, Helen and our wider executive team at 8.30am GMT today via video call which you can register for through our website.

Chief Executive's Review

This year marks a significant milestone for the water industry in England and Wales. We've moved into a new regulatory period, AMP8, which is set to be a turning point for the sector with record levels of investment. And this summer the final report of the Independent Water Commission ('IWC') set out the recommendations which stand to shape the regulatory framework for the future beyond 2030.

Both of these developments are positive for the sector as a whole. AMP8 brings significantly more investment, allowing companies to deliver improvements to the three priority areas which will define the success of the industry - storm overflows, leakage and pollutions - while also evolving the incentive regime and introducing more protection for investors. Meanwhile, the IWC final report emphasises greater stability for shareholders and clearly sets out that significant long-term growth will continue far into the future.

We entered AMP8 as the frontier company in the sector. In the five years of AMP7, we were the only company to be rated as 'industry leading' by the Environment Agency for our environmental performance every year, made the fastest start to reduce storm overflow spills, and were one of only two water and sewerage companies to hit our leakage reduction target every year.

The relative performance of our company is significant because the regulatory framework is comparative, setting allowances based on industry averages and directly rewarding better performers. Our operational performance in leakage and pollutions contributed to £434 million of net 'ODI' rewards earned in AMP7 - more than twice as much as any other company. That helped us to deliver a real Return on Regulatory Equity of around 9%, significantly more than any other company in the sector. We had the highest asset base growth of any listed water company across the period; when factoring in growth to our asset base from indexation, our regulatory return was 14.2% p.a. across the past five years.

Our success is underpinned by our ability to adapt to the changes and opportunities presented to us. For AMP8, that started with our Business Plan, which was rated Outstanding by the regulator and granted an additional 30 basis points onto the allowed cost of equity (which equates to a reward of more than £100 million across the AMP). Since accepting our Final Determination, we've aligned the business to the new regulatory framework and made a fast start to the AMP.

We've progressively stepped up our investment levels over the past few years. We deployed around half a billion pounds of AMP8 spend in the last two years of AMP7 and secured more than twice as much funding in the AMP7 'Green Recovery' reopener than the rest of the sector combined, meaning we entered this year already at the right run rate to deliver the capital programme in AMP8. This also puts us in the most credible position to be awarded any additional funding we apply for through Ofwat's 'reopener' (see glossary) in the next five years, once that process is defined and the growth opportunity it presents becomes clearer.

Much of our early investment was directed towards storm overflows, meaning we began tackling the sector's biggest issue earlier than anyone else. Storm overflow performance is measured by the number of times each company's storm overflows spill on average across a calendar year, and last year we had the lowest average spills number in the sector. Having installed over 2,700 interventions so far across our nearly 2,500 storm overflows, we are on course to halve our spills number this year, beating our 2030 target.

Our progress in addressing storm overflow spills is just one factor contributing towards the significant ODI reward we expect to earn this year, as we upgrade our year one guidance. We see ODIs as our strength: we have demonstrated that Severn Trent has the culture to generate outperformance in any regulatory regime. We adapted best to the introduction of ODIs in AMP6, and adapted again to generate the highest rewards in AMP7 as the framework evolved. And we signalled our continued confidence before AMP8 had even begun, guiding to at least £300 million of rewards from operational incentives across the five years.

Strong water performance

2025 marks 30 years since the Severn Trent region last had a hosepipe ban and, thanks to the network resilience we've built over the past decade, we've managed this summer's drought with minimal customer impact. While hotter, drier weather leads to greater water consumption, we've increased our ability to transfer water through our network to keep customers on supply, and our roughly even split of water sources between reservoirs, rivers, and aquifers provides more flexibility when choosing where to abstract.

We've also been better able to manage the dry weather thanks to our strong track record of leakage reduction, resulting in a greater proportion of treated water reaching customer homes. We expect to deliver another record leakage performance this year, putting us on track for a significant ODI reward. The accelerated rollout of no-dig repairs, which are now used on around half of our communication pipe repairs, has allowed us to complete repairs faster and more cost effectively, with minimal customer disruption. We're also installing pressure management devices that allow us to optimise water pressure remotely, reducing the frequency of bursts in our network. By the end of the year around half of our network will be remotely pressure-controlled, and initial indications show a reduction in bursts of over 20% on these pressure-controlled parts of the network. Our leakage ODI is calculated on a three-year rolling average, so consistent performance underpins reward in future years.

As we continue to improve leakage towards our target of a 31.6% reduction in the ten years to 2030, we will be expanding and utilising our smart network, with over a third of our customers on smart meters by the end of that period. We got a head start, rolling out over 400,000 smart meters in AMP7. This provides real time data, allowing us to find and fix leaks more quickly. Customers benefit too as the smart meters integrate into our Kraken customer management system, giving them insight into their usage.

We are currently on track to meet our annual targets on the vast majority of our water ODIs, including supply interruptions, water quality contacts and the Compliance Risk Index (see glossary). The exception is per capita consumption, with customer demand remaining high during this summer's drought for both Severn Trent Water and Hafren Dyfrdwy - we have numerous initiatives in place including flow regulators, which help to promote water efficiency.

Wastewater and environmental leadership

In October, the Environment Agency awarded Severn Trent Water 'industry-leading' four-star status for our 2024 environmental performance. We earned that rating by delivering against seven stretching operational metrics, including fully implementing 580 environmental improvement programmes, delivering another year of 100% compliance on Satisfactory Sludge Disposal, and achieving 99.5% compliance with our discharge permits across 648 wastewater sites. We were the only company to be given four stars for 2024, marking six consecutive years of the highest possible rating, twice as long as any other company has ever achieved. This achievement is testament to the efforts of the teams involved and the investment we have made, and as we near the end of the 2025 assessment period, we are currently on track to earn this rating for a seventh consecutive year.

At this stage of the year, we are on track to meet our targets on 100% of Ofwat's waste and environment targets, which reflects the hard work of our teams and the upfront investment we have made.

Storm overflow spills have been the water sector's biggest issue in recent years. We had the lowest average spills in the sector in 2024, and as we approach the end of the 2025 assessment period we are highly confident of halving our average spills number year-on-year to 13, meaning we will have beaten our 2030 target in the first year of AMP8.

The drier weather this year has undoubtedly been a contributing factor. We believe our reduction from 2024 in like-for-like weather conditions would have been 27%. We are seeing the benefit of the over 2,700 interventions already implemented on our network to slow the rate at which storm water enters our sewers, increase our storage capacity, and enhance the volume of wastewater that can be treated at our works. Customers expect us to go further, and we foresee significant investment to be supported by the regulator in the coming decades to meet the 2050 government target of ensuring that none of our nearly 2,500 storm overflows spill more than ten times per year.

Pollution incidents are another major focus and we are continuously tackling pollutions in our network. We have been a top three performer in each of the past five years and while we expect to continue to outperform Ofwat's targets over the coming years, we want to go much further. The expansion of our proactive response teams has contributed to a 20% reduction in pollutions so far this year and, going forwards, we'll be fully utilising Storm Harvester - an AI tool which uses data from sewer monitors to give advance warning of when pollutions are likely to occur. Over the course of this five-year regulatory period we are investing £400 million to reduce the number and severity of pollutions, including a sevenfold increase in annual investment in our proactive intervention programme and upgrades to over 400 sewage pumping stations. 

Sewer flooding continues to be rare, but seriously impacts customers when it occurs so we will continue to invest to reduce the frequency of these incidents. We are once again on track to meet our regulatory target on internal sewer flooding, prioritising fast responses to prevent these disruptive events. External sewer flooding incidents are also lower year-on-year, and we expect to achieve our target on the measure having invested in capability and skills to improve response times and prevent future issues from arising.

Fast start to investment programme

The AMP8 regulatory period will see the water sector quadrupling investment in new infrastructure and resources compared to AMP7. We are in prime position to deliver this investment early and efficiently thanks to two key differentiators.

Firstly, we scaled up our capital delivery unit early, including deploying around half a billion pounds of transition spend over the last two years of AMP7, so that we have entered the new regulatory period already operating at the right run rate. We anticipate having 80% of our enhancement schemes in contract by March 2027, which derisks the impact of any supply chain peaks that might occur later in the AMP.

Secondly, our insourced capital design team gives us intellectual property ownership of the design of our assets. Traditionally capital build projects take years to complete, with assets built on site, meaning

more time on site and each asset designed individually. Our embedded design team has developed a catalogue of standardised and repeatable 'Plug and Play' assets which can be deployed across multiple projects, reducing the cost and increasing the speed of design and delivery of these capital schemes. Utilising this approach across our increased investment profile in AMP8 will contribute towards at least £500 million of capital efficiencies we are targeting to achieve over the AMP, providing headroom for additional investment.

Our upfront investment enables us to guide to the maximum possible reward of up to £50 million in Price Control Deliverables (PCDs) in AMP8. PCDs incentivise companies to deliver programmes to time, and we expect to outperform on all seven of our time incentive schemes across the next five years. These incentives scale up later on in the period, but we are still expecting the maximum possible reward on the two PCDs measured this year - Mains Renewals and Metering.

Over the next five years we will be completing work on thousands of projects including our largest scheme, a c. £300 million treatment works upgrade at Wanlip in Leicestershire. With the majority of our work being on a smaller scale, we can make the most of our unique Plug and Play approach to drive efficiencies.

For instance, historically we've used over 40 different variations of chemical dosing rig depending on the specific chemical mix needed on a site. Now, our Plug and Play team have created modular chemical dosing rigs with a configurable design that can deliver around 80% of our dosing rig needs. The team have also developed a unique modular solution to increase storage capacity at treatment works, including last year at Lower Moor, Worcestershire. These solutions can be deployed into our existing works at scale quickly with minimal preparatory civil work. Our capital design philosophy looks first to Plug and Play solutions, and we expect to utilise similar technologies across the full breadth of our AMP8 capital programme. As our region's population increases and the climate changes in future years, these Plug and Play solutions will continue to grow in importance.

Customers, Communities and Colleagues

In April of this year, customers saw a step up in their bills as the regulator allowed record levels of investment in AMP8. Knowing this would be the case, we have been committed to delivering value for their money. Our accelerated investment has delivered service improvements ahead of the bill increase, meaning the benefits have been felt from day one. Strong progress on our capital programme and PCDs means that improvements customers have paid for will be delivered on time. Continued outperformance against our targets means delivering the service outcomes they care about most. And our ability to generate cost efficiencies prevents bills from rising more than needed.

That said, we understand that in some cases the bill increase is simply more than families can afford. While collections have remained strong, our five-year £575 million financial support package is sufficient to support around 1 in 6 households with their bill by 2030. Meanwhile, to help households who don't qualify for our financial support, we are starting to proactively move customers onto metered bills where we know it will save them money.

While our Trustpilot score of 4.9 is the highest in the FTSE100, we are expecting to be in a penalty position on the regulatory measure of customer experience, C-MeX. The new methodology introduced this year has created an asymmetry in penalty and reward across all companies, with total sector penalties expected to be c. £100 million compared to less than £20 million of reward.

That said, we are determined to improve, and we know there is more we can do to ensure customers experience a hassle-free journey, and as more customers move over to Kraken we're seeing underlying improvements. Thanks to the data this enables we are segmenting our customers to better tailor the messages we send and the service we provide to them, and as we adapt to this new technology we expect it to transform the service we are able to offer our customers.

We continue to be rated very highly for the services we provide to housing developers. Severn Trent Water and Hafren Dyfrdwy are the two highest-rated companies in the sector on the Developer Measure of Experience (D-MeX), maintaining our strong AMP7 performance into the start of AMP8 when the associated rewards for good performance are more than three times higher.

More widely, as part of the support we offer to our region, over the past three years we have reached over 30,000 people and delivered around £10 million of social value through community initiatives, with a key focus being social mobility. Around 15,000 people have now attended our employability events and careers fairs across the major cities in our region, and we also offer 500 work experience opportunities annually, primarily targeting young people from disadvantaged backgrounds.

Alongside the impact on the lives of people in our communities, this is having a tangible impact on our business. Most recently, 43% of colleagues at our new customer contact centre in Edgbaston came through social recruitment initiatives. And our progress in this area has been recognised externally; we achieved second place in the 2025 Social Mobility Index, having ranked as one of the top ten UK employers in each of the past seven years.

Finally, the source of our success is our engaged workforce, and we continue to see very high morale across our teams. Our recent colleague engagement score is at an all-time high, and once again within the top 5% of utilities globally, while we have been ranked in Glassdoor's top 30 workplaces in the UK with an overall score of 4.6 out of five.

We've maintained these scores while growing our business. We now have more than 10,000 colleagues, 11% growth over the past year. Despite the increase in headcount, we have 92% retention rates across staff and an average employee tenure of over 8 years. This expansion in our organisation has set us up to deliver the increased level of work and investment that lies ahead in the coming years and decades, increasing the internal expertise held within our business while perpetuating the culture that drives our consistent outperformance.

Long-term value from growth

As we look beyond AMP8, the Independent Water Commission ('IWC') report has laid out the direction of travel for the sector over the next few decades.

The report was clear that we should expect operational incentives to remain, evolving towards a more streamlined and simplified form. Our current suite of 24 ODIs contains a number of penalty-only measures which the report recommends are dropped, alongside other ODIs which offer minimal to no return. We therefore expect the roughly ten ODIs in future AMPs to consist predominantly of familiar measures which already carry strong incentives, such as leakage, storm overflow spills and pollutions. Our consistent outperformance and confidence across three different ODI frameworks demonstrates that we can adapt to the future evolution and continue to generate strong returns.

We also know that this era of growth is only just starting. Existing government targets on issues such as storm overflows will require funding for decades, while other investment themes such as PFAS continue to emerge. The IWC report explicitly builds on this foundation, indicating that higher levels of investment will continue well into the future, advocating for upgraded asset health standards, improved resilience standards, greater digitisation and smarter networks.

We are particularly sensitive to these trends. We have no coastline, so our treated wastewater adheres to the stricter permits required to discharge into rivers; as standards continue to tighten, we will continue to be funded to upgrade our treatment works accordingly. Equally, our region continues to experience high levels of population growth, leading to further funding to increase our supply and treatment capacities. And our population is widely dispersed across the region, meaning we have a relatively high number of assets which will require funding.

This growth matters to our business. Increases in the value of our asset base compound over time and are adjusted to reflect inflation. The asset base is used to calculate our base return and as the reference point for outperformance rewards earnt, both of which are key determinants of future earnings.

Finally, as we saw in AMP7, opportunities and challenges will arise that we're not yet able to predict. We're confident that we are best placed to adapt our organisation to whatever challenges and opportunities are ahead.

Chief Financial Officer's Review

AMP8 is a period of exceptional growth for the Group and we have made a strong start, building on our achievements from AMP7. We have delivered strong financial performance in the first half year, with revenue up 18%, PBIT up 57% and adjusted earnings per share up 74%. It is also pleasing we are able to upgrade our ODI guidance for the year to £40 million, demonstrating our commitment to deliver returns with a regulatory return forecast of 13% (nominal).

While we expect to continue to deliver strong performance in the second half of the year, this year we expect that our PBIT will be more weighted to the first half than it has been in the past, due to higher consumption over the very dry summer, and the impacts in the second half of more customers switching from unmeasured to measured billing, increased infrastructure renewals expenditure and higher depreciation due to capital investment.

We have delivered another record level of investment, £769 million in the first half of the year and we expect our RCV to grow by around 13% in the full year to £15.4 billion, including the return from inflation.

We have continued to outperform on financing costs, with a particular highlight being our €700 million 12-year Eurobond issued at a sector-leading 76 bps below the adjusted iboxx allowance set by Ofwat.

Our regulated gearing of 61.5% underpins our strong balance sheet, providing a solid platform for the growth to come in our Regulated Water and Wastewater division. Our target range for regulated gearing by the end of the AMP, i.e. at 2030, is 60 - 65%.

In October 2025, we published an updated Sustainable Finance Framework, which includes stronger alignment with ICMA Green Bond Principles, improved EU Taxonomy mapping, the inclusion of Blue and Nature Bonds, and enhanced impact reporting in line with ICMA guidelines. Our leading approach to sustainable financing reflects our broader environmental and social commitments, and further strengthens our platform for funding record levels of investment.

We are also driving for growth outside the regulated business through our Infrastructure Services businesses. This includes our new Network Services business, formed from the acquisition of two existing suppliers to Severn Trent Water, together with our existing Business Services division comprising the Operating Services, Green Power and Property Development businesses. We see significant potential for growth from all of these businesses and are targeting EBITDA of £100 million from Infrastructure Services by the end of 2029/30, predominantly through organic growth.

A summary of our financial performance in the period is set out below:

¹ Adjusted earnings exclude gains/losses on financial instruments and deferred tax

Group turnover was £1,436.9 million (2024/25: £1,217.7 million), up £219.2 million (18.0%), driven by higher revenues in our Regulated Water and Wastewater business (up £215.1 million) due to tariff increases and higher consumption over the dry summer.

Group PBIT was £466.2 million (2024/25: £297.8 million). In our Regulated Water and Wastewater business PBIT increased by 58.5%. Along with the higher revenue, higher operating costs were partly mitigated by lower energy prices and reductions in infrastructure renewals. In Infrastructure Services, EBITDA was £3.1 million lower, impacted by lower export prices in Green Power, which were partially mitigated by increased generation of electricity and gas.

Our effective interest cost increased to 5.2% (2024/25: 4.4%) due to higher inflation uplift on index linked debt, and higher market rates impacting the cost of new debt issued, although lower than the cost of debt we were allowed by Ofwat. Average adjusted net debt increased by 18.4% over the same period in the previous year and net finance costs increased to £161.2 million (2024/25: £124.6 million), up 29.4%. Excluding the impact of inflation on our index-linked debt, our effective cash cost of interest was 3.8% (2024/25: 3.3%), as we saw the impact of higher interest rates on new debt issues compared to maturing debt.

Our adjusted effective current tax rate was nil% (2024/25: 0.1%) as the benefit of full expensing for tax purposes of our significant expenditure on qualifying plant and machinery reduced our profit chargeable to tax. Our effective tax rate was 26.1% (2024/25: 26.5%).

Group profit after tax was £227.4 million (2024/25: £141.4 million). Our adjusted basic earnings per share were 101.0 pence (2024/25: 58.0 pence). Basic earnings per share were 75.7 pence (2024/25: 47.2 pence).

Our balance sheet remains strong. At 30 September 2025 our adjusted net debt was £9,149.8 million (31 March 2025: £8,545.3 million) and our regulated gearing was 61.5% (31 March 2025: 62.7%). We have £1.5 billion of committed facilities, and at 30 September 2025 our cash flow requirements were funded to March 2027.

Our net pension deficit at 30 September decreased to £112.8 million (31 March 2025: £119.8 million) . The overall funding level across all of our defined benefit schemes was 93.7% (31 March 2025: 93.3%).

Capital investment was £769 million (2024/25: £665.9 million) as we carried the momentum through from our transition spend in AMP7 to make a fast start to our largest ever programme in AMP8.

The acquisitions in our Infrastructure Services division led to a total net cash outflow of £32 million.

The Board continues to recognise the important role dividends play in providing income for pensioners and other investors. Taking into account the Group's prospects and financial position and the interests of other stakeholders including customers, our pension scheme members, colleagues and communities; the Board has declared an interim dividend for the year ending 31 March 2026 of 50.40 pence, up 3.5% in line with our policy for the five years of AMP8 to increase the dividend by CPIH.

Regulated Water and Wastewater

Turnover for our Regulated Water and Wastewater business was £1,346.0 million (2024/25: £1,130.9 million) and PBIT was £466.9 million (2024/25: £294.5 million).

Turnover increased by £215.1 million. Core revenue increased by £219.6 million, mainly due to the annual CPIH + K increase in prices as the new AMP8 revenue allowance took effect, alongside increased consumption from measured customers during the very dry first half year.

Infrastructure diversions turnover was £12.9 million lower mainly due to lower HS2 activity, which is offset by lower infrastructure renewals expenditure, and other turnover was £8.4 million higher.

Net labour costs of £131.2 million were 13.6% higher period-on-period. Investment in additional headcount to drive operational improvements in key strategic business areas such as pollutions, and to deliver the step up in our capital programme increased gross labour costs by £31.7 million. Annual pay increases, which take effect from 1 July each year, increased costs by £15.3 million period-on-period. Increased employer's national insurance, higher take up of sharesave and other factors increased gross labour costs by £4.0 million. The increases in gross labour costs were partly offset by a £35.3 million step up in capitalised salaries.

Net hired and contracted costs increased by £24.4 million (18.4%), £10.9 million most of which relates to a planned step up in licence costs for our new billing system, Kraken. Additional tankering to manage the impacts of the prolonged drought have contributed £7.6 million. Higher volume-related sludge recycling costs in Bioresources contribute a further £2.0 million, along with a number of other small increases across other areas. Operational efficiencies of £4.5 million have been generated including through our water networks Origin activities which allow us to complete jobs faster, with lower need for excavation and gang costs.

Power costs were £7.2 million or 8.1% lower period-on-period, driven by the lower wholesale weighted average price of electricity on imports (around £25/MWh lower). This was partly offset by increased consumption at our Water Treatment sites during the hot summer months.

Bad debt charges increased by £5.8 million but remained broadly flat as a proportion of household revenue at 2.1% (2024/25: 2.0%).

Other costs were up by £5.5 million as a result of increased Ofwat regulatory fees, higher business rates and price increases to chemicals such as ferric sulphate. These increases were partly offset by lower spend on compensation payments and damage costs as we have delivered operational activities more effectively. We have also benefited from improved commercial agreements on some small contracts.

Infrastructure renewals expenditure was £22.7 million lower in the period, due to lower HS2 activity as well as a higher proportion of capitalised mains renewals jobs compared to this time last year.

Depreciation of £237.3 million was £21.2 million higher period-on-period due to the increasing asset base.

Infrastructure Services

Infrastructure Services turnover was £99.9 million (up 11.0%) and EBITDA was £21.3 million (down 12.7%). This includes the performance of the two Network Services acquisitions, Industrial Jetting Water Systems Limited (IWJS) and Watertight Management Limited (Watertight), that were completed on 31 July 2025.

In our Operating Services and Other businesses, turnover increased by £7.8 million due to recovery of higher charges from water and wastewater suppliers in our MoD contract, the acquisition of Reigate Environmental Services Limited and higher project revenue in Oren Services, our reed bed business. EBITDA was £11.8 million, £1.2 million lower year-on-year due to EIR case legal costs being recovered in the prior year. On an underlying basis, EBITDA was £1.3 million higher year-on-year.

Network Services includes our two new acquisitions. IWJS provides sewer rehabilitation and jetting services, removing sewer blockages to prevent pollutions and sewer flooding events. Watertight was one of our key civil engineering suppliers and brings experience in complex mains renewals, infrastructure upgrades and incident response.

Both businesses were acquired on 31 July 2025 as part of a strategic vertical integration of members of the Severn Trent Water supply chain, securing this part of the supply chain for Severn Trent Water and creating opportunities for Infrastructure Services to benefit from the increased sector investment over AMP8 and beyond. These businesses have contributed additional revenues to the period of £5.0 million and EBITDA of £0.2 million before acquisition costs of £1.5 million.

In Green Power, turnover was £2.9 million lower year-on-year as a result of lower incoming waste volumes translating into lower gate fee revenue.

Green Power EBITDA was £1.1 million lower period-on-period. Above-inflation cost increases on employment costs, food waste and haulage, as well as additional maintenance costs were offset by lower costs associated with reduced food waste volumes.

Profits from Property Development were £1.4 million, up £0.5 million. Our long-term plans to deliver £150 million profit by 2032 remain on track.

Corporate and other

Corporate overheads were £7.2 million (2024/25: £10.6 million). The prior year charge included a reclassification of Executive Director bonuses and three years' unvested long-term incentive plans to Severn Trent Plc of £2.4 million to ensure these costs are not borne by customers.

Net finance costs

The Group's net finance costs for the six month period were £161.2 million, (2024/25: £124.6 million). Average adjusted net debt of £8,840.1 million was higher than the previous year (2024/25: £7,469.1 million) and our effective interest cost for the period increased to 5.2% (2024/25: 4.4%) due to the impact of higher inflation on our index-linked debt and increased interest rates on new debt. Our effective cash cost of interest (which excludes the inflation uplift on index-linked debt) was 3.8% (2024/25: 3.3%) higher due to increased interest rates on new debt. Interest capitalised of £72.0 million (2024/25: £43.0 million) increased due to the higher capital work in progress during the period.

The Group's EBITDA interest cover was 4.5 times (2024/25: 4.4 times) and PBIT interest cover was 3.0 times (2024/25: 2.5 times). See note 18 for further details.

Net gains/losses on financial instruments

The Group uses financial derivatives solely to hedge risks associated with its normal business activities including:

An analysis of the amounts charged to the income statement in the period is presented in note 5 to the financial statements including:

The Group has fixed around 95% of the estimated wholesale energy usage for the remainder of 2025/26 through a combination of forward price contracts and financial derivatives.

Taxation

We are committed to paying the right amount of tax at the right time and were pleased to have our Fair Tax Mark accreditation renewed for the seventh year.

As well as corporation tax on profits, which is included in the tax charge in our accounts, we pay a range of other taxes, charges and levies imposed by government agencies including business rates, employer's national insurance, the Climate Change Levy and Insurance Premium Tax. Our 2024/25 Annual Report and Accounts sets out an analysis of the taxes incurred in that year and we will set out this year's amounts in our Annual Report to be published in June 2026.

The tax charge reported in the income statement is calculated at a rate of 26.1% (2024/25: 26.5%), representing the best estimate of the annual average tax rate expected for the full year, applied to the profit for the six month period.

The current tax charge for the period was £0.1 million (2024/25: £0.2 million). The deferred tax charge was £80.3 million (2024/25: £50.7 million).

The tax allowances generated by our significant capital programme reduced our adjusted effective current tax rate (in line with guidance) to nil% (2024/25: 0.1%).

Profit for the period and earnings per share

Reported profit for the period was £227.4 million (2024/25: £141.4 million).

Basic earnings per share were 75.7 pence (2024/25: 47.2 pence). Adjusted basic earnings per share were 101.0 pence (2024/25: 58.0 pence).

Cash flow

Six months ended 30 September

Adjusted net debt comprises:

At 30 September 2025 we held £1,449.2 million (31 March 2025: £1,044.8 million) in net cash and cash equivalents. Our average debt maturity is 12 years. Including undrawn committed facilities, the Group's cash flow requirements are funded until March 2027.

We invest cash in deposits with highly rated banks and liquidity funds. The Treasury Committee regularly reviews the list of counterparties and their limits.

Adjusted net debt at 30 September 2025 was £9,149.8 million (31 March 2025: £8,545.3 million). Regulatory gearing (Adjusted net debt of our regulated businesses, expressed as a percentage of estimated Regulatory Capital Value) was 61.5% (31 March 2025: 62.7%).

The estimated fair value of debt at 30 September 2025 was £1,153.5 million lower than book value (31 March 2025: £1,109.8 million lower). The difference arises because market expectations for interest rates and inflation are higher than the average embedded amounts in our debt instruments (see note 9 for further details).

Pensions

We have three defined benefit pensions arrangements, two for Severn Trent and one for Dee Valley Water. The two Severn Trent schemes closed to future accrual on 31 March 2015 and the Dee Valley Water scheme closed to future accrual on 31 March 2024.

The future funding plan agreed under the 2022 actuarial valuation for the main Severn Trent Pension Scheme (STPS) includes:

We have substantively completed the 2025 triennial valuation with the Trustee and have agreed in principle that payments will remain on the same basis as the 2022 valuation set out above.

On an IAS 19 basis, the estimated combined net position (before deferred tax) of all of the Group's defined benefit pension schemes at 30 September 2025 was a deficit of £112.8 million. Calculation of the pension deficit for accounting purposes uses corporate bond yields as the basis for the discount rate of our long-term liabilities, irrespective of the nature of the scheme's assets or their expected returns.

The net finance cost was £3.4 million and administration costs were £2.5 million.

The movements in the net deficit during the period were as follows:

On an IAS 19 basis, the funding level is 93.7% (31 March 2025: 93.3%).

Dividends

The Board has declared an interim ordinary dividend of 50.40p per share (2024/25: 48.68p per share), which will be paid on 12 January 2026 to shareholders on the register at 28 November 2025.

Principal risks and uncertainties

The Board considers the principal risks and uncertainties affecting the business activities of the Group for the remainder of the financial year to be those detailed below. Details of how the Group mitigates and manages these risks are set out in the Annual Report.

Health and Safety:

Infrastructure Failure and Asset Resilience:

Customer Service and Experience:

Supply Chain and Capital Project Delivery:

Security and Resilience:

Political, Legal and Regulatory:

Financial Liabilities:

Climate Change, Environment and Biodiversity:

People and Culture:

Outlook Statement

Long-term earnings

Our long-term earnings outlook remains unchanged. We project Group adjusted EPS to double in the 3-year period to 2027/28, from 112.1 pence in 2024/25, benefitting from regulated revenue growth including ODI outperformance, continued cost management, and our strategic approach to financing. We expect this Group adjusted EPS growth to be weighted towards 2025/26 reflecting our bill profile.

In addition, we anticipate increasing EBITDA from Infrastructure Services to around £100 million in the period 2029/30, driven by growth in Network Services as well as our Green Power, Operating Services, and Property businesses. This includes our long-term plan to achieve £150 million of profit from our Property business by 2032.

Financial resilience

We expect regulated gearing to be between 60% - 65% at the end of the AMP. We expect Plc gearing to remain within thresholds consistent with our current credit ratings.

Technical Guidance 2025/26

Footnotes to Technical Guidance

1.     Outcome Delivery Incentives are quoted post-tax in 2022/23 prices.

2.     Regulatory return: the return generated on actual regulatory equity, calculated using average actual gearing applied to the Final Determination RCV. It encompasses the base return, outperformance, and the uplift to our RCV from inflation.

3.     Based on Oxford Economics October inflation forecast. Index-linked debt comprises around a quarter of our total debt.

4.     2025/26 dividend growth rate based on November 2024 CPIH of 3.53%.

Investor Timetable

A Dividend Reinvestment Plan ('DRIP') is provided by Equiniti Financial Services Limited. The DRIP enables the Company's shareholders to elect to have their cash dividend payments used to purchase the Company's shares. More information can be found at www.shareview.co.uk/info/drip.

Further Information

For further information, including the Group's half-year results presentation, see the Severn Trent website (www.severntrent.com).