17 July 2013
Severn Trent Plc Interim Management Statement
for the period 1 April to 16 July 2013
The Board of Severn Trent Plc confirms that trading across the group has been in line with its expectations and prior guidance.
Regulated business
Customer prices in Severn Trent Water increased by 2.0% from 1 April 2013, reflecting November RPI of 3.0% and a k-factor of minus 1.0%. Consumption across our measured income base has declined year on year in the period, in line with our expectations.
Our forecasted bad debt level is maintained at around 2.2% of turnover for the full year, and we continue to monitor developments such as unemployment levels and changes to the UK benefits system closely.
Operating expenditure continues to be in line with the Board's expectations for the year and, on a like for like basis, in line with the level of the Final Determination. Operating costs are expected to rise year on year due to the impact of inflation and increases in quasi taxes, partially offset by efficiency improvements.
Expectations for net capital expenditure (UK GAAP after deducting grants and contributions) remain in the range £600 million to £620 million, including an estimated £15 million related to private drains and sewers. The level of net infrastructure renewals expenditure included in this range is anticipated to be £135 million to £145 million.
Non-regulated business
In Severn Trent Services we expect to see the benefits of our previous investments in growth areas. Growth will however be second half weighted as indicated by timing of deliveries from the Water Purification order book.
Group
The group interest charge is expected to be higher year on year due to higher net debt and with the adoption of revisions to IAS19 increasing the pension accounting interest charge. The year on year impact of this revision to IAS 19 is estimated at £13m.
The effective current tax rate for the group for 2013/14 is expected to remain between 23% and 25%.
Under our dividend policy of RPI+3% growth the dividend for 2013/14 is set to be 80.40 pence, representing growth of 6% year on year.
Other
In early May Severn Trent Plc received an approach from LongRiver Partners, a consortium led by Borealis Infrastructure Management, about a possible offer for the company. On June 11th LongRiver Partners confirmed that it did not intend to make an offer for Severn Trent Plc, and that it is bound by the restrictions under Rule 2.8 of the Takeover Code. In addressing this approach, the board of Severn Trent plc has incurred costs for advisory, legal and other services of approximately £19 million in aggregate.
Severn Trent Plc will announce its interim results for the period ending 30 September 2013 on 26 November 2013.
Enquiries:
Tony Wray |
Severn Trent Plc |
0207 353 4200 (on the day) |
Chief Executive |
|
02477 715000 |
Mike McKeon |
Severn Trent Plc |
0207 353 4200 (on the day) |
Finance Director |
|
02477 715000 |
Rob Salmon |
Severn Trent Plc |
0207 353 4200 (on the day) |
Head of Communications |
|
02477 715000 |
John Crosse |
Severn Trent Plc |
0207 353 4200 (on the day) |
Head of Investor Relations |
|
02477 715000 |
David Shriver / Martha Walsh |
Tulchan Communications |
0207 353 4200 |
Forward-Looking Statements:
This document contains certain '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', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'reasonably possible', 'targets', 'goal' or 'estimates'. 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 will occur in the future.
There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, 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. Severn Trent does not intend to update these forward looking statements.
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).
