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14 Feb 2014 07:00
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14 February 2014
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Severn Trent Plc Interim Management Statement
for the period 1 October 2013 to 13 February 2014
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The Board of Severn Trent Plc confirms that the group's trading performance overall remains in line with its expectations and prior guidance.
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Regulated business
Consumption across our measured income base is expected to be slightly higher year on year, given current volumes.
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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.
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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 power costs, partially offset by efficiency improvements. We currently anticipate no material financial impact from the present floods.Β
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Net capital expenditure (UK GAAP after deducting grants and contributions) is expected to be towards the low end of the Β£600 million to Β£620 million range, including an estimated Β£15 million related to private drains and sewers. The level of net infrastructure renewals expenditure included in this range is anticipated to be Β£135 million to Β£145 million.
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On 2 December 2013 Severn Trent Water submitted its business plan for 2015-2020 to Ofwat. On 19 December 2013, Ofwat published a revised price review process and timetable. Ofwat subsequently published guidance on risk and reward on 27 January 2014. We await further announcements from Ofwat on plan ratings, starting on March 10 2014.
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Non-regulated business
Operating Services continues to perform well year on year, but in Products shipments have been below expectations in the last two months due to continuing customer project and delivery delays. Therefore for the full year Severn Trent Services underlying PBIT is now expected to be lower year on year.
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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 IAS19 is estimated at Β£13m.
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The effective current tax rate for the group for 2013/14 is expected to be between 21% and 23%.
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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.
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Severn Trent Plc will announce its Preliminary results for the financial year ending 31 March 2014 on 29 May 2014.
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Enquiries:
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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 |
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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.
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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.
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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.
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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.
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Nothing in this document should be regarded as a profits forecast.
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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).
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