Severn Trent Regulatory News (SVT)

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Severn Trent Plc

PR19 Update for Severn Trent Water and Hafren Dyfrdwy

Ofwat has today published new information on its PR19 assessments including its Draft Determination for our Welsh business, Hafren Dyfrdwy. 

In respect of Severn Trent Water, we are pleased Ofwat has acknowledged our Totex representations in this publication, increasing our allowed cost base by £100m for the next 5 years and indicating further dialogue will continue over the coming months on remaining items.

We welcome the positive adjustments Ofwat has made to the glidepaths for two of the AMP7 ODI targets, Supply Interruptions and CRI - both of which we elected to keep open until this point. We will continue our preparations to ensure a positive start to AMP7 on the measures we know matter most to our customers.

Our revised Hafren Dyfrdwy plan was well received by Ofwat and a reduced cost sharing rate is unlikely to be applied. Our Totex allowance will benefit from a small increase, based on our efficient cost base submission. 

We consider that the reduction Ofwat has made to the WACC is significant for the sector and we would like to have seen a final position by this stage in the process. We will review the decision carefully in the context of our own plan, and look forward to further engagement with Ofwat on this issue in due course.

We believe the combined impact of positive changes in Totex and the latest adjustments to the WACC leaves us in a net neutral position over AMP7 when compared to the fast track draft determination we received in April 2019.

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Cautionary statement regarding forward-looking statements

This document contains statements that are, or may be deemed to be, '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', 'will', 'would', 'should', 'expects', 'believes', 'intends', 'plans', 'projects', 'potential', 'reasonably possible', 'targets', 'goal', 'estimates' or words with a similar meaning, and, in each case, their negative or other variations or comparable terminology. Any forward-looking statements in this document are based on Severn Trent's current expectations and, 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 may or may not occur in the future.

Forward-looking statements are not guarantees of future performance and no assurances can be given that the forward-looking statements in this document will be realised. There are a number of factors, many of which are beyond Severn Trent's control that could cause actual results, performance and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: the Principal Risks disclosed in our latest Annual Report and Accounts (which have not been updated since the date of its publication); 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. No assurances can be given that the forward-looking statements in this document will be realised. This document speaks as at the date of publication. Save as required by applicable laws and regulations, Severn Trent does not intend to update any forward-looking statements and does not undertake any obligation to do so. Past performance of securities of Severn Trent Plc cannot be relied upon as a guide to the future performance of securities of Severn Trent Plc.

Nothing in this document should be regarded as a profits forecast.

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