Final Results
Severn Trent Plc
8 June 2004
Preliminary Results for the year to 31 March 2004
GOOD FULL YEAR RESULTS
INCREASED OVERALL PROFITS FROM NON-REGULATED BUSINESSES
SEVERN TRENT WATER CONTINUES TO OUTPERFORM
Financial and operating highlights
Group
- Turnover up 8.8% to £2,015.1m (£1,852.0m)
- PBITA* up 7.5% to £440.6m (£409.8m); PBIT of £422.4m (£343.8m)
- Profit* before tax and goodwill amortisation up 8.9% to £272.6m (£250.4m)
- Net exceptional profit of £11.6m (charge of £40.8m); PBT of £254.4m
(£184.4m)
- Adjusted basic EPS** up 5.7% to 61.4p (58.1p); Basic EPS of 53.5p (28.9p)
- Full year dividend increased by 2.5% to 47.04p (45.9p)
- Net debt £2,749m (£2,506m); interest costs up £8.6m to £168.0m
Severn Trent Water
- Turnover up 4.2% to £956.7m (£917.9m)
- IDOK price increase from April 2003 - contributed c. £19m to turnover
- PBITA* up 3.8% to £337.9m (£325.5m)
- Exceptional profit from land and property sales of £19.8m; PBIT of £356.4m
(£325.4m)
- AMP3 regulatory outputs on track; £442m of capital investment
- Ranked 1st in 2002/03 for Ofwat's overall performance assessment for water
and sewerage companies
Non-Regulated Businesses
- Contributed 55% of Group turnover and 27% of Group PBITA*
- PBITA* up 18.1% to £123.4m (£104.5m); PBIT of £86.7m (£38.6m)
- PBITA* contribution of £5.5m (£2.4m) from Systems and Property, Engineering
consultancy and Insurance
Biffa
- Turnover up 23.9% to £633.1m (£510.9m)
- PBITA* up 16.6% to £79.2m (£67.9m); PBIT of £47.0m (£51.3m)
- Hales' contribution to PBITA* of £10.4m
- Hales' integration: to date, timing is ahead of plan; exceptional costs
of £10.9m
Services
- Turnover down 1.1% to £381.2m (£385.4m)
- PBITA* up 13.2% to £38.7m (£34.2m); PBIT of £31.5m (loss of £21.1m)
- Excluding the impact of exchange rates, Services' turnover and PBITA*
were up by around 6% and 16% respectively
- P&K contribution to PBITA* of £3.2m
* excluding exceptional items ** excluding exceptional items and deferred
tax
David Arculus, Chairman Severn Trent Plc, said:
'These Group results, and our confidence in our core businesses, have led the
Board to increase the full year dividend to 47.04p per share.'
'It is now the Board's intention that for the period up to 31 March 2005,
barring unforeseen circumstances, full year dividends per share would be a
minimum of 47.04p.'
Robert Walker, Group Chief Executive Severn Trent Plc, said:
'I am pleased to report that the Group has delivered a good performance in 2003
/04, the last full year of my term as Group Chief Executive. I am particularly
pleased with the increased contribution from the non-regulated businesses.'
'The Final Business Plan for the AMP 4 price review aims to achieve the right
balance between customer and investor expectations. Severn Trent Water's aim is
to deliver improvements for our customers while realising appropriate financial
returns for our investors.'
'Biffa produced a solid overall result, reflecting the strength of its
integrated business model that combines collection, landfill, and special
waste. The Hales' acquisition is bedding down well with the integration process
now close to completion.'
'I am also pleased with the progress of Services and the initiatives taken to
develop the business.'
'Although the Group expects significant additional pension charges in 2004/05,
overall, our core businesses - Severn Trent Water, Biffa and Laboratories -
give us a good platform for the future, with the Group well positioned to
capitalise on opportunities.'
Enquiries:
Robert Walker Severn Trent Plc 020 7404 5959 (on the day)
Group Chief Executive 0121 722 4775
Alan Perelman Severn Trent Plc 020 7404 5959 (on the day)
Group Finance Director 0121 722 4176
Peter Gavan Severn Trent Plc 020 7404 5959 (on the day)
Director of Corporate Affairs 0121 722 4310
Julian Wais Severn Trent Plc 020 7404 5959 (on the day)
Head of Investor Relations 0121 722 4295
Simon Holberton Brunswick Group Ltd 020 7404 5959
Preliminary Results Presentation and Webcast
There will be a preliminary results presentation at 9.30am on Tuesday 8 June
2004. This presentation, together with the presentation slides, will be
available as a simultaneous webcast on the Severn Trent web site
(www.severntrent.com) and will remain on the web site for subsequent viewing.
Interview with Group Chief Executive
An interview with Robert Walker, Group Chief Executive, Severn Trent Plc, will
be available from 7.00am on Tuesday 8 June 2004 on the Severn Trent web site
(www.severntrent.com) and the Cantos web site (www.cantos.com).
Chairman's statement
In this Preliminary Results announcement: PBIT is profit before interest and
tax; PBITA is profit before interest, tax and goodwill amortisation; PBITA* is
PBITA excluding exceptional items; sales margins are based on PBITA*.
Overall, the Severn Trent Group has delivered a good performance in 2003/04,
with Group profit before tax, goodwill amortisation and exceptional items at
£272.6m, an increase of 8.9%. Group profit before tax and exceptional items was
£242.8m (£225.2m) and Group profit before tax was £254.4m (£184.4m).
Severn Trent Water has benefited from the IDOK and has continued its efforts to
manage costs; its PBITA* was up 3.8% to £337.9m. The Group's non-regulated
businesses increased their PBITA* by 18.1% to £123.4m, being 26.8% of the
Group's PBITA*. Biffa's PBITA* was £79.2m, up 16.6%, including the first time
contribution from the acquisition of Hales. Services PBITA* was up 13.2% to
£38.7m, including the first time contribution from the acquisition of P&K
Microbiology Services. Overall, Systems and Property, Engineering consultancy
and Insurance increased their PBITA* to £5.5m (£2.4m).
There was a net exceptional profit of £11.6m in the year, representing a £19.8m
profit from the sale of fixed assets and a £2.7m credit from the release of
part of the exceptional charge made in 2001/02 in respect of certain of
Systems' CIS-OpenVision contracts in the USA, offset by a £10.9m charge for
Hales' integration costs. In the prior year there was a net exceptional charge
of £40.8m.
Based on SSAP24, the Group expects a significant additional pension charge in
2004/05 that is provisionally estimated to be of the order of around £30m to
£35m (net of amounts allocated to own work capitalised), with broadly around
two thirds to three quarters of this amount expected to be attributable to
Severn Trent Water. However, given the preliminary nature of these estimates
it is quite possible that the actual additional pension charge, as a result of
these valuations, could be materially different from these estimates. (See
Financial Review - pensions.)
Dividend
The Board is proposing a final dividend of 29.27p (28.56p) to be paid on 1
October 2004. This would give a total dividend for the year of 47.04p, an
increase of 2.5%. Hence, the Board has decided to enhance its dividend policy
to the effect that it is the Board's intention that for the period up to 31
March 2005, barring unforeseen circumstances, full year dividends per share
would be a minimum of 47.04p.
For the period of AMP4 (from 1 April 2005), the outcome of the AMP4 price
review will be a critical input in the determination of the Group's dividend
policy. Accordingly, the Board intends to consider its dividend policy for the
period from 1 April 2005 to 31 March 2010 following the finalisation of the
AMP4 price review.
Operational Review
Water and sewerage
Turnover from water and sewerage increased by 4.2% to £956.7m. The price
increases resulting from the IDOK award in December 2002 were implemented from
April 2003 and have benefited turnover in 2003/04 by c. £19m. In addition,
increased consumption by metered customers during the hot dry summer is
estimated to have added c.£2.5m to turnover in the year.
PBITA* was up 3.8% to £337.9m. Goodwill amortisation was £1.3m (£0.1m) - being
the write down of goodwill. PBIT excluding exceptional items was £336.6m
(£325.4m). Including an exceptional profit from the sale of fixed assets (land
and property) of £19.8m, PBIT was £356.4m (£325.4m). Given its magnitude, the
profit from the sale of fixed assets of £6.7m was not treated as exceptional in
2002/03.
There was an additional pension charge (net of amounts allocated to own work
capitalised) of £1.8m for water and sewerage in 2003/04 to reflect the
valuation of pension schemes (see Financial Review - pensions).
Direct operating costs in 2003/04 (excluding corporate management charges) of
Severn Trent Water were £378.3m, a reduction in real terms of £0.3m, or 0.1%.
Excluding the impact of inflation, gross operating cost efficiencies in 2003/04
amounted to £8.1m although these efficiencies were offset by cost pressures of
£7.8m.
At 31 March 2004, total AMP3 gross operating cost efficiencies amounted to
around £69m, some £17m ahead of the Ofwat target, but were offset by cost
pressures amounting to around £60m. Total AMP3 gross operating cost
efficiencies are expected to be around £75m in 2004/05, although there will be
offsetting cost pressures that, excluding the expected additional pension
charges in 2004/05 (see Financial Review - pensions), are expected to be of a
broadly similar amount.
Severn Trent Water continued to deliver efficiencies against its investment
programme of c.£2 bn for the five-year period 2000/01 to 2004/05. The programme
is expected to deliver average capex efficiencies over the AMP3 period of
around 5% as measured against the RPI index or around 12% as measured against
the Construction Output Price Index. In 2003/04, approximately £442m was
invested; the delivery of the AMP3 regulatory outputs is on track. Severn Trent
Water believes that the timely and complete delivery of its capital programme
is part of its regulatory contract and its obligations to customers.
Severn Trent Water has delivered high levels of performance in terms of
customer service and drinking water and wastewater quality. Following Ofwat's
review of Severn Trent Water's leakage data, the company's position for 2002/03
in Ofwat's overall performance assessment has been revised to 1st in respect of
water and sewerage companies.
Profit from the sale of fixed assets was £19.8m (£6.7m), arising from the sale
of land and property. In previous years the profit from the sale of fixed
assets has been included within (and has therefore reduced) the operating costs
of Severn Trent Water. In this year, as the profit from the sale of fixed
assets is significantly larger than last year, the continuance of this
treatment would unduly flatter the year-on-year trends for operating costs.
Accordingly, operating costs (as set out above) have been stated after
excluding any benefit from fixed asset disposals for all years.
In April 2004 Severn Trent Water submitted to Ofwat its Final Business Plan for
the AMP4 price review. This business plan sets out the proposed prices and
investment plans for the period 2005 to 2010, taking into account the state of
existing assets and new legislation which has to be met.
The water and sewerage networks need further significant investment to cope
with the increased variability in both supply and demand that are expected to
occur, due in part to the impact of climate change. In addition, further
investment will be needed to meet the requirements of the new UK and European
legislation and obligations to reduce sewerage flooding. Severn Trent Water's
business plan also takes into account increases in operating costs.
The Final Business Plan for the AMP 4 price review aims to achieve the right
balance between customer and investor expectations. Severn Trent Water's aim is
to deliver improvements for our customers while realising appropriate financial
returns for our investors.
Extracts from Severn Trent Water's Final Business Plan are available on its web
site (www.stwater.co.uk/finalbusinessplan). Ofwat is due to publish its draft
AMP4 price review in August 2004 and its final AMP4 review in December 2004.
Waste management
Waste management's turnover increased by 23.9% to £633.1m, benefiting from the
first time contribution from the acquisition of Hales. Turnover in the UK
increased by 25.5% to £573.9m, while Belgian turnover increased by 10.4% to
£59.2m.
Biffa's PBITA* (including Biffa Belgium) was up 16.6% to £79.2m. Goodwill
amortisation was £21.3m (£16.6m). There was an exceptional charge of £10.9m for
Hales' integration costs. PBIT was £47.0m (£51.3m).
There was an additional pension charge of £1.8m for waste management in 2003/04
to reflect the valuation of pension schemes (see Financial Review - pensions).
On 19 June 2003 Biffa acquired Hales from RMC (UK) Limited for approximately
£126m and paid approximately £15m (exclusive of VAT) to ING to purchase vehicles
and equipment used in the Hales' business, being a total consideration of
approximately £141m (excluding transaction costs). Biffa targeted synergies of
around £7.5m per annum (in terms of run rate) from the integration of Hales.
The integration process has gone well and is now close to completion. In 2003/
04, Hales contributed (including synergies) an estimated £10.4m to waste
management's PBITA*.
Excluding the impact of acquisitions (Hales £10.4m, other acquisitions £0.2m)
and of increased pension charges, waste management's PBITA* was up by 3.7%
compared to last year.
The results for the year include the costs of settling legal disputes and
insurance credits (of a broadly similar scale). These items have been allocated
to UK central costs so as to provide more comparable figures, year-on-year, for
the three UK business units of Collection, Landfill and Special Waste.
In 2003/04, Collection turnover in the UK increased to £360.6m (£270.7m). The
Collection division contributed a PBITA* of £51.6m (£43.6m), up 18.3%. Sales
margins were lower at 14.3% (16.1%) reflecting the impact of integrating the
Hales business, economic conditions and some other factors (eg additional
pension costs). Excluding the estimated impact of Hales, Collection's PBITA*
was down by around 2%.
Landfill turnover in the UK was up 15.2% to £163.1m. Excluding the estimated
impact of Hales, Landfill volumes were up by around 3% with unit revenues
(excluding Landfill Tax) up by around 1%. PBITA* from the Landfill division was
up 17.6% to £34.0m (£28.9m). Excluding the estimated impact of Hales,
Landfill's PBITA* was up by around 7%.
The Special Waste division in the UK, which includes the important power
generation activity, delivered a 11.6% increase in turnover to £50.2m and
contributed PBITA* of £7.0m (£5.9m). Excluding the estimated impact of Hales,
Special Waste's PBITA* was up by around 7%. Biffa has interests in around 90MW
of electricity generation in the UK (including from Biffa sites leased to third
parties).
In Belgium, turnover increased by 10.4% to £59.2m. Following a change in
Belgian legislation, turnover in 2003/04 is now reported gross of the recovery
for environmental taxes (this is consistent with the treatment in the UK);
excluding this change, Belgium's turnover would have been up by around 6%.
Biffa Belgium's PBITA was £3.2m (£3.1m).
Services
Services' turnover decreased by 1.1% to £381.2m. A little under 80% of Services
turnover arose in the USA. Excluding the impact of exchange rates, Services'
turnover increased by around 6%.
Services' PBITA* increased by 13.2% to £38.7m, reflecting improved
contributions from Water Purification and Operating Services and benefiting
from the first time contribution of £3.3m from P&K Microbiology Services and
Aerotech Laboratories. Excluding the impact of exchange rates, PBITA* increased
by around 16%. Goodwill amortisation was £7.2m (£8.5m). There were no
exceptional items in the year (charge of £46.8m). PBIT was £31.5m (loss of
£21.1m).
After eliminating the share of associated undertakings' profit, where the
corresponding turnover is not consolidated into Services' results, Services'
sales margin increased to 7.3% (6.3%).
On 4 April 2003 Laboratories acquired P&K Microbiology Services, a microbiology
and mycology testing business based in New Jersey. On 16 March 2004
Laboratories acquired Aerotech Laboratories, based in Arizona, whose principal
business is indoor air quality testing. These acquisitions give Laboratories a
leading position in the expanding indoor air quality and mould testing market
in the USA providing further opportunities for profitable growth.
Turnover in Laboratories, the largest business within Services, was down 1.0%
to £170.1m, but excluding the impact of exchange rates turnover increased by
around 7%. Turnover in the USA (in US$) was up by around 8% and turnover in the
UK (in £) was up by around 2%. Geographic coverage was expanded with five new
service centres in the USA and the first service centre in the UK - in Glasgow.
A little over 80% of Laboratories' turnover arose in the USA.
Water Purification's turnover was down by 5.3% to £82.9m, but excluding the
impact of exchange rates turnover was up by around 2%. The cost reductions and
improvements which delivered gains in the second half of 2002/03 have continued
into 2003/04 and are reflected in Water Purification's improved performance
compared to last year.
Turnover in Operating Services increased by 1.7% to £128.2m, but excluding the
impact of exchange rates turnover was up by around 7%. Contract operations
delivered organic turnover growth of around 7%. Operating Services also
includes the results of Severn Trent Water International and Aquafin, an
associated undertaking in Belgium, which provides sewerage services for
Flanders. Associated undertakings contributed £10.7m (£10.0m) of PBITA to the
results of Operating Services.
Systems and Property, Engineering consultancy and Insurance
Total turnover for Systems increased to £63.6m (£61.3m). Systems' PBITA* was
£2.3m (loss of £3.1m). After an exceptional credit of £2.7m (credit of £6.0m),
Systems' PBIT was £5.0m (£2.9m).
Total turnover from Property, Engineering consultancy and Insurance was £83.5m
(£73.0m) generating PBIT (and PBITA*) of £3.2m (£5.5m). This reduction in
profits reflects the result from Haswells, the Group's engineering consultancy
business. The remaining undeveloped land within the first phase of the Daventry
International Rail Freight Terminal project was sold to another developer.
Overall, Systems and Property, Engineering consultancy and Insurance increased
their PBITA* to £5.5m (£2.4m).
Financial Review
Group Results
Group turnover was £2015.1m (£1852.0m), an increase of 8.8% over last year. The
growth in turnover was mainly due to the contribution of the non-regulated
businesses which benefited from the acquisitions made in the year. The turnover
of the non-regulated businesses increased by 12.7% to £1161.4m (£1030.6m),
representing 54.8% (52.9%) of the Group total (before the elimination of inter
segment trading). Turnover from water and sewerage increased by 4.2% to £956.7m
(£917.9m).
Goodwill amortisation was £29.8m (£25.2m). There was a net exceptional profit
of £11.6m (loss of £40.8m) - see below.
Group profit before interest, tax, goodwill amortisation and exceptional items
was up 7.5% to £440.6m (£409.8m). The water and sewerage business was up by
3.8% to £337.9m (£325.5m). The Group's non-regulated businesses in total were
up 18.1% to £123.4m (£104.5m), representing 26.8% (24.3%) of the Group total
(before unrealised profit on inter segment trading and corporate overheads).
Group profit before interest, tax and exceptional items was £410.8m (£384.6m).
Group profit before interest and tax was £422.4m (£343.8m).
After interest charges of £168.0m (£159.4m), Group profit before tax, goodwill
amortisation and exceptional items was up 8.9% to £272.6m (£250.4m). Group
profit before tax and exceptional items was £242.8m (£225.2m), an increase of
7.8%. Group profit before tax was £254.4m (£184.4m).
The total tax charge for the year was £69.6m (£84.3m) of which current tax
represented £33.3m (£24.8m) and deferred tax was £36.3m (£59.5m). Minority
interests were £0.7m (£0.9m). Profit after tax and minority interests was
£184.1m (£99.2m).
Basic earnings per share were 53.5 pence (28.9 pence). Adjusted basic earnings
per share (before exceptional items and deferred tax) were 61.4 pence (58.1
pence), an increase of 5.7%.
Operating activities generated a net cash inflow of £733.1m. The main cash
outflows were capital expenditure and financial investment of £487.5m, equity
dividends of £157.7m and net financing costs of £148.3m. The increase in net
debt was £243.5m.
Net debt at 31 March 2004 was £2,749.1m (£2,505.6m). Gearing, reflecting the
provision for deferred tax, was 124% (113%). The Group's net interest charge
was covered 4.4 times (4.4 times) by profit before interest, tax, depreciation,
goodwill amortisation and exceptional items.
Exceptional items
There was an exceptional profit in the year of £11.6m comprising the net of:
- a £19.8m profit from the sale of fixed assets, arising from the sale of
land and property by Severn Trent Water. Given its magnitude, the profit
from the sale of fixed assets of £6.7m was not treated as exceptional in
2002/03.
- a £2.7m credit from the release of part of the exceptional charge made in
2001/02 in respect of certain of Systems' CIS-OpenVision contracts in the
USA.
- a charge of £10.9m in waste management for Hales' integration costs.
In 2002/03 there was an exceptional charge of £40.8m comprising the net cost of
a £46.8m write down for impairment in the net book value of some businesses
within Services and a £6.0m credit from the release of part of the exceptional
charge made in 2001/02 in respect of certain of Systems' CIS-OpenVision
contracts in the USA.
Taxation
The charge for current tax was £33.3m (£24.8m), of which £2.4m (nil) was
attributable to exceptional items. The current tax charge of £30.9m
attributable to profit after interest and goodwill amortisation but before tax
and exceptional items is an effective rate of 12.7% (11.0%). The current tax
rate has benefited from an adjustment in respect of prior periods.
Pensions
SSAP24, the applicable standard for Severn Trent, uses the results of the last
formal actuarial valuations to determine the pension charge in the Group's
accounts. This principle has been followed in determining the Group's pension
charge for 2003/04.
The Group has four defined benefit pension schemes, viz: the Severn Trent Water
Pension Scheme (STWPS) which is by far the largest of the Group's defined
benefit pension schemes, the Severn Trent Mirror Image Pension Scheme (STMIPS),
the UK Waste Pension Scheme (UKWPS) and the Severn Trent Senior Staff Pension
Scheme (STSSPS).
Formal actuarial valuations have been undertaken for the STMIPS as at 31 March
2003 and for the UKWPS as at 6 April 2003. Given the deterioration in the
funding position of these two schemes since their previous formal actuarial
valuations, there is an additional pension charge (net of amounts allocated to
own work capitalised) of £4.1m for the Group in 2003/04 reflecting the results
of these valuations.
The Group's pension charge in 2003/04 in respect of the STWPS and the STSSPS is
based on their formal actuarial valuations as at 31 March 2001 when these funds
had a combined surplus of around £46m. Formal actuarial valuations of the STWPS
and the STSSPS are currently being undertaken as at 31 March 2004 in accordance
with the normal triennial pattern of valuations. Given the deterioration in the
funding position of these two schemes since their last formal actuarial
valuations, these valuations and the analogous assessment of the Group's
unfunded pension liabilities for senior staff are expected to result in a
significant additional pension charge for the Group in 2004/05. Based on
SSAP24, this additional pension charge (net of amounts allocated to own work
capitalised) is provisionally estimated to be of the order of around £30m to
£35m, with broadly around two thirds to three quarters of this amount expected
to be attributable to Severn Trent Water. However, given the preliminary nature
of these estimates it is quite possible that the actual additional pension
charge, as a result of these valuations, could be materially different from
these estimates.
On an FRS17 basis, the estimated net position (before deferred tax) of the
Group's defined benefit pension schemes and the Group's unfunded pension
liabilities for senior staff was a deficit of approximately £368m as at 31
March 2004, as compared to a deficit of approximately £325m as at 31 March
2003. Although the value of assets has increased over the last year,
liabilities have increased by a greater amount reflecting, inter alia, the
updating of mortality assumptions (to be in line with current experience and to
include an allowance for expected further improvements) and a reduction in the
real discount rate. Net of deferred tax, the estimated net deficit on an FRS17
basis as at 31 March 2004 was approximately £257m. On an FRS17 basis, the
funding level has improved from around 70% at 31 March 2003 to around 72% at 31
March 2004.
As at 31 March 2004 the Group's defined benefit pension schemes had total
assets of approximately £937m, of which around 73% was invested in equities.
For further information on the Group's pension and retirement benefits, see
Severn Trent's Annual Report and Accounts 2004 which is due for publication in
late June 2004.
Treasury management
The Group's policy for the management of interest rate risk requires that no
less than 50% of the group's borrowings should be at fixed interest rates, or
hedged through the use of interest rate swaps or forward rate agreements. At 31
March 2004, interest rates for some 70% of the Group's net debt of £2,749m were
so fixed at a weighted average interest rate of 6.1% for a weighted average
period of 17.9 years. In addition, the Group has a £50m forward start interest
rate swap (floating to fixed) that commences during 2004/05.
International Accounting Standards
Severn Trent will be required to adopt International Accounting Standards
('IAS') for its 2005/06 financial year, with the Group's first published
results under IAS being the 2005/06 Interim Results. In preparation for this,
existing IAS's are being reviewed to assess their likely impact on the Group
and to determine any additional data that may be required to be collected.
Some of the IAS's are still under review by the standards board and, in
addition, the Group's work in reviewing the impact of existing IAS is ongoing.
Hence, at this time, no definitive information on the impact on the Group of
the adoption of IAS is being provided. However, it seems likely that the
adoption of IAS will increase the volatility of the Group's reported results
and impact its balance sheet.
Board Changes
A number of Board changes have been announced during the course of 2004. These
are as follows:
- David Arculus will stand down as Chairman of Severn Trent Plc at the end of
December. His successor will be announced in due course.
- Colin Matthews, a non-executive director of Severn Trent Plc and CEO of
Hays plc, will succeed Robert Walker as Group Chief Executive after Mr
Walker retires in February 2005.
- Mark Wilson, Director of Finance and Regulation, Severn Trent Water, will
succeed Alan Perelman as Group Finance Director after Mr Perelman retires
in August 2004.
- Brian Duckworth has decided to stand down as Managing Director of Severn
Trent Water and from the Severn Trent Plc Board at the end of August but he
will continue with the Group until March 2005 to ensure his expertise is
available to complete the regulatory process for the AMP4 review. His
successor will be announced in due course.
- Rachel Brydon Jannetta, President and CEO of Severn Trent Laboratories,
will join the Severn Trent Plc Board in September 2004.
Supplementary Information
For supplementary information, including the Group's preliminary results
presentation, see the Severn Trent web site (www.severntrent.com).
Outlook
Over the coming 12 months, the outcome of the AMP4 price review is expected to
be the key event for both Severn Trent Water and the Group. The next important
step is Ofwat's announcement of its draft AMP4 price review in August 2004.
The Final Business Plan for the AMP 4 price review aims to achieve the right
balance between customer and investor expectations. Severn Trent Water's aim is
to deliver improvements for our customers while realising appropriate financial
returns for our investors.
Although the Group expects significant additional pension charges in 2004/05,
the Board considers that, overall, the Group's core businesses - Severn Trent
Water, Biffa and Laboratories - provide a good platform for the future, with
the Group well positioned to capitalise on opportunities.
David Arculus
Chairman
Group profit and loss account
Year ended 31 March 2004
Continuing Operations
Total
Acquisitions 2004 2003
-----------------------------------------
Notes £m £m £m £m
Turnover: group and share of
joint ventures 1,923.3 95.2 2,018.5 1,855.8
Less: share of joint ventures'
turnover (3.4) - (3.4) (3.8)
------------------------------------------------------------------------------
Turnover 2 1,919.9 95.2 2,015.1 1,852.0
Operating costs before goodwill
amortisation and exceptional items (1,505.1) (81.3) (1,586.4) (1,453.0)
Goodwill amortisation (24.8) (5.0) (29.8) (25.2)
Exceptional integration costs 3 - (10.9) (10.9) -
Exceptional provision release 3 2.7 - 2.7 6.0
Exceptional impairment of goodwill
and tangible fixed assets 3 - - - (46.8)
------------------------------------------------------------------------------
Total operating costs (1,527.2) (97.2) (1,624.4) (1,519.0)
Group operating profit/(loss) 392.7 (2.0) 390.7 333.0
Share of operating profit of joint
ventures and associates 11.9 - 11.9 10.8
Exceptional profit on disposal
of fixed assets 3&4 19.8 - 19.8 -
---------------------------------------
Profit before interest,
goodwill amortisation and
exceptional items 2 426.7 13.9 440.6 409.8
Goodwill amortisation 2 (24.8) (5.0) (29.8) (25.2)
---------------------------------------
Profit before interest and
exceptional items 2 401.9 8.9 410.8 384.6
Exceptional costs 2 - (10.9) (10.9) (46.8)
Exceptional profits 2 22.5 - 22.5 6.0
---------------------------------------
Profit/(loss) before interest 2 424.4 (2.0) 422.4 343.8
Net interest payable (168.0) (159.4)
------------------------------------------------------------------------------
Profit after interest before goodwill amortisation
and exceptional items 272.6 250.4
Goodwill amortisation (29.8) (25.2)
------------------
Profit after interest before exceptional items 242.8 225.2
Exceptional items 2&3 11.6 (40.8)
------------------
Profit on ordinary activities before taxation 254.4 184.4
Taxation on profit on ordinary activities
- current tax 5 (33.3) (24.8)
- deferred tax 5 (36.3) (59.5)
------------------------------------------------------------------------------
Total taxation 5 (69.6) (84.3)
Profit on ordinary activities after taxation 184.8 100.1
Equity minority interests (0.7) (0.9)
------------------------------------------------------------------------------
Profit for the financial year 184.1 99.2
Dividends 6 (162.0) (157.6)
------------------------------------------------------------------------------
Retained profit/(loss) for the
financial year 22.1 (58.4)
------------------------------------------------------------------------------
Earnings per share (pence)
Basic 7 53.5 28.9
Diluted 7 53.3 28.8
Adjusted basic before exceptional items
and deferred tax 7 61.4 58.1
Adjusted diluted before exceptional items
and deferred tax 7 61.2 57.9
There is no difference between the profit on ordinary activities before
taxation and the retained profit/(loss) for the financial years stated above,
and their historical cost equivalents.
Group balance sheet
At 31 March 2004
2004 2003
£m £m
---------------------
Intangible assets - goodwill 497.6 401.5
Tangible assets 5,278.0 5,048.6
----------------------------------------------------------------------
Investments in joint ventures:
Share of gross assets 7.2 3.1
Share of gross liabilities (6.5) (2.6)
Loans to joint ventures 8.9 4.7
----------------------------------------------------------------------
9.6 5.2
Investments in associates 17.7 17.6
Other investments 4.2 7.7
----------------------------------------------------------------------
Total Investments 31.5 30.5
--------------------------------------------------------------------------
5,807.1 5,480.6
Current assets
Stocks 80.4 91.0
Debtors 452.8 423.2
Short-term deposits 70.8 25.7
Cash at bank and in hand 44.5 43.2
--------------------------------------------------------------------------
648.5 583.1
Creditors: amounts falling due within one year (1,223.7) (1,219.2)
--------------------------------------------------------------------------
Net current liabilities (575.2) (636.1)
--------------------------------------------------------------------------
Total assets less current liabilities 5,231.9 4,844.5
Creditors: amounts falling due after more than
one year (2,440.6) (2,101.6)
Provisions for liabilities and charges
Deferred tax (462.9) (425.8)
Other provisions (109.1) (97.3)
---------------------
(572.0) (523.1)
--------------------------------------------------------------------------
Net assets 2,219.3 2,219.8
--------------------------------------------------------------------------
Capital and reserves
Called up share capital 225.2 224.4
Share premium account 33.5 28.7
Capital redemption reserve 156.1 156.1
Profit and loss account 1,802.1 1,808.4
--------------------------------------------------------------------------
Total equity shareholders' funds 2,216.9 2,217.6
Minority shareholders' interest (equity) 2.4 2.2
--------------------------------------------------------------------------
2,219.3 2,219.8
--------------------------------------------------------------------------
Group cash flow statement
Year ended 31 March 2004
2004 2003
Notes £m £m £m £m
--------------------------------------
Net cash inflow from operating activities 9 733.1 682.7
Dividends received from associates and
joint ventures 1.9 1.6
Returns on investments and servicing
of finance (148.3) (146.7)
Taxation (19.5) (14.3)
Capital expenditure and financial
investment (487.5) (454.0)
Acquisitions (170.6) (11.5)
Equity dividends paid (157.7) (157.5)
-------------------------------------------------------------------------------
Net cash outflow before use of liquid
resources and financing (248.6) (99.7)
Management of liquid resources (45.2) (6.5)
Financing
Increase in debt 283.1 114.1
Issue of shares 5.6 3.3
-------------------------------------------------------------------------------
288.7 117.4
-------------------------------------------------------------------------------
(Decrease)/increase in cash (5.1) 11.2
-------------------------------------------------------------------------------
Reconciliation of net cash flow to movement
in net debt 2004 2003
Notes £m £m £m £m
-------------------------------------------
(Decrease)/increase in cash (as above) (5.1) 11.2
Cash flow from movement in net debt
and financing (283.1) (114.1)
Cash flow from movement in liquid
resources 45.2 6.5
-------------------------------------------------------------------------------
Change in net debt resulting from
cash flows (243.0) (96.4)
Net cash/(debt) assumed with acquisitions 0.3 (0.4)
Movement in rolled up interest on
finance leases 2.2 1.3
Currency translation differences 6.0 2.6
Other non cash items (9.0) (1.0)
-------------------------------------------------------------------------------
Increase in net debt (243.5) (93.9)
Opening net debt (2,505.6) (2,411.7)
-------------------------------------------------------------------------------
Closing net debt 8 (2,749.1) (2,505.6)
-------------------------------------------------------------------------------
Statement of total recognised gains and losses
Year ended 31 March 2004
2004 2003
------------------
£m £m
Profit for the financial year
- group 182.1 97.3
- joint ventures 0.6 0.5
- associates 1.4 1.4
-----------------------------------------------------------------------
Total profit for the financial year 184.1 99.2
Exchange movement in translation of overseas
results and net assets (35.6) (25.1)
Translation differences on foreign currency
hedging 10.3 3.8
Tax on translation difference on foreign currency
hedging (3.1) -
-----------------------------------------------------------------------
Total recognised gains and losses for the year 155.7 77.9
-----------------------------------------------------------------------
In 2003/04, in accordance with UITF 19, a tax charge of £3.1m related to gains
of £10.3m, arising on foreign currency borrowings hedging investments in
foreign businesses, has been reflected in the Statement of total recognised
gains and losses above. In 2002/03, a tax charge of £1.1m, related to such
gains of £3.8m was instead charged to the profit and loss account. Had the
£1.1m charge been properly treated as in the current year, Adjusted earnings
per share in 2002/03 would have improved by 0.4p from 58.1p to 58.5p. Given
the magnitude of the numbers, no restatement has been applied to the 2002/03
figures.
Reconciliation of movements in shareholders' funds
2004 2003
------------------
£m £m
Opening shareholders' funds 2,217.6 2,294.0
----------------------------------------------------------------------
Profit for the financial year 184.1 99.2
Dividends (162.0) (157.6)
----------------------------------------------------------------------
Retained profit/(loss) for the financial year 22.1 (58.4)
Other recognised gains and losses relating to
the year (28.4) (21.3)
Shares issued 5.6 3.3
----------------------------------------------------------------------
Net reduction to shareholders' funds (0.7) (76.4)
----------------------------------------------------------------------
Closing equity shareholders' funds 2,216.9 2,217.6
----------------------------------------------------------------------
Notes
1 Basis of preparation
The results for the year ended 31 March 2004 have been prepared on the basis of
accounting policies consistent with those adopted for the year ended 31 March
2003, as set out in the financial statements of the group.
The results have been extracted from the audited financial statements of the
group for the year ended 31 March 2004. These audited statements incorporate an
unqualified audit report. The results do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985. Statutory accounts
for the year ended 31 March 2003, which incorporated an unqualified auditors'
report, have been filed with the Registrar of Companies.
2 Segmental analysis
Analysis of turnover and profit before interest by geographical origin and type
of business
Other-principally
United Kingdom USA & Europe Group
------------------------------------------------------
2004 2003 2004 2003 2004 2003
--------------------------------------------------------------------------------
£m £m £m £m £m £m
Group turnover
Water and sewerage 956.7 917.9 - - 956.7 917.9
Waste management 573.9 457.3 59.2 53.6 633.1 510.9
Services 63.6 55.8 317.6 329.6 381.2 385.4
Systems 52.0 50.9 11.6 10.4 63.6 61.3
Property, Engineering
consultancy and Insurance 80.0 66.4 3.5 6.6 83.5 73.0
Inter segment trading (102.1) (95.8) (0.9) (0.7) (103.0) (96.5)
--------------------------------------------------------------------------------
1,624.1 1,452.5 391.0 399.5 2,015.1 1,852.0
--------------------------------------------------------------------------------
Group profit before interest, goodwill
amortisation and exceptional items
Water and sewerage 337.9 325.5 - - 337.9 325.5
Waste management 76.0 64.8 3.2 3.1 79.2 67.9
Services 4.6 4.2 34.1 30.0 38.7 34.2
Systems 3.4 (0.7) (1.1) (2.4) 2.3 (3.1)
Property, Engineering
consultancy and Insurance 3.2 5.5 - - 3.2 5.5
Unrealised profit on inter
segment trading (2.4) (2.6) - - (2.4) (2.6)
Corporate overheads (18.3) (17.6) - - (18.3) (17.6)
--------------------------------------------------------------------------------
404.4 379.1 36.2 30.7 440.6 409.8
--------------------------------------------------------------------------------
Goodwill amortisation (23.2) (17.4) (6.6) (7.8) (29.8) (25.2)
--------------------------------------------------------------------------------
Group profit before interest and exceptional items
Water and sewerage 336.6 325.4 - - 336.6 325.4
Waste management 54.9 48.3 3.0 3.0 57.9 51.3
Services 3.8 3.4 27.7 22.3 31.5 25.7
Systems 3.4 (0.7) (1.1) (2.4) 2.3 (3.1)
Property, Engineering
consultancy and Insurance 3.2 5.5 - - 3.2 5.5
Unrealised profit on inter
segment trading (2.4) (2.6) - - (2.4) (2.6)
Corporate overheads (18.3) (17.6) - - (18.3) (17.6)
--------------------------------------------------------------------------------
381.2 361.7 29.6 22.9 410.8 384.6
--------------------------------------------------------------------------------
Exceptional items
--------------------------------------------------------------------------------
Exceptional profit on disposal
of fixed assets-Water and
sewerage 19.8 - - - 19.8 -
Exceptional integration
costs-Waste Management (10.9) - - - (10.9) -
Exceptional impairment of
goodwill and tangible
fixed assets-Services - (3.5) - (43.3) - (46.8)
Exceptional contract
provision release-Systems - - 2.7 6.0 2.7 6.0
--------------------------------------------------------------------------------
8.9 (3.5) 2.7 (37.3) 11.6 (40.8)
--------------------------------------------------------------------------------
Group profit before interest
Water and sewerage 356.4 325.4 - - 356.4 325.4
Waste management 44.0 48.3 3.0 3.0 47.0 51.3
Services 3.8 (0.1) 27.7 (21.0) 31.5 (21.1)
Systems 3.4 (0.7) 1.6 3.6 5.0 2.9
Property, Engineering
consultancy and Insurance 3.2 5.5 - - 3.2 5.5
Unrealised profit on inter
segment trading (2.4) (2.6) - - (2.4) (2.6)
Corporate overheads (18.3) (17.6) - - (18.3) (17.6)
--------------------------------------------------------------------------------
390.1 358.2 32.3 (14.4) 422.4 343.8
--------------------------------------------------------------------------------
Turnover by origin and destination do not differ materially.
The profit and loss account and segmental analysis include the following
amounts in respect of businesses acquired during the year:
Turnover Operating profit
--------------------------- ---------------------------
Other - Other -
principally principally
United USA & United USA &
Kingdom Europe Total Kingdom Europe Total
----------------------------------------------------------
£m £m £m £m £m £m
Waste management 89.0 - 89.0 (5.0) - (5.0)
Services - 6.2 6.2 - 3.0 3.0
----------------------------------------------------------
Total 89.0 6.2 95.2 (5.0) 3.0 (2.0)
----------------------------------------------------------
Waste management's and Services' operating profit in the table above is after
charging goodwill amortisation of £4.7m and £0.3m respectively.
Waste management's operating profit is also stated after charging exceptional
integration costs of £10.9m. Profit before interest, tax, goodwill amortisation
and exceptional items of acquisitions in this period therefore amounts to
£13.9m (Waste management £10.6m including synergies and Services £3.3m).
Analysis of net operating assets by geographical location and type of business
Other -
principally
United Kingdom USA & Europe Group
-----------------------------------------------------
2004 2003 2004 2003 2004 2003
-----------------------------------------------------
£m £m £m £m £m £m
Water and sewerage 4,726.1 4,542.2 - - 4,726.1 4,542.2
Waste management 257.8 208.4 21.4 23.7 279.2 232.1
Services 15.5 17.3 124.5 136.0 140.0 153.3
Systems 5.4 8.3 (2.0) (2.6) 3.4 5.7
Property, Engineering
consultancy, Insurance
and Corporate 12.8 24.3 - - 12.8 24.3
----------------------------------------------------
Net operating assets 5,017.6 4,800.5 143.9 157.1 5,161.5 4,957.6
----------------------------------------------------
Goodwill:
Water and sewerage - 1.3
Waste management 390.7 289.2
Services 106.9 111.0
Short term deposits, cash, borrowings, taxation and
dividends payable (3,439.8) (3,139.3)
--------------------
2,219.3 2,219.8
--------------------
3 Exceptional items
A net exceptional credit arose during 2003/04 of £11.6m, as opposed to a net
£40.8m charge in the prior year, this is further analysed below.
Exceptional items in 2003/04 comprise a £19.8m profit from the disposal of
fixed assets and a £2.7m credit from the release of part of an exceptional
charge made in 2001/02, offset by a £10.9m charge for Hales' integration costs.
The exceptional profit on disposal of fixed assets during 2003/04 of £19.8m
relates to the disposal of land and property by Severn Trent Water, which is
disclosed on the face of the profit and loss account (see note 4 below).
Other operating costs in 2003/04 include a £10.9m charge in respect of
integration costs associated with the acquisition of Hales. This is offset by a
£2.7m release of part of the £25.0m charge made in 2001/02 in respect of
certain Systems' CIS-OpenVision contracts in the USA.
Exceptional items in 2002/03 comprise a charge of £46.8m for the impairment of
goodwill and tangible fixed assets in Services, offset by a £6.0m credit from
the release of an exceptional charge made in 2001/02.
The £46.8m impairment was determined in accordance with FRS 11 'Impairment of
fixed assets and goodwill'. The impairment restated the relevant assets to
value in use using a pre-tax discount rate of 10%. £42.5m of this impairment
charge was a write down of goodwill, the remaining £4.3m was a write down of
tangible fixed assets.
The exceptional contract provision release of £6.0m in 2002/03 related to the
release of part of a £25.0m exceptional charge made in 2001/02 in respect of
certain Systems' CIS-OpenVision contracts in the USA.
4 Profits on disposal of fixed assets
Profits on disposal of fixed assets, expressed on a like for like basis,
comprising only sales of land and property, have arisen as follows in the
reported periods:
March 2004 March 2003
£m £m
---------- ----------
Profits on disposal of fixed assets 19.8 6.7
---------- ----------
In the current period, profits on disposal of fixed assets amounting to £19.8m
have been shown separately as exceptional on the face of the profit and loss
account, after operating profit, due to the materiality of the amounts
involved. In previous periods such profits on disposal (shown above) were not
treated as exceptional and were reported within operating costs, given their
relative magnitude.
Changes in analysis
In prior periods, profits on disposal of fixed assets other than land and
property were also reported within operating costs as part of a total figure
for profits on disposals of fixed assets. Because they are now regarded more
appropriately as minor adjustments to depreciation, £1.2m of such items in the
current period have been included within the depreciation charge. £0.2m of such
depreciation arose in the year to 31 March 2003.
5 Taxation
2004 2003
£m £m
Current tax
UK corporation tax - current year at 30% 39.0 27.9
UK corporation tax - prior year (8.3) (6.4)
Double taxation relief (0.6) (0.8)
Overseas taxation - current year 1.9 2.3
Overseas taxation - prior year - 0.4
Share of taxation charges of joint ventures and
associates 1.3 1.4
----------------
Total current tax 33.3 24.8
Deferred tax 36.3 59.5
----------------
Total tax charge 69.6 84.3
----------------
Of the current tax charge for 2003/04, £2.4m relates to tax charges arising on
exceptional items. No tax was attributable to the exceptional items which arose
in 2002/03.
The group's current tax charge, excluding £2.4m of tax on exceptional items of
£30.9m (2003: £24.8m) represents 12.7% (2003: 11.0%) of the group's profit
after interest but before exceptional items.
6 Dividends
An interim dividend of 17.77p per ordinary share (2003: 17.34p) was paid on 6
April 2004. The Board is proposing a final dividend of 29.27p per ordinary
share (2003: 28.56p) to be paid on 1 October 2004. The shares will be traded
'ex-dividend' with effect from 18 June 2004.
The cost of the proposed equity dividends to the company's shareholders for the
year ended 31 March 2004 amounts to £162.0m (2003: £157.6m).
7 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the year, excluding those held in the Severn Trent Employee Share
Ownership Trust which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares. These represent share options granted to employees, where the exercise
price is less than the average market price of the company's shares during the
year.
Supplementary, adjusted earnings per share figures are presented. These exclude
the effects of exceptional items and deferred tax in both 2004 and 2003. The
Directors consider that the adjusted figures provide a useful additional
indication of performance.
Year ended 31 March 2004
---------------------------------
Weighted
average Per
number share
Earnings of shares amount
£m m pence
-------------------------------------------------------------------------------
Basic earnings per share 184.1 343.8 53.5
Effect of dilutive options - 1.5 (0.2)
-------------------------------------------------------------------------------
Diluted earnings per share 184.1 345.3 53.3
-------------------------------------------------------------------------------
Adjusted earnings per share
-------------------------------------------------------------------------------
Basic earnings per share 184.1 343.8 53.5
Effect of:
Exceptional profit on disposal of
fixed assets (19.8) - (5.8)
Exceptional integration costs 10.9 - 3.2
Exceptional impairment of goodwill
and tangible fixed assets - - -
Exceptional contract provision release (2.7) - (0.8)
Tax related to exceptional items 2.4 - 0.7
Deferred tax 36.3 - 10.6
-------------------------------------------------------------------------------
Adjusted basic earnings per share before
exceptional items and deferred tax 211.2 343.8 61.4
-------------------------------------------------------------------------------
Diluted earnings per share 184.1 345.3 53.3
Effect of:
Exceptional profit on disposal of
fixed assets (19.8) - (5.7)
Exceptional integration costs 10.9 - 3.2
Exceptional impairment of goodwill
and tangible fixed assets - - -
Exceptional contract provision
release (2.7) - (0.8)
Tax related to exceptional items 2.4 - 0.7
Deferred tax 36.3 - 10.5
-------------------------------------------------------------------------------
Adjusted diluted earnings per share before
exceptional items and deferred tax 211.2 345.3 61.2
-------------------------------------------------------------------------------
Year ended 31 March 2003
---------------------------------
Weighted
average Per
number share
Earnings of shares amount
£m m pence
-------------------------------------------------------------------------------
Basic earnings per share 99.2 343.1 28.9
Effect of dilutive options - 1.4 (0.1)
-------------------------------------------------------------------------------
Diluted earnings per share 99.2 344.5 28.8
-------------------------------------------------------------------------------
Adjusted earnings per share
-------------------------------------------------------------------------------
Basic earnings per share 99.2 343.1 28.9
Effect of:
Exceptional profit on disposal of
fixed assets - - -
Exceptional integration costs - - -
Exceptional impairment of goodwill
and tangible fixed assets 46.8 - 13.6
Exceptional contract provision release (6.0) - (1.7)
Tax related to exceptional items - - -
Deferred tax 59.5 - 17.3
-------------------------------------------------------------------------------
Adjusted basic earnings per share before
exceptional items and deferred tax 199.5 343.1 58.1
-------------------------------------------------------------------------------
Diluted earnings per share 99.2 344.5 28.8
Effect of:
Exceptional profit on disposal of
fixed assets - - -
Exceptional integration costs - - -
Exceptional impairment of goodwill
and tangible fixed assets 46.8 - 13.5
Exceptional contract provision
release (6.0) - (1.7)
Tax related to exceptional items - - -
Deferred tax 59.5 - 17.3
-------------------------------------------------------------------------------
Adjusted diluted earnings per share before
exceptional items and deferred tax 199.5 344.5 57.9
-------------------------------------------------------------------------------
8 Analysis of net debt
2004 2003
£m £m
Cash at bank and in hand 44.5 43.2
Short-term deposits 70.8 25.7
Overdrafts (32.1) (31.8)
Debt due within one year (442.4) (500.4)
Debt due after one year (1,888.7) (1,581.1)
Finance leases due within one year (12.4) (5.4)
Finance leases due after one year (488.8) (455.8)
------------------------
Net debt (2,749.1) (2,505.6)
------------------------
9 Reconciliation of operating profit to operating cash flows
2004 2003
£m £m
Operating profit 390.7 333.0
Depreciation charge 299.9 291.1
Amortisation of goodwill 29.8 67.7
Profit on disposal of fixed assets (see note 4) - (6.7)
Deferred income movement (2.1) (4.0)
Provisions for liabilities and charges 23.1 12.7
Utilisation of provisions for liabilities and (28.6) (30.4)
charges
Movement in working capital 20.3 19.3
------------------
Net cash inflow from operating activities 733.1 682.7
------------------
The depreciation charge in 2003 includes an exceptional charge of £4.3m.
The amortisation of goodwill in 2003 includes an exceptional charge of £42.5m.
10 Annual Report
The 2004 Annual Report will be sent to shareholders in late June. Copies may be
obtained from the Company Secretary, Severn Trent Plc, 2297 Coventry Road,
Birmingham B26 3PU.
11 Annual General Meeting
The Annual General Meeting will be held at the National Exhibition Centre,
Birmingham, on 27 July 2004 at 2.30pm.
12 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', '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.
13 Not an Offer
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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