Trading Statement

RNS Number : 4348L

Severn Trent PLC

19 July 2017

 

LEI: 213800RPBXRETY4A4C59

Severn Trent Plc

Trading Update for the period 1 April to 19 July 2017

Severn Trent, one of the leading water and waste water companies in the UK, today announces a trading update for the period to 19 July 2017.

Our focus continues to put the customer at the heart of everything we do. We have made a good start towards delivering our target net reward for 2017/18 customer ODI¹ outperformance of around £23 million, whilst also continuing to work towards delivering totex² efficiencies of £770m in AMP6³. We are making good progress on our business plan for AMP7⁴, which will be submitted to Ofwat in September 2018.

On 11 July 2017, Ofwat published its draft methodology consultation for PR19⁵. As expected, PR19 looks set to be a challenging review. However, we are encouraged by the opportunities of higher financial returns for ambitious and innovative companies. On 14 July 2017, Liv Garfield, Chief Executive and Dr Tony Ballance, Director, Strategy & Regulation, hosted a webcast discussing our views on the methodology consultation in more detail. This can be accessed via our website at www.severntrent.com 

Following the successful acquisition of Dee Valley in February 2017, integration of the business is progressing well.

We are also encouraged by the ongoing progress of our Water Plus joint venture. It has strongly positioned itself in the new market, including winning a number of large multi-site customers such as Kwik-Fit and David Lloyd Leisure.

The sale of our North American business was announced on 3 July 2017. As a consequence of that disposal and the disposal of our Italian business on 23 February 2017, we will be restating our accounts to classify these activities as discontinued operations and have set out the impact of this restatement below.

As a result of the reclassification of our North American business to discontinued operations, the guidance for the remainder of our Business Services segment has been upgraded. We now expect growth in both revenue and profit before interest and tax in this segment, on a like-for-like basis.

Other than the above, there has been no material change to current year business performance or outlook since the full-year 2016/17 results presentation on 23 May 2017. The Board continues to expect that the Group will deliver full-year trading performance in-line with its expectations and prior guidance.

Severn Trent Plc will announce its half-year 2017/18 results for the period ending 30 September 2017 on 23 November 2017.

Notes

1.     ODI = Outcome Delivery Incentive

2.     Totex = total expenditure

3.     AMP6 = Asset Management Plan 6, the regulatory period for 2015 to 2020

4.     AMP7 = Asset Management Plan 7, the regulatory period for 2020 to 2025

5.     PR19 = Price Review 2019

Restatement of prior-year results following the reclassification of operating services activities in the USA and Italy as discontinued operations

Severn Trent Plc announces the restatement of prior-year results as a consequence of the reclassification of its Operating Services activities in the USA and Italy as discontinued operations. These activities are restated following the sale of the US business announced on 3 July 2017. For the full financial year to 31 March 2018, the results for the Group will therefore include three months of discontinued operations for the US Operating Services business.

The following restatement of 2016/17 half-year and full-year data is to assist investors and analysts in their financial modelling of the Group, in advance of the half-year 2017/18 results, which will be announced on 23 November 2017.

Summary restatement

Prior year ended 31 March 2017:

	Regulated Water and Waste Water	Business Services	Corporate and Other	Consol adjs	Group
	£m	£m	£m	£m	£m
Turnover:
From continuing operations
As previously reported	1,528.8	309.6	6.2	(25.4)	1,819.2
Operating Services US and Italy	-	(181.2)	-	-	(181.2)
Restated	1,528.8	128.4	6.2	(25.4)	1,638.0
From discontinued operations(1)
As previously reported	-	66.0	-	-	66.0
Operating Services US and Italy	-	181.2	-	-	181.2
Restated	-	247.2	-	-	247.2
Profit before interest, tax and exceptional items (PBITE)(2):
From continuing operations
As previously reported	494.7	37.2	(6.0)	(0.8)	525.1
Operating Services US and Italy	-	(5.0)	-	-	(5.0)
Restated	494.7	32.2	(6.0)	(0.8)	520.1
From discontinued operations
As previously reported	-	(1.3)	-	-	(1.3)
Operating Services US and Italy	-	5.0	-	-	5.0
Restated	-	3.7	-	-	3.7

·   Group turnover from continuing operations reduced by £181.2 million. Group PBITE from continuing operations is restated by £5.0 million.

·   Business Services turnover from continuing operations reduced by £181.2 million and PBITE from continuing operations is restated by £5.0 million. No other segment was impacted.

·   Discontinued operations turnover increased by £181.2 million and PBITE increased by £5.0 million.

·   Of the adjustment to turnover of £181.2 million, £160.5 million relates to Operating Services US and £20.7 million to Italy.

·   Of the adjustment to PBITE of £5.0 million, £4.4million relates to Operating Services US and £0.6 million to Italy.

Summary restatement

Prior six months ended 30 September 2016:

	Regulated Water and Waste Water	Business Services	Corporate and Other	Consol adjs	Group
	£m	£m	£m	£m	£m
Turnover:
From continuing operations
As previously reported	765.2	151.0	0.6	(10.0)	906.8
Operating Services US and Italy	-	(86.8)	-	-	(86.8)
Restated	765.2	64.2	0.6	(10.0)	820.0
From discontinued operations(1)
As previously reported	-	68.8	-	-	68.8
Operating Services US and Italy	-	86.8	-	-	86.8
Restated	-	155.6	-	-	155.6
Profit before interest tax and exceptional items (PBITE):
From continuing operations
As previously reported	268.9	16.1	(4.7)	(1.9)	278.4
Operating Services US and Italy	-	(2.7)	-	-	(2.7)
Restated	268.9	13.4	(4.7)	(1.9)	275.7
From discontinued operations(1)
As previously reported	-	2.4	-	-	2.4
Operating Services US and Italy	-	2.7	-	-	2.7
Restated	-	5.1	-	-	5.1

·   Group turnover from continuing operations reduced by £86.8 million. Group PBITE from continuing operations is restated by £2.7 million.

·   Business Services turnover from continuing operations reduced by £86.8 million and PBITE from continuing operations is restated by £2.7 million. No other segment was impacted.

·   Discontinued operations turnover increased by £86.8 million and PBITE increased by £2.7 million.

·   Of the adjustment to turnover of £86.8 million, £74.8 million relates to Operating Services US and £12.0 million to Italy.

·   Of the adjustment to PBITE of £2.7 million, £2.5 million relates to Operating Services US and £0.2 million to Italy. 

Notes

1.     Discontinued operations previously reported comprises the non-household retail business that was sold to Water Plus in June 2016

2.     PBITE = Profit Before Interest, Tax and Exceptional items

Enquiries

Ruban Chandran	Severn Trent Plc	[phone]
Head of Investor Relations
Richard Tunnicliffe	Severn Trent Plc	[phone]
Investor Relations Manager

Appendix

Restatement of P&L for the prior year ended 31 March 2017:

The following P&L summaries are provided to assist the reader in comparing continued and discontinued operations side by side.

Ø Group

	Continuing			Discontinued				Total
	Previously reported	Operating Services US and Italy	Restated	Previously reported	Operating Services US and Italy	Restated
	£m	£m	£m	£m	£m	£m		£m
Turnover	1,819.2	(181.2)	1,638.0	66.0	181.2	247.2		1,885.2
Profit before interest tax and exceptional items (PBITE)	525.1	(5.0)	520.1	(1.3)	5.0	3.7		523.8
Exceptional items	18.6	-	18.6	14.6	-	14.6		33.2
Profit before interest and tax	543.7	(5.0)	538.7	13.3	5.0	18.3		557.0
Net finance costs	(204.0)	(1.1)	(205.1)	-	1.1	1.1		(204.0)
Gains/(losses) on financial instruments	(1.8)	-	(1.8)	-	-	-		(1.8)
Share of results of associates and joint ventures	(1.8)	-	(1.8)	-	-	-		(1.8)
Profit before tax	336.1	(6.1)	330.0	13.3	6.1	19.4		349.4
Taxation	(7.1)	0.6	(6.5)	0.3	(0.6)	(0.3)		(6.8)
Profit after tax	329.0	(5.5)	323.5	13.6	5.5	19.1		342.6

Ø Business Services

	Continuing			Discontinued			Total
	Previously reported	Operating Services US and Italy	Restated	Previously reported	Operating Services US and Italy	Restated	Total
	£m	£m	£m	£m	£m	£m	£m
Turnover	309.6	(181.2)	128.4	66.0	181.2	247.2	375.6
Profit before interest tax and exceptional items (PBITE)	37.2	(5.0)	32.2	(1.3)	5.0	3.7	35.9
Exceptional items	2.6	-	2.6	14.6	-	14.6	17.2
Profit before interest and tax	39.8	(5.0)	34.8	13.3	5.0	18.3	53.1

Restatement of P&L for the six months ended 30 September 2015:

The following P&L summaries are provided to assist the reader in comparing continued and discontinued operations side by side.

Ø Group

	Continuing			Discontinued				Total
	Previously reported	Operating Services US and Italy	Restated	Previously reported	Operating Services US and Italy	Restated
	£m	£m	£m	£m	£m	£m		£m
Turnover	906.8	(86.8)	820.0	68.8	86.8	155.6		975.6
Profit before interest tax and exceptional items (PBITE)	278.4	(2.7)	275.7	2.4	2.7	5.1		280.8
Exceptional items	21.0	-	21.0	20.6	-	20.6		41.6
Profit before interest and tax	299.4	(2.7)	296.7	23.0	2.7	25.7		322.4
Net finance costs	(98.1)	(0.4)	(98.5)	-	0.4	0.4		(98.1)
Gains/(losses) on financial instruments	(15.4)	-	(15.4)	-	-	-		(15.4)
Share of results of associates and joint ventures	(0.9)	-	(0.9)	-	-	-		(0.9)
Profit before tax	185.0	(3.1)	181.9	23.0	3.1	26.1		208.0
Taxation	2.9	0.4	3.3	(0.5)	(0.4)	(0.9)		2.4
Profit after tax	187.9	(2.7)	185.2	22.5	2.7	25.2		210.4

Ø Business Services

	Continuing				Discontinued			Total
	Previously reported	Operating Services US and Italy		Restated	Previously reported	Operating Services US and Italy	Restated	Total
	£m	£m		£m	£m	£m	£m	£m
Turnover	151.0	(86.8)		64.2	68.8	86.8	155.6	219.8
Profit before interest tax and exceptional items (PBITE)	16.1	(2.7)		13.4	2.4	2.7	5.1	18.5
Exceptional items	0.6	-		0.6	20.6	-	20.6	21.2
Profit before interest and tax	16.7	(2.7)		14.0	23.0	2.7	25.7	39.7

Investor timetable

Dividend payment date (Final)	21 July 2017
Half-year results announcement 2017/18	23 November 2017
Ex-dividend date (Interim)	30 November 2017
Record date (Interim)	1 December 2017
Dividend payment date (Interim)	5 January 2018

 

END

 

 

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