Severn Trent Water is on track to achieve £670 million of totex efficiencies across AMP6, with a further £50 million of efficiencies now locked in, according to its half year results for the six months ended 30th September published today.

Severn Trent has committed to reinvest £120 million of the efficiencies into three important areas for customers; water quality, security and vulnerable customers.

Turnover rose £28.2 million to £906.8 million (3.2%) year-on-year, attributed to regulated price increases, and underlying growth and favourable exchange impacts in Business Services. Cash generated from operations rose by £36.5 million (7.4%).

The water company will pay an interim dividend of 32.6 pence, in line with dividend policy.

Severn Trent’s customers had the lowest combined average bills in Britain - £329 in 2016/17, with support provided to over 36,000 vulnerable customers – almost three times as many as last year.

The utility said its capital programme remains on track, with good progress made during the half year on the Birmingham Resilience Programme. Severn Trent has secured all of the planning permissions it needs and have appointed the main contractors. Work has also commenced on the three tunnels required, the first of which is expected to be completed by the end of 2017. Good progress is also being made on the strategic sewer flooding scheme in Newark.

The group described itself as “delivering on our levers of outperformance” – Severn Trent is on track for a forecast net reward of £15 million for customer ODIs. However, in terms of customer service the firm said it still had a lot to deliver in terms of customer performance, citing its performance against Ofwat’s Service Incentive Mechanism (SIM) as the most obvious illustration - finishing seventh out of the eighteen water companies in 2015/16.

Severn Trent  said water quality complaints also continued to be a challenging area – the group expects to receive a penalty again this year.

The water company said a further £50 million of efficiencies are now locked in and that it is on track to achieve £670 million of totex efficiencies across AMP6. In its AMP6 efficiency targets unveiled in the full year results published in May this year, the utility  announced total efficiencies of £670 million, of which £490 million was locked in.

Severn Trent said much of this had been achieved by working in partnership with the supply chain on capital programmes, with improvements coming through strategic programming, batching, collaborative planning, standardising products and innovative solutions. It was also continuing to deliver savings through consolidating suppliers and finding more efficient ways of working.

Severn Trent is also on track to generate the equivalent of 50% of its energy needs through its renewables programme by 2020.

Commenting on the results, Liv Garfield, Chief Executive Severn Trent Plc, said:

“We are focused on the things that matter most to our customers while also maintaining the lowest bills in Britain. External sewer floodings are down 9% year-on-year, and we have almost trebled the number of vulnerable customers supported. We are also proud of our performance on customer complaints, achieving the largest reduction in complaints in 2015/16 of all water and sewerage companies, as measured by the Consumer Council for Water, giving us the second best performance overall.”

“Investing for the long-term in our network and skills is vital. As custodians of a totex investment programme of over £6 billion this regulatory period, we have made strong progress on our biggest ever capital project, the Birmingham Resilience Programme. We are doing more for our communities and have also more than doubled the number of apprentices and graduates hired into the business. We have committed to reinvest £120 million of our totex efficiencies into three important areas for our customers; water quality, security and vulnerable customers.

“While we are encouraged by the results of everyone’s hard work, we are aware that much remains to be done to achieve the high standards we set ourselves and continue to deliver for all stakeholders.”