Severn Trent Plc will have earned at least £163 million across AMP6 in net customer ODI outperformance payments according to its latest update for the period to 31 March 2020 published today.
The company also remains on track to deliver at least £25 million of net customer ODI outperformance payments for 2019/20.
As a result, Severn Trent will be able to defer £177 million (pre-tax, nominal prices) into revenue in AMP7.
There has been no material change to the Group’s current year business performance since the trading update announced on 28 January 2020 – Severn Trent said it expects the Group will deliver full-year trading performance in-line with previous guidance.
However, the utility is warning that the restrictions implemented by the Government to limit the spread of Covid-19 are likely to have a material impact on many of the business customers of joint venture company, WaterPlus.
“The company has been making good progress on improving its underlying operating performance, however this new challenge will significantly impact the pace and certainty of its recovery plan,” the update says.
At the start of the month, Severn Trent Plc successfully raised £200 million in the US Private Placement market - the first debt issue under our Sustainable Finance Framework and the first debt raising for the holding company since 2012. The funds were received last week .
Overall, the Group is in a robust financial position to manage through the current uncertainty of the impact of the Covid-19 outbreak which, supplemented by the USPP cash, extends liquidity out to early 2022. Severn Trent has less than 2.5% of debt requiring re-financing in 2020, and cash and committed facilities of over £1.1 billion. However, the update cautions:
“Given the uncertainty of how the situation will develop, we will continue to closely monitor our cash flows and update our contingency planning accordingly.”
Covid-19 - health, safety and well-being of employees and millions of customers is absolutely first priority
The company also emphasises that the health, safety and well-being of its staff and the millions of customers it serves throughout the Covid-19 outbreak is absolutely the first priority. Frontline teams are continuing to keep essential services flowing across the Severn Trent region, with strict hygiene and social-distancing protocols in place for all field teams and production sites, and only essential customer visits taking place.
All staff who can work from home have the necessary equipment to do so, the statement says.
In response to the outbreak, Severn Trent has enacted robust incident management and business continuity plans throughout its business and is working closely with local resilience forums and collaborating with others in the water sector.
The utility has increased communications to customers, highlighting the ways that it can support them via the priority services register. “We also recognise this will be a difficult time financially for some of our household customers; we are here to help and are actively promoting our range of existing social tariff and vulnerable customer schemes to help them with their bills,” the update says.
Severn Trent is also announcing it is today committing £1 million to support groups and charities helping those impacted the most in the region and believes it needs to do “even more to support our communities in these unprecedented times”
The water company’s aim is to make the funding available as quickly as possible, so it can start to make a difference straightaway.
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