Severn Trent is reporting resilient financials and strong operational performance with the publication this morning of its interim results for the six months to 30 September 2020.

The utility said it is on track for a full year ODI (Outcomes Delivery Incentive) reward of at least £25 million - driven by a record performance in reducing environmental pollutions and customer blockages, while delivering a strong start to ambitious biodiversity plans.

Severn Trent’s capital investment is set to exceed £500 million for the year, including accelerating £80 million from additional capacity in the infrastructure market created by the pandemic and accelerated activity on strategic renewable projects. To date the utility has seen no delays to the capital programme from COVID-19.

The company said it had taken the opportunity created by additional capacity in the infrastructure market to bring forward strategic investment in projects such as its thermal hydrolysis programme, creating a more efficient renewable energy process which would ultimately drive cost and carbon benefits in the business.

Chief Executive Liv Garfield said:

“The benefits from securing early agreements with our framework partners and insourcing our capital design team are already being felt in the business and we believe it will continue to play an important role in delivering immediate operational benefit while balancing the demands of cost efficiency, carbon neutrality and waste reduction.”

The company also accelerated payments to its supply chain to provide £159 million of crucial cash flow helping 705 small and medium-sized enterprises in its region.

Severn Trent has continued to improve in its customer service metrics - from the UK Customer Satisfaction Index to its regulatory measures of C-MeX and D-MeX. Improved performance in water included leakage being cut by 15%, the speed of leak repairs up 9% and water quality complaints on track to fall by 9%.

On the waste business side Severn Trent produced one of its strongest-ever sets of results on pollutions with a 14% reduction, putting it on track to hit its target to halve pollutions by the end of the AMP7 period. The reduction also helped the firm gain the top 4* rating from the Environment Agency for its performance in 2019.

The company is also reporting an excellent start to its long-term metering commitment and is now likely to deliver almost double the number targeted in the first year of AMP7.

Liv Garfield commented:

“These improvements put us in a credible position to begin discussions with Ofwat to access material amounts of funding being made available to invest in the Green Recovery in the next five years. This has the potential to deliver sustainable improvements including reduced carbon water treatment, water abstraction, flooding resilience and river quality for our region. If approved, it would boost employment in the region both directly and indirectly as well as support our environmental ambitions for the long term.”

Group turnover of £888 million (2019/20: £910.0 million) was in line with expectations, down £22 million (2.5%), including £33 million as a result of consumption, largely driven by a COVID-19 related decrease in metered revenue.

The Board has recommended that the interim dividend for shareholders for the year ending 31 March 2021 should be increased by 1.5% to 40.63 pence in line with its policy for AMP7.

Last Severn Trent announced that it was embracing the Government Kickstart Scheme with ambitious plans to support 500 16 to 24 year olds into employment with paid work experience and skills development from January 2021.

Describing the last six months as challenging for everyone, Liv Garfield commented:

“I’m incredibly proud of what we’ve achieved, whether it’s getting the top environmental performance grade once again from the Environment Agency, improving services for our customers, increasing our investment to help the country build back better, or taking a leading role in the Kickstart Scheme.

“We’ve done all of that while striving to do the right thing for all of our stakeholders, including mental health programmes, our support schemes for vulnerable customers, and through our £1 million emergency COVID-19 fund.”