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Severn Trent on track for full-year performance

By Michele Maatouk

Date: Wednesday 06 Feb 2019

Severn Trent on track for full-year performance

(Sharecast News) - Severn Trent said on Wednesday that it was still on track to deliver a full-year trading performance in line with its expectations and prior guidance.
In an update for the 1 October 2018 to date, the water company said there have been no material changes to the current year business performance or outlook since the HY18/19 results presentation on 22 November.

Severn said its capital programme is progressing well and it is on course to deliver its biggest capital spend in a decade. In addition, the group's re-investment programme from part of the £870m Totex efficiencies it has delivered is continuing at pace.

The company said Ofwat's decision to increase the cap on water customer outcome delivery incentives from 2% to 2.6% of return on regulatory equity continues to align performance incentive to the things its customers care about.

"As previously stated, these prospective changes will provide the opportunity to receive further outperformance payments in FY2019/20 for some of our longer-term waste water customer ODIs that would have been limited by the previous cap. Our guidance of a net neutral position for FY2018/19 remains unchanged."

RBC Capital Markets said the statement was very much in line with its expectations and it awaits further clarity on potential ODI outperformance payments in waste water, which would provide additional upside to its estimates.

"SVT continues to be our preferred UK water name, as we see the potential for significant upside in PR19 from ODIs, and believe peers will be playing catch up to SVT in this respect," it said.

At 0900 GMT, the shares were down 0.5% to 1,996.50p.

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