Investors

Our investment proposition

Investing in Severn Trent Group brings a valuable combination of reliable earnings, long-term asset growth and an inflation-linked dividend

Stable earnings with strong cost control

Because of the unique way the water industry is regulated, we have a high degree of certainty over our income.

Continued ability to generate revenue

We have greater certainty than most businesses in our foresight of future income streams because our revenue is defined by a well-established regulatory model.

This stable revenue stream combined with our excellent track record of keeping costs down makes us a trustworthy investment.

 

Good regulatory foresight and reliable forecasting

We have good regulatory foresight, with a five year view driven by a trusted regulatory model, alongside a track record of delivering to expectation.

 

Track record of cost control

Strong cost control has countered several cost pressures.

 

An attractive, inflation-linked dividend providing long term clarity

Our dividends are predictable, with a policy set out in advance. This makes us ideal for long-term investment that can provide a reliable income for the future.

 

We’re a stable, long-standing, well-established organisation, delivering steady, inflation-linked dividends that enable our investors to plan reliably. 

 

We have announced an AMP7 dividend policy of growth of at least CPIH

CPIH is an additional measure of the Consumer Price index which includes owner occupiers' housing costs.

 

  1. Based on £111m share buyback dividend by 237m shares (average number over buyback period)

 

A growing non-regulated business

The Severn Trent Group has a growing non-regulated business, primarily focused on three key areas.

Green Power

Severn Trent Green Power produces over 150 GWh of renewable energy a year, focusing primarily on food waste using the same anaerobic digestion processes as our industry-leading regulated Bioresources business.

Our food waste business expanded substantially with the acquisition of five food waste plants from Agrivert, and we expect it to keep growing as our society becomes increasingly conscious of waste and the government seeks to make kerbside collection of food waste mandatory.

Other sources of energy include solar and wind farms, which utilise excess land within our region.

 

Operating Services

Severn Trent Services consists of several long term contracts to operate and maintain water and waste water services for operations which fall outside of the regulatory regime.

The largest of these is a 25 year contract with the Ministry of Defence to operate and maintain a third of their sites across the UK.

 

Property Development

Technological advancement means that our core Severn Trent Water business now requires a much smaller footprint to operate, freeing up excess land.

Our property development team purchase this land from Severn Trent Water, carry out any remediation work in order to achieve planning permission, and sell the land to developers.

Our ambition is to generate £100 million of profit before interest and taxes from property sales in the ten years to 2027. We are now a third of the way towards achieving this goal.

 

Long-term sustainable growth

We expect 3.8% Regulatory Capital Value (RCV) growth across our next five-year Asset Management Plan 7 (AMP7). Beyond AMP7, we expect further growth to RCV driven by population increases, asset replacement and environmental improvement.

 

Population and household growth

Our region features the largest population and household growth forecast outside of London, with over 750,000 more people and 430,000 more households by 2040.

 

Replacement expenditure

We expect to see significant additional funding in future AMPs for mains renewal and sewer refurbishment.

From AMP8 onwards, we expect to invest even further in resilience to meet the climate change challenge.

Environmental expenditure

Environmental expenditure could increase, with funding for Water Framework Directive schemes in AMP 8 potentially enhanced by funding during AMP 8 to AMP 10 if the UK Government strengthens the Urban Waste Water Treatment Directive.

There's also potential for further investment should the UK Government raise standards on hazardous substances, micro-plastics and anti-microbial resistance.

 

A high quality stock with strong sustainability credentials

We’re a high-performing company with a market-leading track record on our Outcome Delivery Incentives, and upper quartile Return on Regulated Equity.

 

 

Our ODI rewards have totalled £115m in the first four years of AMP6, and our RoRE outperformance has been achieved across all three levers.

We take great pride in the fact that Ofwat, our industry regulator, gave us fast-track status at our latest price review - showing their confidence that our business plan will deliver for customers. 

Our customer challenge group praised our understanding of customer needs, saying, “We are confident that the company has a deep understanding of customer priorities. Most critically, we can see a clear connection between those priorities and the company’s business plan”.

Meanwhile Ofwat said of our Price Review that we “demonstrate real ambition in creating the culture and capability for innovation”.

Our long-term business model requires sustainable thinking to ensure we can continue to deliver for all our stakeholders, now and in the future. We’re convinced that businesses that serve society today will be best placed to thrive in the future.

We are determined to seize the opportunity to have a positive impact on the customers we serve, the region we operate in and our colleagues around us. 

 

 

 

We care for our environment

Our local environment

 

As part of our ongoing commitment to sustain and develop our local ecosystems for future generations, we will:

 

We are building resilience into our ecosystems to reduce future flooding, improve water quality, and help build a legacy that secures a sustainable future for our businesses and communities.

We even have Outcome Delivery Incentives attached to our biodiversity pledges, tying financial rewards and penalties to our delivery of these commitments.

 

Our global environment

 

We shape, and are shaped by, our environment. Take a closer look at the role we play in caring for our planet and the rich biodiversity on it.

We’re passionate about protecting the environment and have launched a triple carbon pledge to ensure we look after the environment we operate in.

By 2030 we will achieve net zero carbon emissions across the business, generate 100% of our power from renewable resources and switch our fleet to electric vehicles wherever possible.

We’re already made great progress towards these goals.

 

 

 

We care for our people

 

Looking after one of life’s essentials means we need to ensure that we care for the drinking water we provide, the waste water we treat and the people and places we serve. 

 

 

 

 

 

We act responsibly

 

We’re proud of the steps we’ve taken to enshrine sustainability in the core of our business and ensure we ensure we follow governance best practice

 

 

 

 

Investor resources

Investing from the United States of America

If you're based in the USA you can invest in Severn Trent through our American Depositary Receipt programme, which is operated by Bank of New York Mellon.

Investor newsletters

We want to keep our investors updated with what’s happening in the Severn Trent world, from the big headlines to the smaller stories that give you a broader insight into our business.

 

Investor summaries

View and download PDF versions of our investor summaries of our PR19 Business Plan, and Ofwat's decision to Fast Track our plan for Severn Trent.