Interim Management Statement (6008X)

TIDMSVT

RNS Number : 6008X

Severn Trent PLC

17 February 2012

17 February 2012

Severn Trent Plc Interim Management Statement

for the period 1 October 2011 to 16 February 2012

The Board of Severn Trent Plc confirms that trading across the group has been in line with its expectations. No new material trading events or transactions have occurred during the period 1 October 2011 to 16 February 2012.

Severn Trent Water

Consumption levels across our measured income base for FY 2011/12 are expected to lower year on year, in line with the trend seen in the first half.

The level of bad debt for the full year is expected to remain broadly stable compared with the first six months, although we continue to monitor future developments closely, especially unemployment levels.

Operating expenditure continues to be in line with the Board's expectations for the year, and below the level allowed in the Final Determination. Operating costs are expected to rise year on year, due to the impact of inflation, prudent investment in our networks, and quasi taxes (including the CRC levy), partially offset by efficiency savings.

Expectations for net capital expenditure (UK GAAP after deducting grants and contributions) remain in the range GBP450 million to GBP470 million. The level of net infrastructure renewals expenditure included in this figure is anticipated to be GBP120 million to GBP130 million. Both figures exclude the costs of Private Drains and Sewers (PDaS).

Severn Trent Water is not currently predicting any usage restrictions this year, despite record low rainfall over the winter period. This situation remains under constant review however and the company is taking steps to improve supply resilience this year. Severn Trent Water has maintained its focus on continuous improvement and is on course to meet its 2011/12 leakage target. Severn Trent Water is one of only 3 companies that is targeting reduced leakage year on year over the current regulatory period.

Work volumes related to Private Drains and Sewers continues to be at the lower end of initial expectations. The company will provide FY 2011/12 costs, and updated capital and operational expenditure estimates for the remainder of the current regulatory period, with its Preliminary Results in May.

Severn Trent Services

Severn Trent Services is expected to deliver an improved second half performance, compared to the first half, in line with prior guidance. However, markets remain challenging, with no significant upturn expected before the start of the next financial year.

Group

The group completed a successful GBP250m 30 year bond issue in January, at a coupon of 4.875%, and simultaneously a tender offer for its 2014 GBP200m bond, which saw an uptake of 75% or GBP151m. The costs of the tender offer will give rise to an exceptional finance charge of GBP16m for FY2011/12, representing the difference between the purchase price and the carrying value of the bond.

The expected effective current tax rate for the group for FY 2011/12 remains at 26% to 27%.

Severn Trent Plc will announce its preliminary results for the financial year ending 31

March 2012 on 30 May.

Enquiries:

 
                                                         0207 353 4200 (on the 
 Mike McKeon                   Severn Trent Plc           day) 
 Finance Director                                        02477 715000 
                                                         0207 353 4200 (on the 
 Rob Salmon                    Severn Trent Plc           day) 
 Head of Communications                                  02477 715000 
                                                         0207 353 4200 (on the 
 John Crosse                   Severn Trent Plc           day) 
 Head of Investor Relations                              02477 715000 
 Anastasia Shiach / Martha 
  Kelly                        Tulchan Communications    0207 353 4200 
 

Forward-Looking Statements:

This document contains certain 'forward looking statements' with respect to Severn Trent's financial condition, results of operations and business and certain of Severn Trent's plans and objectives with respect to these items.

Forward looking statements are sometimes, but not always, identified by their use of a date in the future or such words as 'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans', 'potential', 'reasonably possible', 'targets', 'goal' or 'estimates'. By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.

There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies and markets in which the group operates; changes in the regulatory and competition frameworks in which the group operates; the impact of legal or other proceedings against or which affect the group; and changes in interest and exchange rates.

All written or verbal forward looking statements, made in this document or made subsequently, which are attributable to Severn Trent or any other member of the group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Severn Trent does not intend to update these forward looking statements.

Nothing in this document should be regarded as a profits forecast.

This document is not an offer to sell, exchange or transfer any securities of Severn Trent Plc or any of its subsidiaries and is not soliciting an offer to purchase, exchange or transfer such securities in any jurisdiction. Securities may not be offered, sold or transferred in the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act of 1933 (as amended).

This information is provided by RNS

The company news service from the London Stock Exchange

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