Good morning, everyone, and welcome to the Severn Trent results Q&A session. I've got, the entire senior team, and obviously Helen as her first moment as our CFO, with James alongside as well as our outgoing CFO. With that, I'd like to open up questions, and I can see that the first question, Martin, is over to you. Yeah, good morning to everybody. Hope everybody's well. I've got sort of one sort of overarching question about the broader industry. You know, if we look at what's been playing out in the media, you know, recently, in respect of the GBP 10 billion that is going to be invested in wastewater, I just wanted to kind of check how this sort of stacks up because I look at the Accelerated Infrastructure Delivery project from Ofwat, the GBP 56 billion that was outlined by the government last August. Surely, you know, that is going into business plans in October. This GBP 10 billion that's been talked about widely in the press strikes me as not being new money over and above what's been talked about previously. As a consequence of that, it seems a bit cheeky that The Times is claiming that it's a victory for its campaign. I just wanted to check that my understanding there was correct about the money. Also, I think it leads into a broader issue around, you know, how the collective narrative is being managed by the water industry in aggregate. It doesn't strike me that it's being done in a great way, and collectively the industry needs to pull its socks up a little and gain some element of control. I just wondered what your sort of overarching thoughts were about, you know, where the industry stands at the moment in public consciousness and how collectively it can do a better job on the PR side of things. Very good. Couple of questions there. I'm gonna divide into 2 parts, right? 1 is the investment. I think the key story for the next 5-year period is time. We are going to be traveling GBP 3.1 billion has been invested in further improving and reducing activations from CSOs. In the next 5-year period, that's going to be GBP 10 billion. I think for the sector, and I think it is a really exciting commitment. That's the first part of that. Every company has to self-fund its improvements from an average of 29 across the sector activations a couple of years ago, down to an average of 20 by 2025. That's been a clear guidance by Ofwat, is that you will have to self-fund that improvement. We've made good progress on that. We've been working hard behind the scenes. You'll see that through our results today, our average actually is at 18.4. We've already made some significant investments. People sometimes refer to GBP 56 billion like you did. I mean, that's a Stantec report. I think what I would like to believe is that, you know, as we invest, I guess the GBP 10 billion, which the sector was committed to over the next few years, we'll get better, we'll get more efficient, we'll find different ways of delivering it. Certainly that's our expectation, is that we'll be able to continue to improve those costs to hopefully bring down that future bill impact. That's part of the question. Raise of the eyebrows versus a nod, but I'll take it. The second part I think is all around the reputation. I think last week was really important. I think what's clear from the public perception is that the sector did need to make an apology. It did need to accept that we could have gone faster and quicker on this topic. That's true for the whole sector, and we stand by the fact that that's exactly what the sector did. I think Water UK have got new leadership in the form of Ruth Kelly and David Henderson, and they seem to me to be doing a very strong job in their first couple of months. I think that's needed. I think the sector needed the reset. Now what we're gonna be judged on is around our series of commitments. Of course, there are different performance levels in the sector. The reality is the best companies need to continue to perform strongly and get better and better and set the benchmark. Companies that are struggling on performance areas need to continue to improve. I think that's the best we can say about it. I think the key issues that are the big topics Severn Trent has done really well on. If you look at our results today, we try to lean into this exact topic. We've got a whole slide, and I talk about the fact that we are under the spotlight. I think the big five measures, we've got a decent track record on CSOs improvements, leakage reduction and performance, making sure you don't have hosepipe bans so customers can have access that they want to water in the summer. It's been, you know, best part of 30 years since we needed one of those in our region. Making sure that we actually help on affordability. The biggest topic, if you talk to customers, is affordability and manage bills. Of course, making sure that we are a good, wider societal employer. I think if you take a look at that slide, it tries to bring out our track record and our desire to go further and faster. It's quite a long answer, but hopefully covers a few points. Okay. Thank you. Very good. Our next question is Sarah. Thank you very much. Good morning, everyone. Two questions from me, please. Firstly, ODIs. You met guidance for this year, and frankly, I don't think that should be taken for granted at all, given the challenging conditions. On that, could you please talk us through the strategic pivot that had to take place, if it did, given that some areas you would usually do well on were maybe more challenging because of the weather? Just wondering, you know, if the challenges of the year have actually meant you've improved in other areas because of your determination to hit the guidance for this year. Secondly, this is a super high level question, and maybe one for you, Liv. If you could devise a Christmas wish list of 3 things you'd ideally want from water regulation here in the U.K., what would those 3 things be? I don't mean specific numbers around return allowances. More a high-level question around the future of regulation and the framework. Really good. Okay. You're all starting with easy questions this morning. Not. I think it was a challenging year weather-wise. I mean, we saw the driest 5.5 months on record. We managed to see all of the rainfall. Actually, in our region, we got to about the 90th percentile on rainfall, but it arrived in 3 months, right? That is much harder to run a waste network on that basis, and that came through in terms of some of the underlying performance on a couple of the waste measures. We saw the freeze thaw. That was costly on mains burst. It's true, we did see some measures that have been friends previously, be less friends this year, and we saw some measures we expected to outperform on by bigger numbers, deliver less. I've always said that the most unique thing about Severn Trent is our culture. What we saw kick in was exactly that. As you say, a determination, but also we promise our customers a standard of performance, and we were desperately keen to get around 80% of our measures to be green, but also for our customers to see benefits year on year. We stepped in. I'm gonna ask Jude to comment a little bit on some of the stuff that her team stepped in on in terms of voids and meters, then turn to Steph, because we also did some lovely job on the environmental metrics, and we'll talk about the performance on those. Jude. Yeah. Absolutely. A couple of things in my area. These are the properties where we haven't been charging for consumption. We worked really hard to identify all of those, bring them back into charge with data, so that we were really confident that we wouldn't upset anybody. That was very successful, and we over-delivered, and we kind of accelerated out the tracks on that. Then metering actually, which was an even bigger uphill moment. We hadn't planned to extend our rollout massively last year. Actually, as we could see, other areas not performing in the way that we really hoped, we decided to, again, accelerate out the tracks with meters. We secured plenty of meters, we galvanized the team, and we worked dawn to dusk to try and make sure that we put all the meters in the ground that we could do, and again, we really overperformed there, so some great challenges and work. Steph, some highlights that came out of your Fresh Start. Yeah, absolutely. Thanks for recognizing it was a tricky year in some regards. We did do some great things for the environment, particularly around biodiversity, where we delivered a bumper year and really set ourselves up for what we want to do over the next couple of years as well. In pollutions as well, we had our best year on serious pollutions, and we're absolutely focused on driving all pollutions across all asset classes down over the next couple of years too. Very good. In terms of the what I'd love for Christmas, and it's actually something I talk about quite a lot internally, is things I'd like for Christmas. I often say to the team, "All I want for Christmas of you is X." It's good language. I'll choose two, and I know Shane's got one 'cause he's like giving me the look that says, "Right, I've got one. Yeah. Yeah, you can have one. The first two I'd have is, I think we're gonna receive is, we wanna step up in investment. We've said that we're ready. We're in a really strong place, and we look at the work we've done on capital delivery over the last few years and on underlying cost base, we feel that we can deliver really strongly for customers, but we'd like to see the next price review have a step change in investment. We're stepping up this year to our guidance on our own capital investments to between GBP 850 million and GBP 1 billion, and that's part of our AMP8 preparedness. We'd love to see a strong support by the regulator for us to focus on water resources, on net zero, and also for more support for us to head into continued river quality and environmental improvements. That's the first thing I guess we'd like. The second thing that we'd love for Christmas, I guess assuming we've got joyous investment, is we'd love clarity early on the price review. We've been quite open about the fact that we're confident of putting in a good plan. That plan will go in October. We'd love clarity as early as possible in the process. Now, I think last time round, we had a fast-track situation that's not formally built in yet, but we've been open with Ofwat that that's what we'd love, is early feedback to allow us to deliver for customers early by literally starting as early as possible with our price review. Shane, what's the thing you'd love for Christmas? I think we probably would like is one of the enablers, I guess, for what you talked about, which is more engineering expertise within Ofwat. It's gonna be a big investment plan, and I think it would be much easier for Ofwat to assess the cases if they have more capability. One of the reasons why we're quite supportive of the fact they're gonna be recruiting more engineers, 'cause they can assess more of our proposals. Very good. Hope that answers, Sarah, your questions. Absolutely. Thank you. Very good. Thank you. Dominic, we're over to you next. Hello, everyone, and special sort of hello to and goodbye to James. That is the last time that we're gonna see him. I haven't got a James specific question for you, so apologies. Two questions from me. Following on, I think the first one from Martin, in your response, you said obviously Water UK apologized on behalf of the water industry, and it seemed to me to be a unilateral apology. Do you think it's fair that the water sector should take the sole blame for the position that we find ourselves in with this sort of lack of trust, or do you think other institutions should also sort of step up to the mark and be culpable? Following on from that, do you think that the structure of the regulation of the water sector should change and what sort of oversight should we have, particularly in light of Labour and Keir Starmer's view of what to do with the Environment Agency and Ofwat? The second question is that interesting on your three Christmas wish list that you just mentioned? I didn't hear anything about returns. You're obviously gonna be publishing your business plans on October the second. Could you just give us some sort of color as to whether you are thinking that you have to follow the Ofwat early view or the Ofwat return numbers, which frankly, I think are in a, in another era, or do you actually think that you should have as a wish list a significantly higher return to reflect the world we now live in? Thank you. Very good. I guess let's do the second question first. The way the process works, as you know, Dominic, is you're meant to put in your plan using the Ofwat number, but you can also recommend what you think is the right and appropriate number as well. That is the named process. This time around, that is different to previous price reviews, where you had to just accept the number that was given. This time around, you can give evidence, you can say what you believe. I suspect that will be the answer for the sector, because from when the initial view came out from Ofwat, so much is happening, and they would say that and openly acknowledge that as well. I think they've been on record saying that they'll take the very latest data and the very latest macroeconomic position when they look at it, certainly the world continues to change. We don't ever get drawn on debating WACC in public, as you know. It's a conversation that we'll have with the regulator over the course of the price review process. That's as much as we say at this stage or any stage during price reviews. In terms of the first part, I mean, I think all the evidence says that consumers, they certainly hold us to a large degree accountable. Whether it is fair that we get so much negative press is obviously an interesting debate. I think, you know, we'd love to see that broaden out. The view for us as a sector, for us as a senior team, is that customers wanted us to make that reset. They wanted the whole sector to lean into that apology. That's what we needed to do. We stand by that we should, as a senior team, we should as a sector, have understood, you know, whether there's an archaic Victorian infrastructure that's existed for a while, it's not acceptable to consumers anymore, and we need to make sure that we do our part of addressing that. In terms of shape of regulators, I mean, they're hypotheticals, and I guess so I think we should leave that to governments and to regulators to work out their best position. What I do know is strong regulators are the best answer for the sector. Sectors that are seen to have strong regulators typically fare better. I think it's important as well, with the stuff that I think, you know, Ofwat have announced and the EA announced, they've also set out things they intend to do as part of their next wave of their journey, and we support them on all of those ambitions as well. Thank you. Good. Dominic, anything else, or should I move to Mark? Is that all right? Yeah. Please move to Mark. Very good. Mark, over to you. Hello. Thank you for taking my question. My question is more of an observation and then a question. I mean, the returns achieved are actually quite low, right? If I take the financing outperformance, which is mostly inflation-related. I mean, you're outperforming a slim amount on ODIs, and then you've got a base which is really just too low. I think as Dominic spoke about, you know, what's, you know, the provisional numbers for the next price control are just too low, right? It's all very well, the media criticism, but I'm not convinced those returns are enough to secure the investment required if you get a big step up in WACC growth at the next price control. I guess further to that, this is the question element for James, is that we saw you resort to equity markets two years ago to fund Green Recovery programme, which went tremendously well. How do you think about balancing returns and the need to raise capital? On that, the next possibility, you can't do the higher CapEx without the financability. Detail on our price review now, right. Our price review gets submitted in October. The regulators are more comfortable that this is as much as we'll say for five years with guidance. More on performance and how they make sure the sector is financeable. Don't forget, in their code, they have the notional company. It is different for us versus others, and they do need to make sure that company is financeable. On your first point, I think it's a bit harsh actually, to be honest, Mark, because if you look at the AMP6 returns and you cross-compare it to the AMP7 returns on RORI, then actually we're already significantly ahead if you take our cumulative average position. Ignore the base return, look at the actual outperformance and look at the total return. Our RORI performance at the end of year three in this AMP versus end of year three in last AMP is ahead. I know that we'd all like the WACC to be higher as well. Of course, that makes every chief exec's life better. But actually, you've got to play the cards you've got. We've played them really well in this period of time. Your point on financing, I think is. I think, I mean, we've been an upper quartile performer on RORI, I think, for the last 8 years, since the beginning of AMP6. If you look at specifically at financing, I think we've acknowledged that we've had a bit of a tailwind from inflation, but we've also delivered financing outperformance in 7 of the last 8 years. That's through periods of both high inflation and low inflation. I think, whilst acknowledging your point, I think we are good at finance, and we've successfully demonstrated that we can raise, you know, debt at competitive rates, certainly compared to the allowance. You know, our inflation strategy this year, you know, demonstrates that we can, you know, that we can provide higher returns in periods of high inflation, but also that we can deliver good returns when inflation is lower as well. I feel like, you know, we've I think it's been a good result, not just to factors out of our control. I think it's a key point. It's high inflation or low inflation. We floated on a basis at the time. We had a good strategy on that basis. That's what the financing team has led. In a high inflation, we had low index-linked debt, We fixed more, and that again has proven to be right. I think it's those active decisions in treasury management which have led to the outperformance. I think we'll probably own a bit of that, if that's all right. Very good. Okay, we're going over to James now for his questions. Yeah. Hi. Thanks for the presentation. I had one question for Liv and one for James. For Liv, you mentioned that the design of the regulatory system was up to the government. Do you see appetite on behalf of the Conservative or more, you know, tweaks around the edges? I kind of note that Labour, which was not calling for radical changes to the regulatory approach, but did have some things that sounded kind of in the manifesto. For James, could you just maybe help us understand a little bit what's going on with power costs this year? You know, maybe whatever detail you can provide, you know, something in terms of GBP or millions. Also, could you leave the message in the past has been you expected to stay within the Totex allowance for the regulatory period, net of kind of the issue around power costs, which you see when you take account the non-regulated business and the regulated business you see as being broadly neutral. I was wondering whether you could just confirm that that is still your expectation. Thank you very much. Thank you for your service and the great job you've done, James, and you enjoy your home retirement. He'll love the fact that you said the word service. We said he couldn't use the word service because only the Queen can use the word service. He'll be delighted that you've now legitimized that for him, James. That he's basically royal. Taking the first one, I mean, you know, I guess if you look at it, we are considered globally to have a very strong regulatory regime in the U.K. I think that continues, whether it's Ofcom, Ofgem or Ofwat. There are some fundamentals around economic regulators which have presided for a long period of time. What you tend to see every few years is you see evolution, I think we'll see continued e-evolution of that regime. At the same time, if you look at the key fundamentals that any government will want in power, it's investment. Every government will want scale investment into the transition world. It wants scale investment into net zero and into continued investment in nature and in rivers. I think the overarching consideration for any government in power is how do you encourage international investment to want to fund some of the big schemes. I think it's an evolution, not a revolution journey, but that's my sense of it. In terms of energy, I'll get Helen to talk about future guidance, because obviously it's her baby going forward. Energy first for James in terms of giving what you can for James on cost. Yeah. Power costs are gonna go up year-on-year. I think what we've done is we've given you some, you know, pretty decent amount of information about when we were hedging in the market. We're 100% hedged for the year ahead. Keep in mind that, you know, this, you know, the economic hedge is, you know, the thing that makes Severn Trent unique, that we've got, you know, in periods of high energy costs, you know, you've got that benefit of, of both green power and bioresources and the, and the sharing there. I've given you a little bit more information, I think, than I normally do in terms of what we think the overall impact's gonna be going forwards. You know, certainly we're seeing, you know, energy prices come down, particularly in year 5. We're already hedging. We've done about 30% of our net hedge for year 5, and we're seeing lower prices there. The important thing for us is when we look across the piece, you know, the impact on RoRE on 5 years, but also most importantly, what the impact is on the group. We, you know, we can show that actually the performance is quite modest. I guess we've given more information than we usually do, and I'll let you, I'll let you work out what the, you know, what that entails. Helen, overall cost base? Yeah. If you take out the impact of energy, we're expecting to be broadly on track with our Totex for the AMP. It's been a challenging environment, as you know. We've seen inflation in chemicals, as well as other areas. We'll see pay inflation. You'll have seen in our results that, if you take out the impact of energy in real terms, our cost base has been flat. We've got a really great track record of delivering efficiencies, and we'll continue to do that and manage our cost base very closely. Very good. Thank you. Thank you. Okay, Jenny, over to you. Hi. Morning, everyone. A couple of questions from me, please. Just following on from the last, looking specifically at your earnings growth. You obviously talk about strong earnings growth into next year because of, I guess inflation, dropping, flowing through financing and then also commodities, which you just touched on. Are you able to give us a sense of what that strong growth mean into this year and then also the further step up into next year? I'm looking at consensus here. We're looking at 75p of earnings 2024 and well over GBP 1. Are you happy with those sort of numbers as we stand? Because of the volatility that we're seeing across the piece, it's quite difficult to pin down earnings. Separately, more, bigger picture, two questions for Liv, please. One, just looking into next. Obviously, you've made a lot of your ODIs on bespoke this time round, and obviously things are moving or towards common. Can you talk a little bit about how confident you are at still being able to achieve some of those numbers that we've seen you guys quote this time round? The, what you mentioned earlier around affordability for consumers. I think You know, clearly, Ofwat has historically put a lot of emphasis on affordability in the past. Do you get any sense that this is now changing in terms of, you know, the need to invest in the sector? It's quite hard to be, you know, robust in any of the sort of investment requirement if priority is still on bills and bill sizes. Thank you. Perfect. Jenny, that's quite cheeky, you know, to try and get the new CFO to answer more detailed questions on guidance around consensus. As you know, we definitely don't get drawn on that, so I'm not handing over to Helen for that one in case she feels too nice on her first moment of results. We've given you as much guidance, actually more guidance than we've ever given before. We're gonna leave you to work out with everything we have given, your choices around that. In terms of the other two then. I mean, the key thing on ODIs is at this stage you don't know enough, right? The things that we know is we know that all the commons, and we know there are some friends amongst the commons. What we don't know is the rate. What we don't yet know is the reward rate on each of those common measures. We've had early drafts from Ofwat. They've said they're gonna reissue a different draft over the next few weeks, so it's too early to know for each individual metric. While Steph has already got some great work going on where we're understanding every metric, we're shadow reporting it. We know what we expect to put into our planners targets. We're reporting that. While we can see all of that detail, we don't have the unit rates, so too early to get drawn on any guidance for next sample ODIs. In terms of whether we think we can deliver strongly, yes. Does that translate straight into what that comes out to in a financial number? Too early to say, in all honesty. What we've said is we'll be a net positive performer. We're confident on ODIs, and we're confident that we'll be a positive high performer across the piece operationally. What that means in terms of monetary terms is unknown yet in the sector. But we do know, I guess, is that the commons will be worth. If you look at the net RoRE number, though, it won't be dissimilar to the combined common and bespoke number from this time round. Whilst we don't yet have the full detail of exactly which one's worth what, we back ourselves. As a senior team, we back ourselves that once we know which rates are worth what and which measures are good, we've still got 24 months to go to get ourselves in fantastic shape to make sure that whichever are the high-earning ODIs, we do well against them. That's as much as we can say on the detail we have available. On affordability, I think your question is about bill profile as much as affordability. I think Ofwat is clear and so are all regulators, the quality regulators as well, in terms of the EA and the DWI, that set the guidance of what they want you to spend money on. I think all of those regulators are clear that they want to see more investment, that they want to have a step up in terms of some of the big issues that we can as a sector lean into. They want that to occur. I think that there is an expectation that bills will increase off the back of that, and that's been well touted and well discussed, I think, across the piece. I think the key thing though is affordability is right at the heart of the conversation. Yes, bills will increase. That's different to whether every customer should any customer should fear their bill. What we've been doing is doing some really good stuff. I'll hand to you to talk about our current plans, and then Shane might just link into what, you know, we intend to do even more of in AMP8 on that affordability point. I think you've got to separate it from bill profile. Yep, absolutely. I guess, you know, we think we're an affordability leader in the sector. We're really plumbed into the other organizations, and we have a range of schemes, and our flagship is our social tariff, our Big Difference Scheme. We've driven up awareness and accessibility to that in the last year, and last year we announced that we expanded the scheme to include, you know, a further 100,000 customers. This year we're gonna extend the scheme to look at not just bill values for future bills, but also for arrears. I think we'll be working really hard to make sure that if there's anybody that can't afford their bill, they'll have all of the means and the access to us to try and get help with that. In terms of AMP8, we currently have one of the best or largest cross subsidies for our social tariff. Ofwat has given guidance and methodology that if you wanna increase this, you've got to do more customer research. Clearly we've been in the field, we expect to be able to announce as part of our plans some very positive news in relation to our social tariff. Alongside that, we'll be also looking at tariff reform as well. This is an area where Ofwat is increasingly supportive of companies doing more, and in particular on Rising Block Tariffs, where you have a low volume of water that's relatively cheap, and then you have quite punitive charges at the high volumes. I think we and a few other companies will be definitely adopting these trials. We've already had conversations with CC Water. We've already shared this information with Ofwat as well, our ambition in this space. Very good. Thank you, Jenny. Dominic, have you got your hand up again? Am I being greedy? No, that's allowed, as long as it wasn't an old hand. No, new hand's very welcome. Come back in. Thank you. I did actually check to make sure that there was no other people in the queue before doing that. A couple of questions from me, first of all. One's on leakage. Clearly yesterday, Ofwat announced an investigation into South West Water, which I know that your response to that is that you're not South West Water, so you're not gonna answer that. Looking at the asterisk on the ODI final sort of determination, there was actually four water companies that Ofwat had an issue with on leakage calculations, and one of them was Hafren Dyfrdwy or HD, I think is a better way of saying it. I know it's small, but would you mind just giving us some color as to why would there be a difference in the way that you calculate leakage between your two water companies? What are the issues that you see on the leakage? Secondly, leading on from your question on block tariffs, which always intrigued me. I think tariff reform is clearly needed. It's something that we've been quite active in sort of. Mm-hmm. How can you have tariff reform block tariffs, unless you have mandated new? The whole issue of water meters also needs to be addressed in order to meet the challenges facing water in spring. Thank you. Very good. Two questions for Shane. Yep. Okay. You're referring to the empirical documents last year. They're quite different, the HD and the Pennon issue that you referred to. Pan On was quite vague, and we understand why, following the news yesterday. The HD, Ofwat identified some improvements, in particular, how HD measures unmeasured consumption. It's using Severn Trent. They're called small area monitors. HD's now had them in place for 18 months, so they'll be able to address the specific feedback from Ofwat for this year. In terms of Rising Block Tariffs, you're right, you need metering, and not only that, you need smart metering. As part of the Defra accelerated investment, we've proposed to roll out 250,000 smart meters, which Ofwat has supported. We are of course water stressed according to the EA, which gives us the right to do compulsory metering, which is part of our Water Resources Management Plan. We'll be doing a large smart metering program obviously over the next 10 years, which again is in the Water Resources Management Plan. That gives us the infrastructure to do Rising Block Tariffs. What we've got to work out is how to set the rates. Because we know when we've engaged with customers with affordability concerns are actually a bit worried about Rising Block Tariffs because for their budgeting process, they wanna know how much they've got to spend. We've got to do this in small increments as well. Very good. Don't forget, we also had Green Recovery, didn't we? We've, and that's one of the things that's given us the impetus, but also the insight to be able to work this through, has been that. That's really helped us doing that scale trial in Coventry in the course of the last year. Thank you. Very good. Any further questions coming through? No. Currently none. We'll give it literally a few seconds just in case someone has a burning comment. Okay. No burning platforms. No further questions. With that, thank you very much for dialing in everyone. Much appreciated, and we'll speak to you all soon. Thank you.