Severn Trent predicted ODI reward rises to £15m

Severn Trent Water (SVT) has said the net reward expected from outcome delivery incentives for financial year 2015/16 has risen to £15 million from the £10 million indicated at interims.

In its latest trading update for the nine months to 31 December 2015, the water and wastewater company said the increase was down to continued investment in operational improvements.

The firm also confirmed that there had been “no material change” to the technical guidance for the full year.

The statement reiterated that the £372 million savings required in Ofwat’s Final Determination have already been locked in, with more being sought – a further £50 million was indicated at the time of the interims, with an update to be provided with the final results.

SVT chief executive Liv Garfield said: “Our customers are at the heart of all we do and we continue to invest in operational improvements to build a better business for our customers, colleagues and shareholders. I am delighted to see all this hard work is translating into a net ODI benefit, at this stage, of £15 million for the full year.

“Having locked in the savings set out in our Final Determination we are working hard to identify further efficiencies, while continuously improving our services, and will provide a further update with our results in May.

“There remains much to do, but this year is shaping up to be a great start to the current regulatory period.”

Whitman Howard utilities analyst Angelos Anastasiou said the trading statement is a “brief but confident affair”. “At these levels our [target price] indicates a total return of four per cent and we maintain our hold recommendation,” he said.

SVT will announce its preliminary results for the period ending 31 March 2016 on 24 May 2016.