Severn Trent Aktie

Brilliant. Good morning, everybody. I'm James Jesic, Chief Executive of Severn Trent. And I just want to welcome all of you to my first results announcement, obviously, Severn Trent's annual results announcement. I'm joined here today, obviously, with Helen and the rest of the executive. I hope you've all had a chance to look through our results presentation, and we're looking forward to some really interesting questions. Now before we start, there is a raise-hand function, that is the best way to get yourself onto the system and we look forward to the questions.

So I think there's already somebody in the queue. So Julius, good morning. How are you?

I have 2 unsurprisingly on the topic of reopeners. So the first one is, how did you come to this like GBP 600 million number that you've announced today? And how should we view this going forward for the next reopeners in the next coming years? Is that like a number that we could expect every year? Or does it depend on basically clarity on the remuneration of this? And that kind of leads me then to the second question. How do you think about funding from here? Because I mean, I guess the GBP 600 million is fully funded with your balance sheet. But do you believe there would be equity needs down the line if more opportunities like this come along? That would be quite useful.

Thank you, Julius. Well, I'll give an overview, and then I will hand to Shane to cover some of the specifics within the reoowner submission. So first and foremost, we've got a really strong track record of delivering RCV growth. And you've seen just from this AMP in terms of our final determination, the GBP 15 billion will deliver 60% RCV growth over that period. And when you compare that to the sector average of 50%, that's really strong. The way we've approached the reopener process is really take into account all the things, obviously, that we've already got in flight. So let's not forget, as part of our fund determination, we secured funding for cyber, for PFAS and for growth. And the reopener process includes considerations around asset health, cyber, PFAS and growth. So a lot of those we have already got covered through our business planning process.

But what we are thinking about and how we arrived at the GBP 600 million is how do we prepare our thoughts and our plans for the future. So we're already cognizant of AMP9 and transition spend and all that good stuff. So we're really thinking about how the reopener process may actually help us in terms of that particular plan. And our focus has really been on how do we use particularly the asset health aspect to provide further information and details to support those plans going forward. So in terms of what might happen for round 2s and 3s, we're not going to comment on that at the moment today.

And I'll come back to the equity answer in a second after Shane just put some more color on the.

Yes. Thanks, James. So yes, whilst the GBP 600 million extra investment is really important, the real prize from the reopeners is unlocking investment in asset health, and that's critical for 3 reasons. The first is that all stakeholders from Cunliffe, the government's White Paper, the National Audit Office have all called for more investment in improving asset health.

Second reason is the pricing mechanism hasn't traditionally allowed companies to increase funding to improve asset health. And third, which is relevant for Severn Trent is we are one of the largest companies. So we have the largest water network. We have the most water treatment works and distribution service reservoirs. On the waste side, we have the second largest sewage network outside, so after terms. And again, we have the second most treatment works. So there's a lot for us to go at. And so that has really driven our approach in terms of the reopeners.

So if you go into the specific cases, so distribution service reservoirs, we have GBP 479 million, and we're proposing to invest GBP 221 million to renew 2% of those. So again, a lot more opportunity in the future. On sewers, we have 93,000 kilometers of sewers. So we're proposing to spend GBP 175 million on renewing 172 kilometers. Perhaps the most exciting part is we're doing AI-enabled inspections of just under 10,000 kilometers of sewers, and that will define the future renewal rate at PR29 onwards.

On boreholes, we'll be renewing 11% of our boreholes at a cost of GBP 25 million. And then on growth. As James said, we had GBP 700 million at PR24 for growth at Sewage Treatment Works. And whilst the world hasn't moved on that much in the 15 months since the FTE, we have identified a bit more growth in 8 catchments. So we're spending just over GBP 50 million in those 8 catchments to expand the treatment works.

Brilliant. Thank you very much, Shane. And in terms of the equity question, Julius, we raised equity, as you will all be well aware, at the -- just prior to the start of AMP8. And we were very clear that, that would see us through to 2030. Those plans haven't changed. If you look at our performance over a period of time, we've not only been able to give gearing guidance at the end of the AMP, which obviously was in the range of 60% to 65% by 2030. We've also got some real choices through that outperformance.

So if you think about ODI performance since 2021, we've delivered GBP 0.5 billion worth of upside. On top of that, if you overlay things like the capital efficiency program, it really does give us choices. So more to come at some point in the future around our plans for 2 and 3.

Okay. Thank you, Julius. Sarah, welcome. I understand you're calling from New York. So what time is there.

It's perfect time for a Severn Trent call.

Brilliant. Thank you Sarah. We appreciate you joining us.

Of course, of course. A couple of questions from me, please. So the first one is on the upgraded FY '28 EPS guidance. Just wondering if you can walk us through the drivers of that. Obviously, today, you've posted a very, very strong yet again ODI result, and that may contribute given the T+2. And then secondly, on the ODI result today, just wondering if you can walk us through a bit more color on the areas of strength, the areas that remain development areas, work in progress. And then obviously, that contributed today to a very strong RoRE versus the guidance you gave in November. So any more color on the building blocks there as well?

Okay. Brilliant. Thank you very much, Sarah. Well I'll tell you what I will do, I will give a bit of an overview from an ODI perspective. I'll then hand to Steph to cover -- I mean, Steph there does the bulk of the ODI delivery. She can cover off some of the highlights from her perspective and some of the areas she's focused on. And then I will let Helen cover off the upgrade on guidance and perhaps the impact on -- from a RoRE perspective, if that's okay.

So in terms of ODIs, we are genuinely delighted with our performance. 78% of our metrics were green, which shows the strength of performance delivery across the business and across a whole suite of metrics, both for waste and water. That really does mean we are delivering for the customers and for the environment. Obviously, nowhere near resting on our laurels and there's always more that we want to do, but we're delighted with the GBP 73 million worth of performance.

And we're also really pleased to set a guidance number of at least GBP 50 million in nominal terms for next year. Again, just credit to the strong performance-driven culture that we've got within the business. Now that bear in mind is also against the backdrop of some subtle changes. So we're seeing some shifts in pollutions the environment agency are changing the classifications of pollutions. And of course, there will be an impact from how Ofwat then treat those. But that aside, we are still committing to deliver that level of performance, which just shows the strength and depth we've got across the business.

I'll let Steph cover off some of the highlights.

Sarah, thanks for the question. So at Capital Markets Day last year, we said that we were going to go big on leakage, pollution and spills, and that's what we've done. So we've reduced pollutions by 1/3. We've reduced spills by 41%, and we've improved leakage by 8% year-on-year, which is absolutely fantastic. We've also had some really big wins on D-Mex and biodiversity, where we've met the cap, which is great.

As James said, there's some change in targets this year. So stand in spill actually costs us GBP 20 million. So we're already on the front foot, and we're going after every single measure. So this year, we've reduced floodings by 12%, but we're excited about what more we can do there, particularly using AI. So we've got StormHarvester, which monitors the waste network. We think we've got some excellent improvements to make in that space. We've also now got 600,000 smart meters in the ground, which is going to help further with leakage and with PCC.

Brilliant. Thank you very much indeed, Steph. And I'll let Helen cover off the growth.

Thank you, James. Sarah, good to see you. Yes, so really, really pleased to be able to upgrade our guidance for FY '28. And there's a few key drivers. Number one is, obviously, we've delivered much more strongly on ODIs than we were anticipating earlier in the -- when we gave the guidance, and you'll see that come through our revenue. We've obviously had a stronger exit this year. We're at the lower end of our guidance for operating costs. And part of that is our drive for efficiency. And we're really confident that we've got a good program, which is why today, we've committed to GBP 150 million of operating cost efficiency on top of the capital efficiencies that we'd already committed to.

And to put a bit of color on that, we're using AI across the business, and that's really helping us. And I'm sure you'll hear some of that today about how we're using that. On our retail costs, we're better -- we're benefiting from the rollout of our new billing system. So -- and we're really focused on removing cost of failure as well. And we're really seeing the benefit of the in-sourcing we've done on waste for that. So our waste volumes are down year-on-year as a result of getting things right first time. So there's a number of levers that give us confidence to upgrade that guidance.

Do you want to go back to the RoRE question? Yes. So yes, so on RoRE, there's a few things that are linked as well. So ODIs, obviously, better performance on ODIs that flows through to RoRE. And on financing, we've had another strong year. We've continued to beat the index on all of our new debt issues. We've made some significant debt issues this year. We've raised GBP 1.8 billion in total. And we've done that all at some of the tightest spreads in the sector and lower than the allowance. And there is a benefit from inflation, of course. And one of the big items that we didn't know about in -- when we gave the guidance was tax. So in the RoRE calculation, the Ofwat guidance came out after we've given the guidance. And it's the way we get credit for essentially deferred tax. The RoRE assumes 0, but we actually get credit. So that's the driver of it. So we've just reflected the Ofwat guidance.

Brilliant. Thank you very much, Helen. Thank you, Sarah. Pav, good morning.

Congratulations on a strong set of results. I'll keep my questions maybe a bit bigger picture. Firstly, James, can you talk about your relationship with stakeholders, politicians, given we're now 1 year into the AMP? Do you feel like support has increased or otherwise from politicians, customers in terms of your increased investment, obviously conscious that that's driven bill increases for customers?

And secondly, in terms of the follow-through from the Cunliffe review, we have the White Paper at the start of the year. Can you remind us what else we should expect in terms of the time line of the recommendations of the review being implemented? What legislation we should look forward to and when we should expect to see some of those changes being meaningfully implemented?

Of course. Thank you, Pav. In terms of our relationship with stakeholders, I mean, we've always enjoyed a very strong relationship both with MPs of all parties and of course, with regulators, and we see those as constructive relationships that need to be in constant dialogue, and we have maintained that, and we will continue doing that. So that is really positive. In terms of your question around customer support, in terms of our reopeners and of course, our ODI performance, we are really conscious of potential bill impacts. We are in a cost of living challenge across many areas. We've seen fuel prices increase. We've seen energy prices increase. And we're really, really conscious of that. Hence, that was part of our consideration.

But one of the things we did do is we actually spoke to a number of our customers. We surveyed the customers as part of our reopener process, spoke to about 2,000 customers. And 3/4 of them actually supported our approach because they could see that our investment proposals really helped growth and development in their particular local areas. We think it's vitally, vitally important to make sure that we have strong local connections and really in service of the needs of those particular local communities. So that's a big area of focus for us and has been, hence, the reopener process, which we think will be a key to enabling those future investments, as Shane articulated earlier.

So very conscious of it, and I'll let Jude in a moment talk about some of the additional support we're providing from a customer perspective as well, just to give a bit more color on that. In terms of the Cunliffe process itself, I mean we wait and see really. The Cunliffe has been the clear direction of travel for a while now. We obviously saw the White Paper come from the government.

And you would have all seen in the King's speech last week that we basically -- the direction of travel was reiterate there will be a single regulator and the aim is to get a sector that is a strong performing sector that is investable, but delivering for the good of society, and that's absolutely aligned with our values. So in terms of time scales, we await the transition plan. Once that's out, we will obviously respond to. But in the meantime, we will carry on doing what we are good at, and that is delivering for customers, for the environment and of course, our shareholders.

Now I'll hand over to Jude and cover off some of the customer support that we've been giving this year.

Pavan, thanks very much for the question. As James said, we totally understand that higher bills can cause real worries for our customers. And so we have a great range of support for the most financially vulnerable customers. And we've also made some changes to make the access for that much easier. This year, we've invested GBP 127 million to support 330,000 customers already. And across the AMP, we're committed to spending GBP 575 million to support customers.

And that's 1 in 6 of the families in our region.

We don't just wait for customers to reach out to us if they're worried. We also are working hard to identify those customers who are likely to need that support and then proactively reach them and even passport them to support without them needing to do anything. So that's great. But it's not just about help with the bill. We're also really keen to help customers reduce their bill. And we know for a fact that many can save money by moving to a MSA. So we're encouraging more to make the switch, and we really hope that, that's a way to make bill rises more palatable.

Thank you, Jude. Pav, that answer your questions? Good morning, Dominic.

Congratulations on your first set of results. I'll ask 3 questions, if that's okay. Apologies. The first one is on C-Mex, which I don't think you've mentioned much on your ODIs, but it's clearly the customer experience is looking a little bit weak. I think you got GBP 28 million penalty this year. Could you explain why customers are not experiencing or not coming across as being enjoying the experience of being with Severn Trent and what you're going to do to mitigate it?

Secondly, can you also confirm whether there's any expected timeline for resolution of the Ofwat and the EA investigation and whether you see outcomes more like the financial penalties, enforcement undertakings or neither. I think clearly we've got a date for pen on, I think, with the EA. I'm curious as to what the development is for you.

And the final question is, your RoRE is looking very high, clearly being driven by inflation. Do you think that if we have another year of high inflation, which looks likely and another year of very high RoRE next year as well, that there's going to be some form of debate similar to Ofgem where we're going to end up with a sort of a real phenomenal switch at all potentially coming into the water sector.

Okay. Brilliant. Thank you very much indeed, Dominic. So I'll cover off the first 2 and then perhaps let Helen explain the inflationary impact on RoRE and how we see that playing forward. So first of all, C-Mex, I think you're absolutely right to call it out. C-Mex has been a measure that we haven't performed well enough on. But if you look at our ODI performance, ODIs are actually a key driver of the service that customers -- the vast majority of our customers receive on a day-to-day basis. And well over 90% of our customers have no need to contact us because they enjoy that level of service as we've seen with the GBP 73 million worth of outperformance that we've delivered over this last 12-month period.

So the vast majority of our customers receive brilliant service every single day. We do see an opportunity to improve though, but it's not just about C-Mex. Now I've just completed 70 roadshows around the business. And my key priority to the organization has really been, how do we make ourselves just a bit more customer-centric. We've got such a strong performance-driven culture. How do we make sure that, that is really focused on giving customers the best possible service each and every single day. So that's been the theme of the road shows, and that's really starting to make a tangible difference within the business.

But as I say, it's not just about improving C-Mex. What it's about is how do we resolve failure, prevent failure happening and also at the same time, make ourselves more efficient. Now Jude can talk wax lyrical about the sort of stuff that we're doing from a Kraken perspective, and I'll hand over to Jude in a moment. But we're also doing lots on the operational side to really continue to improve that service. And again, I'll hand over to Steph in a second. So that -- all that is resulting in a much more customer-centric organization that ultimately will deliver for all customers.

Now I'll hand over to Jude, who can just cover off the improvements that we've been seeing from Kraken.

Dominic, I guess the Kraken implementation has enabled us to replace an aging asset with a modern and secure CRM platform, and that already includes embedded AI. And the implementation completed with really great transaction integrity. And what that simply means is that we've managed to do that without any bumps to revenue or cash collection, which is good news. But you're right. Right now, we are turning our full attention to harnessing the power of Kraken to deliver [indiscernible] type customer service experience improvements.

Our portal has just been through a complete refresh, and our customers will see more improvement on key journeys, things like metering and house moves. And that's really helping to remove friction and reduce customer effort. So all in all, it's been a great partnership, but we're going to continue to benefit from Kraken right through our AMP8 and AMP 9.

Brilliant. Thank you, Jude. And Steph will cover off what we're doing on the operations side, particularly in waste.

Yes, absolutely. So on water and waste, we know that 90% of the customers that have to contact us have a really good experience. We also know that when we send an engineer, customers really enjoy that, but there are absolutely some areas that we can improve. And we've got a new campaign called One Call is all it Takes, and we're focusing on 3 things. So the first thing is response times, particularly on floodings. We've already improved that by 80%, but we've still got more to do in that space.

The second is around when we need to do follow-on work, we need to involve our customers more. So I think in the past, we've assumed that we'll just crack on with doing some civils, and we don't need to tell the customer about it, but we know now that we need to. And the third is around KCI. I think customers' expectations have changed a lot in that space. And we've been doing the basics, and we need to do a lot more around that. So I'm really confident now we know the right things to tackle. We've got the right people. We've got the right measures, and we're already starting to see some of our internal measures moving in the right direction.

And for those that don't know what the [indiscernible] KCI means it's keeping customers informed. So just to bring a bit of color to that. Now in terms of the Ofwat and EA investigations and the outturns of those, truth to be told, Dominic, we are continuing discussions with Ofwat and the EA, and we are just awaiting what the outcomes might be. We haven't got any time scales for those. So we will just by that time and see what comes out of those investigations going forward.

And I'll perhaps hand over to Helen now to cover inflation impact on RoRE.

Dominic, good to see you. Yes, I mean, you're right. We have benefited from inflation being higher than the FD in our financing costs. But we shouldn't assume that it's all down to inflation. The fact that we don't tie ourselves to the Ofwat notional company structure in terms of gearing is a benefit. The fact that we've got a lower -- one of the lowest index-linked debt in the sector also gives us a benefit. That's been a purposeful strategy of ours for a long time, and we see that it benefits us.

On your point about the Ofgem sort of semi nominal thing. I mean it's not something that I've seen is on the agenda. So it is hypothetical. But we have looked at the Ofgem approach, and it's not something that concerns us. So there are upsides and downsides with that model. So if it happened, then that wouldn't be a problem for us.

Brilliant. That answers your questions, Dominic? Good morning, Mark.

My first one, I guess, would be more for Shane. Just on -- can you clarify where we are on receiving in period remuneration for the GBP 600 million and potentially more in future years. As I understand it, Ofwat's opening position is no, it has to be funded by companies until 2030, but there are discussions with government and Ofwat to try to put through some bill rises late review. So can you talk about what you're assuming and where you see that debate going?

Secondly, a question for Helen, just on capitalized interest. Of course, as you ramp-up CapEx, capitalized interest comes through, it's an accounting, not a regulatory construct. But can you remind us what you're capitalizing the interest at? Presumably, it's the marginal cost of debt? And how that credit to the P&L is expected to progress and whether that drives some of the earnings growth over the coming couple of years?

Brilliant. Thank you, Mark. Good. So for those of you not familiar with this, so the default position for reopeners is that the revenue adjustment will occur at the end of the AMP. However, we move growth to one side, for the asset health business cases, you can have in-period funding. However, to get in-period funding, you have to do a couple of things. First, you got to undertake customer research, and that's really about understanding do they support the bill increase now or would they prefer to have it at the end. So we engaged with 2,150 customers, and they, over 3 quarters, supported our proposals and found them either affordable or neutral. And that 3/4 of support included our ODI outperformance as well.

So we gave them a forecast of ODI outperformance, inflation and the reopeners. So we have a really good strong position there, and it adds about GBP 8 to the bill by 2030. And you've also got to be on track with your delivery program. And as we've spoken about in our results, we're not only on track, we're exceeding it, which is why we've got positive PCD performance. So those factors combined gives us the means to getting the in-period funding.

The one exception is growth. So for your year 2 element of growth, there will be no imp-period funding, but Ofwat is going to consult on it next year for years 3, 4 and 5. So for the circa GBP 60 million that we've got now, what we'll spend next year wouldn't get the imp-period, but the spend thereafter would get imp-period funding. So we'll be engaged with Ofwat through that process. But we've met the conditions for impairment-period funding.

Thank you, Shane. Helen?

Yes, I think on capitalized interest, I know others have made some accounting policy changes. None of our earnings growth comes from accounting policy changes. They are as they have always been. But having said that, it will change in capital investments and as our capital investment grows relative to our operating costs, you'll see a shift, but our underlying policies have not changed.

Happy with those Mark? Good morning, James. How are you?

I also have 3 questions. Hopefully, that's okay. The first one, obviously, there's been quite a lot of volatility in share prices and in the sector over the last few days on the back of prospects of Andy Burnham standing for the PM role. It's a bit of a sensitive topic to talk about, but he's been talking about taking government control or greater government control and sometimes that's been written up as nationalization. I don't think that's the language he specifically used. But I was wondering whether you could just share your thoughts. I don't know if you've had any contact with him or his team as to kind of what you think you might be thinking and how that affects you? That's the first question.

The second is on the ODIs. You mentioned that there have been a stronger-than-expected start on ODIs. And also you've got new targets on operating cost savings. So I guess the obvious question is kind of why didn't you increase your across period GBP 300 million target for outperformance given everything seems to be going much better than expected or at least certainly somewhat better than expected. Second question.

And then thirdly, on the ROE, I get that you want to kind of follow the Ofwat methodology, but I was just wondering on your thoughts on this tax slab of the RoRE, it's quite material. And as I understand it, it wouldn't be very likely to be actual genuine economic outperformance given that Ofwat sets the cash -- the tax -- I should say, tax allowance in your revenues in line with the expectations for cash tax. So assuming it continues to do that, you wouldn't actually be generating any tax outperformance. So should we be kind of stripping that out if we want to look at the kind of underlying economic performance?

Brilliant. Thank you, James. Getting into the meaty questions there. So I will hand over to Helen after I've covered off the first 2 to talk about your words, the tax slab on RoRE. Now from a political perspective, I mean, let's be quite frank, there's a long way to go, and we've learned over the years that politics can be really noisy. What we are focused on, and we remain focused on is a company that delivers for its customers, for the environment and of course, for its shareholders.

Now the words that you spoke about from Andy Burnham's perspective, I think his quote was better or more public control and well-run companies for public good. And to be quite frank, that aligns absolutely with the values of Severn Trent. We are a company that prides ourselves on being a well-run organization, and you will see from all the work we do outside of just providing water and wastewater services that public good is really front and center of everything that we try and do each and every single day. So we're well on board with that.

I think in terms of the direction of travel, we saw that the King's speech I've already referred to it was referenced last week, and that sort of cemented the direction of travel in my mind in terms of we are heading for a new independent regulator. And what the whole purpose of it is to again ensure that we've got well-run companies that are financeable and can deliver and support the long-term growth trajectory of the U.K. So that is where and how we remain from that perspective.

In terms of the ODIs, I think it's a really good question. Obviously, we are delighted with the GBP 73 million, unbelievable performance across the business and testament to, again, this really engaged, highly performance-driven culture that we've got in the organization. We will continue to push the boundaries wherever we can. Now as Steph alluded to earlier, just by staying still, there will be a GBP 20 million reduction on our ODIs. The target to ratchet up each and every year. So the fact that we've committed to at least GBP 50 million in nominal terms I think it's a testament again to the culture and the ambition inside the company.

We are in year 1 of a 5-year regulatory period. So we're not going to be bold enough to say that GBP 300 million is up for an upgrade yet. But we also have to take into account the fact that things have moved. And the environment agency have changed the classification of pollutions. And of course, we're waiting to see how Ofwat may then flow that through from an ODI perspective as well. So all of that is uncertain. So where we are, we're really confident with what we've committed to and look forward to delivering again next year.

And now I'll hand over to Helen to discuss tax on RoRE.

Thanks, James. Hi James, good to see you. Great question. I think it's -- yes, I think it's a great question, and we've had that debate ourselves internally. I think if I think about the returns that we're delivering, hopefully, you will have seen the presentation, and we've got this track record of consistently delivering above the base return and those double-digit returns that you can see this year and in previous AMPs.

Obviously, our ODI performance is leading. We've delivered so much outperformance from that. We've also got the 30 bps from our outstanding plan, which we get on our whole GBP 15 billion that we secured in the FD. And of course, in financing as well, benefiting from both our capital structure, but also the fact that we've got tight spreads and a really high demand for our debt. And so all of those multiple levers that we've got to outperform, we see that continuing.

In terms of the tax, we want to be consistent with what you'll see in the APR and the measure that you'll see through the APRs that we will give to Ofwat -- but it's not our focus. It's just -- it is a function of the math and our focus is on all of the other things that are driving those double-digit returns.

Brilliant. Happy with that, James? Good morning, Alex. How are you?

2 from me, please. Just one is a little bit of a follow-up on the ODI point from James' question. Just in terms of what you were saying about the GBP 20 million charge for standing still, can you just clarify, is that from where you outturned on ODIs or where you thought you were going to outturn when you set the original guidance? I'm just trying to understand whether the performance that you've done in year 1 is giving you some carry into next year in terms of underpinning that at least GBP 50 million?

And then my second question is just on the GBP 150 million of cost efficiencies, GBP 36 million in FY '26. I guess 2 parts to this. One is, is it fair to assume a relatively linear run rate on those cost efficiencies to 2030? And then secondly, just on where the easy wins are and what might be more challenging?

Brilliant. Thank you very much indeed, Alex. So just I will cover off the ODI piece. I'll give you a bit of an overview on -- in terms of the efficiencies. And then I'm going to hand to Steph to talk about how we're using AI, particularly in her space. And then we might hear from Bob as well in terms of some of the innovations that will also contribute to those efficiencies. So first and foremost, on the ODIs, I probably wasn't very clear. So in terms of what I meant was, from an ODI perspective, the targets ramp-up each and every year. So if you stand still, effectively, you don't outperform to the same degree.

So even if we deliver the same level of performance as we have this year, effectively, our ODI outperformance would be GBP 20 million lower. So by setting our guidance, what we're effectively committing to is everything has basically been reset. We're committed to delivering that GBP 40 million -- sorry, GBP 50 million in nominal terms outperformance against the backdrop of a particular change in pollution. So that's where we are from that perspective.

In terms of the efficiencies, I spoke earlier about the customer centricity we're going to drive in the business. That will obviously lead to a real attack on failure that we do sometimes see, not obviously for the vast majority of our customers, but when we do get it wrong. By addressing that failure, we will actually start to deliver some real cost reductions as well around the cost of failure. So we're looking forward to seeing that come through in the business. But we are really committed on the artificial intelligence journey, and that is well embedded in the organization. We've seen some exciting stuff already, and there's a lot more to go.

And I'll hand over to Steph to cover some of that first.

Yes, fantastic. So we've got loads of insight about our water network. But when we in-sourced our waste networks team 2.5 years ago, we realized there was a huge opportunity on waste. So we've put 1,000 more sensors in the network, and we've really embraced storm harvester. So our control center here in Coventry uses the data across the network, across grid domains and pumping stations to predict and proactively attend before things happen.

So that means that we can get to problems before they impact on customers, but also before they become too costly. So we don't have to put reactive measures in place. We're ahead of the game, and we've got teams dedicated to go and fixing those things before they actually cause a problem.

Brilliant. Thank you, Steph. And then I'll let Bob in a second talk about some of the things that he's seeing from an innovation perspective. But let's not also forget that we're delivering GBP 500 million worth of capital efficiency. So after Bob's covered it, I'll hand to Paul Baxter, who will cover off some of the stuff that we're doing from a capital delivery perspective also. So Bob?

Great. So I'm going to talk about a couple of AI examples. So the first one is actually around how we predict the weather using AI at the moment, which actually is really helpful in us using our cheapest source of water. So for example, last summer, we were able to deploy the cheapest sources from some of our gravity-fed areas rather than the pump sources. So that's a big efficiency win. Another area I'm looking at is sewage pumping stations efficiencies. We've got over 200 installations live now using machine learning, which optimize how pumping stations work together and optimize pump curves. So that's a brilliant example of that.

Brilliant. Thank you very much indeed, Bob. And Paul, would you share some stuff you're doing in capital delivery?

Yes. Thanks, James. So we're covering a whole range of opportunities in capital delivery to deliver that GBP 500 million. But if I just take on the theme of AI and just take that a little bit further. An example of the sorts of things we're doing with AI is we've got a number of cross-country pipelines that are being delivered this AMP. So big pipes over long distances. And we're using AI to do route selection in order to -- so AI can do thousands and thousands of options on route selection and things that would take months can be done in hours literally now, which take a lot of time out of the design process. And the route selection is to try and avoid things like canals and motorways and all of the other things that make delivery of cross-country pipelines expensive.

Brilliant. Happy with that, Alex? Thank you very much. Dominic, is that a legacy or have you got some more questions?

I've got a couple more. Sorry, you can't give me that -- two questions. Firstly, could you just -- you mentioned a couple of times in this presentation about the change in EPA scores going forward. But you've got -- you had 2 serious incidents through 2025, 2 serious pollution incidents. Do you think that on how it's currently panning out that you'll still be able to maintain the top sort of score? And I know that Liv was going to be upset that you might have been a 5-star CEO rather than a 4-star CEO, but whether or not you'll be able to maintain sort of the top score.

And secondly, looking at your reopen again. And one of the major sort of growth themes that we see in the water sector is water resources and you talk about population growth and climate change. But is there nothing in your submission sort of pre-FEED very big sort of DPC type assets here? Or do you have any sort of lined up? Or is this going to be year 2, year 3 type projects?

Okay. Brilliant. So I'll cover off some of the -- your EPA question, and I'll perhaps hand to Steph to give a bit of color on our pollutions aspiration and how we're really going after that as a measure. And then from a reopener perspective, I will give you a bit of color on our new treatment works, which we've opened and perhaps Shane could share some of his views on where we're going from a water resource perspective.

So first of all, we are genuinely delighted to be on course. We're highly confident to achieve EPA 4-star for a seventh -- let me say second, seventh consecutive year. For context, the next best company in the sector did it 3 years in a row, 10 years ago. So we have continually sustained the highest level of performance, which we are absolutely delighted about. Now let's not forget that EPA is a number of key metrics. There were 6 metrics for 2025. And effectively, you have to perform well against all of those metrics. One of those metrics is overall pollutions and one of those metrics is serious pollutions.

And we've enjoyed a 35% improvement in our pollution performance due to some great work across our operational teams, but also some of the key investments that we've been making across some of our key assets such as compensation. So we're delighted with that. But from a serious pollution perspective, the serious pollution is effectively a function of duration, length and impact. And our whole plan is really focused on, first of all, how do we prevent things happening. When things do start to go wrong, how we catch them early, so we can proactively intervene and prevent it happening in the first place. And then when things do happen, how we respond even better than we currently do to mitigate any potential impact.

And Steph can share some of those thoughts.

Yes, fantastic. Thank you. So in terms of preventing, so we've invested more in proactive work on our network, particularly planned cleansing, which means that we've had fewer pollutions related to blockages. I've also mentioned all of the centers that we've got on our network, too, which means that our new waste OCC, operational control center, that operates 24/7 can respond faster. And we've also invested in a fantastic pollution response team who work around the clock to go and prevent and mitigate pollutions when they do happen. We know that every serious pollution is one too many. We review myself personally and the waste team every pollution that we have in order to learn from that, improve our processes, work out what we need to do differently, but more importantly, make sure that pollution never happens again.

Brilliant. And in terms of the water resources question, Dominic, so we have just -- or we will be commissioning -- or we are in the middle of commissioning, sorry, our newest water treatment work. I think it might even be the newest water treatment works in the U.K. at the site in Derby, which will give us an additional 89 million liters of water each and every day at peak. So that will be available for us in the summer should we need it and will obviously be a key asset for us going forward in the future. On top of that, you will have heard and we've talked previously about strategic resource options and that sort of stuff is still continuing in the background.

But I'll hand over to Shane now to share some of our thoughts for PR29 and beyond.

Yes. So you're right to focus on water resources. So we will have roughly 0.25 million new houses every 5 years. That's a city the size of connecting to our network. We've also got a program called Environmental Destination, where we need to reduce groundwater abstractions. So that means we're going to have to replace about 20% of our water sources. So we do have a lot of investment required on water resources.

I think where you go though from a regulatory process is we've got Rapid. So that was the EA, Ofwat, DWI process set up to fund water resources. So we have 3 large new schemes going through that process.

So it's not through the reopeners, it's through a slightly different process. And we've got a scheme working with the Canal Rivers Trust on one of a big water resource option. We've got one with the Mining Remediation Authority to take -- because they've got excess water. So we'll obviously want to take it, and we've got one in South Yorkshire as well. And if we need more water resources, we can go through the Rapid process.

I think from a reopener perspective, the one avenue where you could get more water resources is through mains renewal. So obviously, we're ahead of our target. And so in round 2, you can go after -- you put in a proposal for more mains renewal. And obviously, that has a longer-term leakage benefit.

Brilliant. Happy, Dominic? Thank you very much indeed. Julius, obviously, Dominic set the trend now for Pete to come back and ask another question. Over to you, please.

Sorry to be paint. But I think 2 things. Just the first one was, I think in my previous question on equity, there was some background noise. And apparently, it was not just for me, I got some feedback from investors as well. So if you could maybe just repeat the message that you put out just to be absolutely sure. And then I was thinking, well, I'll raise my hand again. I can ask another question. So I was just wondering the above 250p guidance now that you put out, how dependent is that on inflation normalizing over the years? I mean I know you have your inflation assumptions going forward. But if inflation would stay at the current levels, would you still be comfortable of reaching that? That's the last question.

Okay. Thank you, Julius. So I'll cover the equity question again, and then I will hand over to Helen. So equity, I've said before that effectively, we raised equity prior to AMP. We were very clear from the that would see us through to 2030, and that position hasn't changed. Now over the years, we've been able to outperform from an efficiency perspective. I mean, Paul talked about some of the work he's doing within capital delivery, which is leading to GBP 500 million efficiency, but also the work that we've done through ODI delivery over all the years.

We've delivered GBP 0.5 billion worth of ODI benefits since 2021. All that outperformance gives us real choices. So as it stands, we are not going -- well, we are not raising any further equity until for this AMP period at all. So that is clear. I hope that's clear, despite me stumbling, but that is clear.

And then in terms of the guidance, I'll just hand over to Helen.

Yes. Julius, again. Yes, I mean, I've probably said before, we're always cautious and prudent with our inflation view. So we look at a number of indices. So yes, my -- and I wouldn't put something into the market that wasn't confident of delivering in any scenario. So yes, you can rest assured that we've looked at that hard and are confident with the earnings. And you also noticed that it's at least 250p.

Thank you, Julius. I appreciate you picking up that equity question wasn't necessarily heard first time around. So thank you for doing that. Much appreciated. I think that is all the questions. I just want to say a huge thank you to everybody that's dialed in. I appreciate all the questions, and thank you to all of the Severn Trent team as well. Much appreciated. And look forward to seeing you all soon on road shows. Thank you very much.

Hello, everyone. I'm James Jesic, Chief Executive of Severn Trent, and I'm delighted to be presenting my first set of annual results here from Edgbaston in the West Midlands, a few miles from where I grew up and right next to Birmingham City Center. Now we're entering a period of sustained long-term growth across the sector, driven by structural trends. These include climate change, population growth and ever-tightening environmental standards. And I'm going to be bringing some of that to life about some of the work we've been doing here in Birmingham, the U.K.'s second largest city and home to 1.2 million people shortly.

But before I do that, I'm going to head inside and take you through the highlights of what has been a really strong year for Severn Trent. Our strong performance and execution of our record investment plan is delivering for all stakeholders. We have met or beaten around 80% of our customer performance incentives, delivering GBP 73 million of reward whilst making tangible environmental improvements, including reductions in spills and pollutions, ensuring we remain on track to deliver EPA 4-star for a seventh consecutive year.

Accelerating our investment plans means we are in a great position and have real momentum, growing our regulatory asset base by 13% to GBP 15.4 billion this year. But whilst our bills remain amongst the lowest in the sector, we recognize that increases can put pressure on some households. We remain dedicated to supporting customers who need it most, helping 330,000 with their bills. Reflecting our strong performance and confidence in the outlook, we're upgrading our 2028 earnings guidance to at least 250p from 224p.

And whilst we've already secured an ambitious plan for a 5-year period to 2030, building on this further, we have submitted our first tranche of reopener business cases for around GBP 600 million, a bit more on this later. This year's strong performance is delivering on our investment case and is linked to 5 key value drivers: Record levels of long-term investment required to address climate change, population growth and asset resilience, supporting sustained increases in our asset base over the coming decades.

We operate within a robust inflation-linked regulatory framework with highly visible and predictable revenues. Our performance-led culture enables us to deliver ahead of regulatory expectations across operational measures, capital execution and environmental outcomes. Our resilient balance sheet and prudent financing strategy underpin a strong track record of delivering double-digit returns. And with visibility over a pipeline of investment and revenue growth, we have confidence over our long-term earnings and maintain inflation-linked dividend policy. More from me shortly, but with that, I will now hand over to Helen.

Thank you, James, and hello, everyone. We have made a flying start to this regulatory period, and I'm pleased to share another set of strong financial results. Revenue growth this year was driven mainly by our regulated water and wastewater business alongside increased contribution from infrastructure services following acquisitions and growth in operating services. This translated into strong profit delivery with PBIT up 46% to GBP 861 million and adjusted earnings per share increasing by 64.5%.

We delivered a regulatory return of 17.2%, reflecting continued operational and financing outperformance. Regulated gearing was maintained at 63.6% through disciplined financing and continued cost control. Regulated PBIT has increased by 45% year-on-year. Core revenue increased by GBP 378 million, reflecting expected real bill increases, higher consumption during the drought and, of course, inflation.

We also billed GBP 54 million for previously earned performance incentives. We continue to drive efficiencies, delivering GBP 36 million, mainly through process improvements, productivity, no-dig repairs on the water network and improvements in waste operations, partly as a result of our investment in in-sourcing. Through hedging, we were able to reduce our energy costs by GBP 18 million year-on-year.

We invested GBP 100 million of operating costs, including license fees for our new billing system as we fully migrated customers through the year, in-sourcing activity on mains renewal and GBP 38 million increase in depreciation as a result of the capital program. Other pricing effects includes inflationary increases in employment costs and another year of above inflation increases in regulatory fees and business rates.

And the long drought in the spring and summer last year drove additional costs of GBP 21 million, mainly for increased energy consumption and chemicals to meet water demand. And finally, bad debt has increased but remains in line with historic averages at 2.1% of household revenue. The regulatory model provides important protection from energy price increases as the cost allowance in the final determination is adjusted for an energy index.

This adjustment is made at the end of the 5-year regulatory period. And so to manage the in-year cash and profit impact, we have a 5-year rolling hedging strategy. We have already hedged around 90% of our energy needs for the next 3 years and are fully hedged for FY '27. Importantly, all of this was secured before the recent Iran conflict at prices around 12% lower than FY '26 exit prices.

We are also reducing our reliance on the external energy market. This year, we self-generated 61% of the group's energy consumption through bioresources and green power, and we are expanding our solar generation through the planned investment of 4 new solar farms. We are also introducing rooftop solar across our estate.

And in total, these programs will increase our energy generation by over 200 gigawatt hours. This expansion means we will self-generate around 75% of our current energy needs by 2030. Our balance sheet is strong with liquidity out to at least August 2027 and regulated gearing at 63.6%, supporting sustained investment and returns. To fund our investment program, we raised GBP 1.8 billion this year, issued at 66 basis points below the allowed cost. This includes 2 Eurobonds, one of which was the longest-dated Eurobond issued by a U.K. utility, highlighting our strong access to global debt markets.

Our finance costs are partially protected through a cost of debt allowance, which broadly moves in line with Gilt yields. This is more important than ever in a time of macroeconomic uncertainty. With almost 2/3 of our debt fixed, we have limited exposure to rising interest rates and with only 22% of index-linked debt, we have a greater benefit from higher inflation versus the regulatory allowance. This year, around 60% of our cash flow has been invested in our assets and funding growth. Delivering our growth outlook requires disciplined execution and a relentless focus on efficiency.

This efficiency gives us options to reinvest in future growth and manage the impact on customer bills and our balance sheet. Removing cost of failure improves productivity, taking out repeats and rework, enabling more proactive rather than more expensive reactive responses. And at the same time, we can deliver better service for customers. We are using AI in every part of the business to enhance our operations, which James will share in more detail later on.

And by vertically integrating elements of our supply chain as well as our in-source capability, we are confident we can deliver around GBP 150 million of total operating cost efficiencies across the regulatory period. On capital efficiency, we are progressing well against our GBP 500 million target with around 40% already locked in, and we are seeing tangible results. A great example is our plug-and-play modular tank solution, which can be used in both water and waste and around 40% lighter, it uses significantly less concrete and defined refinements, half installation time, so not only delivering speed and efficiency, but also reducing carbon, which contributes to our bespoke capital carbon ODI.

This year, we have delivered a 17.2% regulatory return, driven by both outperformance and inflation. Our outstanding reward and ability to execute on performance incentives, manage our retail costs and financing strategy has delivered 6.3% on top of the base return, taking our notional return on regulated equity to 11.6%. Operating above Ofwat's notional 55% gearing also adds a further 2.1%. And the inflation uplift on our RCV, which James talked about earlier, at 3.5% giving a regulatory return of 17.2%.

We have a strong track record of delivering against our commitments. Over the past 5 years, we have scaled up and consistently grown our capital investment, enabling a fast start to this regulatory period. We continue to build on this momentum with a further step-up in FY '27 and will deliver 10% CAGR in our regulatory asset base to 2030. This excludes growth from future funding submissions, including our first reopener application, which James will share more detail on later.

Alongside this, we have consistently led the sector in operational outperformance, delivering outcomes that matter most to our customers. We have started the AMP strongly and guide to another year of reward in FY '27. Our earnings have progressively grown and due to greater certainty over future revenues and costs alongside operational efficiencies, today, I'm pleased to upgrade our 2028 earnings outlook to at least 250p from 224p. And this performance underpins a consistent track record of strong double-digit returns. Sustaining this over many years reflects our embedded performance-led culture, continued investment in our asset base and the strength of our in-house capabilities.

You can see here our technical guidance for the financial year ahead and a summary of the longer-term outlook. For FY '27, we're guiding to a performance incentive reward of at least GBP 50 million in nominal prices. And we expect to invest between GBP 2.2 billion and GBP 2.5 billion of capital in the coming year. This will grow our regulatory asset base by 13% to GBP 17.4 billion before the impact of any reopeners. Other than our 2028 EPS upgrade, the remainder of our longer-term outlook is unchanged. And with that, I'll now hand back to James.

Thank you, Helen. Now let me walk you through another year of strong operational performance for Severn Trent. Now I've had the privilege of playing a part in our performance-led culture over the past 23 years, and our priorities to drive the business forward are clear. We are building on strong momentum, a consistent track record of delivering for both customers and the environment. We're responding to structural changes, including population growth, climate change and increasing environmental standards.

We see these as attractive long-term growth opportunities and are making disciplined strategic choices to position the business accordingly. And to ensure efficient growth, we see a significant opportunity to transform our processes and have embedded AI along with process and technical innovations across the organization. Delivering for our customers remains fundamental, and it's important we have a connection to our local communities, ensuring we support the needs of those areas.

Let me bring that to life with an example of what we're doing here in Birmingham. [Presentation]. We treat and supply water to over 9 million people across our region. And this year, we experienced periods of intense rainfall and months of drought, which we managed without the need to impose usage restrictions. That reflects both the strength of our operational management and sustained investment in our assets over many years. Leakage is now at an all-time low, beating our regulatory target for the eighth consecutive year, and we've performed well on the regulatory incentive measure.

This is being driven by smart metering, AI and satellite technology enabling faster detection with no-dig solutions reducing repair times from days to around 30 minutes. We are performing ahead of our regulatory target on water quality complaints and also investing to strengthen resilience. 98% of our customers now have a second source of supply.

And this summer, one of the U.K.'s newest water treatment works, which uses innovative treatment technology will be coming online following the GBP 170 million investment program, providing even more resilience and an example of how we are stepping up to meet the challenges of climate change and population growth. We operate one of the largest portfolios of waste treatment works in the sector, where we safely treat wastewater to meet stringent environmental standards before returning it to rivers and water courses.

This year alone, we have invested around GBP 1 billion in our wastewater assets. Alongside this, we are deploying advanced technologies to improve visibility across our network, enabling more targeted investment and faster response times. We in-sourced our waste networks teams in 2023, strengthening our in-house capabilities. This is delivering clear benefits, including a 21% reduction in customer complaints this year, alongside continued improvements in both internal and external flooding.

Our investment in sewage pumping stations has contributed to a 35% reduction in pollutions and ongoing interventions in storm overflows, resulting in 41% fewer average spills for calendar year 2025. We are also highly confident of achieving EPA 4-star status for the seventh year in a row, more than any other company and reflective of the environmental improvements we are making.

We've made a strong start to the regulatory period, and our investment is aligned with the long-term growth I covered earlier. The population in our region is expected to grow by around 12% by 2050, and we're expanding waste treatment capacity, developing additional water resources and progressing growth and resilience-related schemes to meet the additional demand and environmental standards.

We are confident in our ability to deliver not only from our track record but also because we have invested in over 2,000 projects this year, mostly small, low risk and repeatable. A large number of smaller projects means we are able to scale delivery with standardized solutions developed through our plug-and-play program touched on by Helen earlier.

Our strong relationships with the supply chain, including Tier 2 and 3 partners, give us quality efficiencies and resilience, helping us actively manage program risk and drive delivery. AI and innovation are enabling improved programming and smarter solutions. For example, by using natural coagulants, we are reducing scope and cutting chemical use and lowering carbon. Finally, our in-sourcing strategy and acquisitions completed this year give us flexibility and control over our expertise to deliver our program.

We have achieved the maximum price control deliverable reward this year for mains renewal, a significant proportion of which was delivered by our in-house team, and we have also accelerated the year 2 PCD targets for storm overflows and other environmental schemes. Being on track with our program is an important prerequisite for Ofwat's reopener process. As mentioned, we are using artificial intelligence to drive efficiency across the business. And here are some exciting examples to bring this to life.

In capital delivery, by modeling different scenarios, we're making smarter investment decisions, helping us identify the lowest cost, highest performing solutions. AI generative tools are also speeding up design such as finding optimal pipe routes for our larger pipeline schemes. A more predictive data-led approach is benefiting our water and waste operations. AI is supporting monitoring of assets in real time, reducing outages as well as finding the location of issues, enabling us to be more proactive.

Through our investment in our AI-enabled billing system, Kraken, we're bringing the customer status history and billing information all into a single view. So our customer service agents can resolve queries much faster and more consistently. And through various tools, we can predict the impact of extreme weather and highlight risk to our network and power supplies. This enables us to be proactively intervene and prevent instances of environmental harm or risk to customer service.

We see AI as a critical enabler to drive efficiency, reduce risk and unlock long-term value. It is embedded across the business, and we see further opportunities ahead. Now we've made a strong start to the regulatory period, delivering for our customers, shareholders and the environment. But now let me turn to the growth outlook. On the 1st of May, we submitted the first tranche of our reopener business cases, representing close to GBP 600 million of incremental investment beyond the GBP 15 billion we secured in the final determination.

This is the first of 3 reopener opportunities available over the next few years. Our enhancement for water will maintain and improve critical assets through the rebuilding and refurbishment of water storage tanks, pipework and telemetry. Alongside this, we will upgrade boreholes to secure long-term high-quality resilient water supplies. The investment in waste will enable us to increase our sewer relining activity by 59% and enhance sewage treatment capacity to support a growing population.

We will also be surveying 900 kilometers of our waste network to support the case for future investments in asset health. For the first round of reopeners, we have been deliberately focused in our approach. We are targeting cases that offer future asset renewal and growth while carefully considering bill impact, funding returns and the timing of potential future regulatory requirements. There are further opportunities to access investment through 2 more rounds of reopeners, transition spend and, of course, AMP9.

As you can see, we have a large and diverse asset base and our first reopener submission only covers a small percentage of these respective asset classes. Now whilst Ofwat have ruled out in-period funding for 2026 growth, we expect clarity by the 15th of August on key decisions, including in-period revenue, RCV adjustments and returns for asset health-driven investment. And as Helen mentioned earlier, we have created funding capacity through efficiencies and our current program is on track, giving us confidence in securing the growth.

Let me close by summarizing how we are delivering against our investment case. We have a sustained investment program delivering at least 60% asset base growth to 2030. That growth is underpinned by an inflation-linked model, providing highly visible and predictable revenues. Our performance-led culture drives operational excellence with GBP 73 million of performance incentives earned this year, and we remain on track for at least GBP 300 million by 2030. We have a strong track record of delivering enhanced returns, including another year of double-digit performance of over 17%. This all supports attractive earnings growth, which has allowed us to upgrade our earnings guidance today. Thank you so much for listening, and I look forward to seeing you all at our Q&A with myself, Helen and the rest of the Severn Trent executive team.

Good morning, and welcome to the Severn Trent Results Presentation Half Year Q&A session. We've got myself, Helen and the entire senior team here. And of course, the new Chief Executive of Severn Trent, James Jesic, is also with us. And obviously, this is my final results presentation. So we'll be trying to get lots of questions on the business topics and on the results. We're pleased with our performance over the last 6 months, and we look forward to taking questions on them. So Sarah, over to you first.

Good morning. Well, we knew the day would come live. To simply say thank you feels way too small given everything you've done. But until I think of something better, I'll just leave it with thank you. James, a much deserving successor, super thrilled, super excited for you for the team and for everything that lies ahead. But I guess it is on with the show. So a couple of questions from me, please, on the results today.

Firstly, on that ODI guidance upgrade, I mean, you could have waited until deeper into winter to upgrade, but you didn't. Wondering what gives you conviction to upgrade that guidance today? Then a cheeky half question, please, on the AMP8 total ODI guide. Do we get to increase that by GBP 15 million today, too? I suspect the answer is no on that. And then the final one, please, and while we're on the outperformance topic, but parking ODIs, wondering what other tools are in the Severn Trent toolkit that can contribute to sustained strong total outperformance in the next few years. And I promise I'm not asking numbers, just more initiatives and areas of opportunity.

Brilliant. Okay, [indiscernible]. So first of all, thank you very much. There are 11,07 [indiscernible] that work their stocks off every day to land out performance, and they will be really pleased that we started strongly. So let's go for the half question first. We're not giving you more of an upgrade than the at least GBP 300 million. So it is a strong first 6 months, and we still got 4.5 years to go, but we will keep that under review, and we'll share more news at the right point in time.

In terms of why we're so confident, I'm going to under that. But I mean, fundamentally, you'll have seen -- we're saying 3 things. The first thing we're saying is that about 90% of measures are green, and that means we're doing very well across the entire basket of ODIs, and that's what gives us confidence because you will always have some ups and downs over the winter period, as you said. The second thing is quite a lot of measures, they do close off at the calendar year-end. So there are, remember, a number of measures where we're actually 10.5 months through the performance and that gives us a chance to give some indication of those. So that's also helpful. Pollution, spills are good examples there where they're almost complete for the year, which helps us give clearer guidance now at this stage and maybe later in the year.

And the third thing is that we're just really getting into our mojo operationally. It's a brand-new 5-year period. We felt confident that now that the measures were against the sector, they're like-for-like, against everybody else, we always saw that our overwhelming strong performance would come through, and that's beginning to come through. So Steph, which are the measures you're excited about on the ODIs?

Yes. So we're doing really well across the piece, but it's the big 3 that we're really excited about, so spills, pollutions and leakage. I've just talked briefly about leakage. You know it's a 3-year roll-in measure. So we've got 2 strong years in the bag already. We're on track to deliver our eighth year hitting the leakage target. We're finding and fixing more leaks than ever. We recovered really quickly after the summer despite the fact that we had 1/3 more burst than we'd normally see during that period. doing some great work with Pegasus units to reduce pressure, which also means we see less leakage. So we think we're set up really well for the rest of the AMP.

Now going on to your second question, which is just wider, what gives us confidence for the future over the next 5 to 10 years? I think there's a couple of areas I'll go to. So I'm going to hand to Helen first of all, because financing is important in the sector. We do own that financing outperformance. And we've had a very strong last couple of years actually on financing. So I'll get to Helen talk about financing. I don't think it's worth getting into totex -- and I'll get to James to talk about partly why the PCDs are an upside for us. Remember, we're guiding to up to GBP 50 million on PCDs, but also on totex overall and give some sense of it.

And the part of it there, I think he'll talk through is some of the innovation we're putting in place and some of the kind of the strategic decisions we've made on in-sourcing and plug and play. And then I think I'll just get Shane to mention, when you look at the future, there is going to be more opportunity for RCV growth. That stores it locks in long-term stored value. I'll get Shane maybe to talk through what we think is going to come next in the RCV growth opportunity above and beyond the current locked in pricing. So Helen?

Yes. So Sarah, thanks for the question. I think we talked about in the results about our financial strength. And I believe that underpins our ability to continue to outperform on financing. We've -- I'm really pleased we've been able to guide today to 60% to 65% gearing by the end of the AMP. And I think that demonstrates our commitment to maintaining that financial strength as we go into the next AMP. But if you look at our financing specifically, our structure has worked for us in terms of we've got one of the lowest index-linked financing in the proportion in the sector. That's really worked for us certainly over the last 5 years and is continuing to now. But we've also had a very specific program about diversification. And we've -- over the last 6 months, we've hugely diversified our sources of finance in terms of geographic. And we've recently welcomed another 5 banks into our into our financing as well. So there's so much positivity out there in the market, so much demand for our financing with the tighter spreads in the sector, I'm extremely confident that as we go out to the market, we'll continue to raise financing significantly lower than the cost that the regulator allows.

Very good, James.

Sarah, first of all, thank you for your kind words. hugely appreciated. I guess when you look at the size of the plan that we've got for AMP, it gives us loads of opportunities to actually deliver more for our customers, more for the environment and, of course, more for our shareholders. I think what we're really focused on and what I've been focused on is how do we innovate, how do we create more efficiency into our program to not only deliver a bigger bang for our book, but also ensure that we have plenty of choices. Now some things that I've shared with you previously are around things like innovation we're doing around AI and how we improve our design. So that will create a lot more efficiency in that space, but also our plug-and-play program where we're using far more modular solutions to increase efficiency in our capital delivery. So there's lots of things that we're doing. And of course, we're always happy to share.

Very good. And I guess what's going to come next year in terms of that performance, plus performance on totex and RCV growth.

Yes. We focus on RCV growth at the moment. So whilst we have 60% nominal RCV growth, there's an opportunity to get -- put forward additional cases to Ofwat. These are called the reopeners. It's quite similar to green recovery where we got $500 million. That was additional RCV growth. There is a high bar though for this. I should just be clear. It's not super easy. So you've got to be on track with your capital program. You're going to be able to demonstrate that your supply chain has capacity and you've got capacity to deliver more. And they are large business cases. As you've seen in PR19, green recovery, PR24, you're going to submit quite a lot of evidence to Ofwat to get these approved, and you've got to have strength in the balance sheet.

So there is a high bar, but Ofwat will be publishing further guidance in December, and we'll be responding to that. So you probably have 2 -- we think there's 2 streams. There's a fast track route, which will be funding next year or there's a slow track route, which runs over 2 years. So I guess you can work out which one we're going to go for Sarah. But in terms of the quantum, until we have the final methodology from Ofwat in December, we probably can't comment any more on that.

Very good. Fantastic. Sarah, you can come up later with any more questions. I'm going to hand to Dominic now. Dominic?

I think you're going to be getting quite a lot of recurring comments this morning, Liv. So first of all, clearly, congratulations on your next adventure and also your decision and also clearly, I think that will be a poor place in your absence. I look forward to hearing what you're going to be getting up to next, maybe I don't know, so wrestling training might be something we can hear about. And James, clearly, you're also going to be sitting there thinking, oh my word, I've got big shoes to fill. So I'm sure you'd be reiterating sure be fine.

A couple of questions for me, please, actually. One actually, Liv, on your decision to step down. Could you give us some words as to -- in your experience, what do you think has happened to the role of CEO in the water sector? And do you think the special measures bill that came through has had any impact in your decision to step down? And do you think that it's having a decision -- having an impact on the ability to attract, retain sort of senior staff?

The second question I've got is on your 13% ROE that you're guiding for '25, '26. You're basically saying, look, it's going to be 13% because we've got higher inflation. But on the normalization, the ODIs look like they're going to be nothing out of the ordinary this year versus the 5-year guidance. The totex looks like you're guiding to potentially more outperformance to come or efficiency, which I guess might be reinvested. And financing is financing. So if we normalize for inflation, is it fair to say that that 13% ROE isn't going to be materially different to what we now expect for the full AMP.

And third question, apologies on something that I've been sort of thinking about, which is on your low rainfall I think the Met office is suggesting we're going to have a very dry winter as well following the dry summer, where it doesn't look like it today. Are you concerned at all about your water resources in your region? And what can you do to give sort of long-term resilience?

Brilliant, what a full range of questions. There's nothing left, I think, after Dominic's done those 3. So the first thing is, no, the special measures is totally fine. So let's be really clear on that. And there are thousands of people that internally that would love to be Chief Executive Severn Trent, never mind you get externally. So we are an absolutely lovely company that employs beautifully cheerful people that does an amazing mission based in the fab part of the country.

So no, I fundamentally disagree that the special measures would have any impact on the Seven Trend being anything other than highly, highly attractive. and it's totally unrelated. I've been here nearly 12 years. And I used to believe that chief execs, I guess, you kind of like you go through the first wave 5, 6 years, and then you got to unravel your first wave of bad decisions. And then you go through another wave of it, you've got to unravel your second wave of bad decisions. And then eventually, you wake up and you realize you've got amazing successes internally. And the job actually at a certain point in time is you've got to hand over to the next generation. They're going to be the perfect answer to the next wave, and that's what we've got. I know James is going to be a rock star. I know the senior team of fab, and I think this is the right time. So I'm not going for another job. I always said I'd never apply for another job whilst was at Severn Trent.

So I will eventually take another job. I'm not going to sit in my like walk the dog every day. But there is no plan. The plan is for the next few months to be sat on James' shoulder, helping him out as he picks up the role. So that's the first one is that it's a brilliant job and company lucky to have James and James is lucky to have the job.

Now on the second, I don't actually quite make the same math as you on the [indiscernible]. So I hear your point on the 13% for this year that a whole chunk of it is either financing or inflation. Yes. But if we add up for the 5 years, not the same. So we've got GBP 300 million worth of outperformance. That's chunky. That's decent in anybody's percentage ROE number. We've got the outstanding status as well, which is 30 basis points. That's chunky in anybody's number. And we've always said that there will be more outperformance across other areas, right? We'll be looking to land that. Financing is part of it. We've guided to at least 0 on totex. We said that there are some areas like Bioresources where we are a sector leader. It's likely that outperformance might come down the line, just not ready to call it yet. And then, of course, we're having a very strong start. So we're calling at least 300 now. Every single member of the Severn Trent family will be looking to try and improve that over the next couple of years.

So for others, they might need to rely solely on financing and on inflation. The Severn Trent, not true. And if you look at our history, what you tend to find is when you look at the bars over a 5-year period, all of them begin to look good and you begin to see some really good performance in a whole range of areas. So that was that one. Now low rainfall again. So I hear it because the EA have published a whole lot of drought situation messages, and they're right to do that across the country.

But if you actually look at our reservoirs, and that's what's interesting, is we have -- I'm going to pass to Bob now to give an update. and he's going to take you 3 things. One is don't forget the sources of water we have. Two is we're going to give you some news in terms of latest levels. And the third thing is just to remind you of our track record of the last time we did actually have a host pipe ban. So Bob, on to those 3.

Yes, great. So 1995 was the last time we had a host pipe ban, of course. And as you know, Dominic, we've got -- our water comes from 3 main sources: underground in our boreholes from rivers and from reservoirs. So I guess the thing that people really noticed, of course, over the summer is the low reservoir levels. And this summer was a hard summer for us. We work really, really hard to avoid having to put a temporary use ban on again, which we managed brilliantly, a combination of asset-related interventions and great customer comms. But the great news is actually, we've actually had a really wet autumn so far. So we're in good shape. In fact, our biggest reservoirs around the Derwin area and Ellen Valley, each went up by more than 10% over this last weekend. So they're all in really good shape as it happens. So I understand the question, but we're in good order. Thank you.

Was an interesting question is to go back to what was the performance in 2022, which was the last dry year, and we're like 15%, 17% ahead of where we were on exactly the same day in 2022. So we feel confident and in good shape.

Okay. And then we go to [indiscernible] next.

Congratulations to the strong results. And obviously, very sad to see you leave. So thank you also from my side and all the best to you, James. Just 2 questions from me. The first one on the 60% and 65% gearing. Just wondering, does that hold also if that additional topics through the reopeners comes in? Or do you need to wait to assess how big that potentially could be? And then the second one on CEO succession, maybe to give you a little bit of an off here, but what makes you think or like what convinces you that Severn Trent even without ULift can continue to be like the highest quality company in the sector and continue to outperform on the ODI like it has done in the past would be interesting to hear your thoughts.

I'll do the first -- the second one first, and then I'll hand to Helen and probably Shane just to talk through the gearing and the reopeners. I mean -- so I am just one person. So I know I'm a big personality, and I know I'm noisy, but I am literally just one person. And I don't actually deliver any individual ODI do I. So I guess we could argue I'm not the person who's going to fix the leaks, I'm not the person who's going to fix the fills. And I'm definitely not the person who's going to stop pollution over the course of the next few hours. So that is the team. And what we've done this whole team and also the 50 FT is created a culture where our people love performance and every single in our body culturally loves the fact that we are a leader in our sector, and that will make absolutely no difference that I'm not going to be here.

It is ingrained in our DNA is the desire to do brilliant for our customers and to make sure that we perform every day. And if you go to any communication cell or any depot or any team meeting, then you'll see that, that's how we're set up, how we thrive is on that level of personal competition between teams, county place county, the ability to kind of add value and find new ideas, and I know that. And don't forget as well, James was part of all that success. He did run operations in the transformational areas where we went from not doing so well in ops to doing brilliantly. So I guess you could argue James might have been involved in that. And then he's run capital during the era that we've gone from kind of like GBP 0.5 billion up to a couple of billion. You could argue we probably added some value in that space as well. So James has been a core part of that entire journey. So the only difference now is he's going to be in a different chair, but he'll still be bringing that same value and that same value add. So I've got no qualms at all this performance will continue.

Helen?

Yes. Julius, thanks for the question. Yes, really pleased we've been able to give gearing guidance today. 60% to 65% at the end of the AMP. And from my perspective, that's what we're committing to. We've said repeatedly, we're fully equity financed for the AMP, and that obviously remains true with that gearing. And we've also said we're committed to our stable credit ratings. So there's plenty of headroom in there for that.

In terms of reopeners, still lots of unknowns, but my expectation is even with reopeners, we intend to meet that gearing level. So it shouldn't make any difference. But obviously, as Shane said earlier, we're waiting to see the financing rules to determine what that allows us to do. I think the other thing to note is I talked about in the presentation about GBP 500 million capital efficiencies. And obviously, one of the things that, that will allow us to do is invest more. We want to invest as much as we can. And that's why we're constantly driving for those capital efficiencies.

Brilliant. I think that answers the question, because effectively, as Helen said, we've got the GBP 500 million of targeted efficiencies. That gives us the chance to invest in the open. And Ofwat we' also very clear that in the rules for the reopeners, there's a lot of companies in the sector that will need to make sure that wherever the rules are set, they can afford to do it. A lot of companies are heavily geared. They'll need to make sure there's some kind of like in-period revenue and also some level of shadow RCV, I would imagine. So we'll expect to see those come through.

Very good. Thank you, Julius. Over to [indiscernible].

And before I start, I'd like to echo congratulations on your successful leadership at Severn Trent and wish you all the best, James, in your role as CEO. Sorry, I'm getting choked up.

I love it. Feel free to cry. I'm okay. If you want to cry, you need tissues.

I'm good. I'm good. I think I'll be able to get through it. My 2 questions, please. Firstly, it would be great to hear the team's thoughts on the CMA provisional determinations. I appreciate you haven't appealed, and I'm sure you don't regret that, but would be good to hear what your thoughts on the determinations were and what you'd be feeding back to the CMA here? And finally, on that topic, how you think we should be reading these decisions into what will feed into eventually AMP9?

And then my second question is your conversations with the government and the new Secretary of State. I guess, I think our conversations with investors, what they want to see from the government is almost a pivot from, hey, we're holding the sector to account to actually saying we're working with the sector to deliver better outcomes. I guess my question is, are you seeing that change in the government? Do you foresee a change in that messaging coming? Or do we need to see more delivery before we can start seeing the government sort of maybe being more cheerleading the sector as opposed to the current messaging?

So I'll start with the second one first. I mean I'd rather you saw Emmahardi's speech from the British Water Conference, but it is available on public record from last week. And I think that actually gives really good evidence that the message is changing. I though it was a very adult speech, I though it was very engaging, and it did highlight that actually there is shared desire to see the sector succeed. So I think there is absolute desire by both Ever Hardie and Emma Reynolds for the sector to do well.

Now equally, though, your second point is true, the sector does need to deliver. So -- and we're really conscious of that. It's why we did the transition spend. It's why we're going early with our capital is that customers have seen pretty reasonably high bill increases after a period of clearly underinvestment, you could argue across the entire sector and then we've played catch-up. And I think what's come out of that, though is that there is clearly -- you have to evidence to customers that by the time they pay that bill, they're getting really, really great value, and we're very conscious that's an imperative. So I think the government is definitely changing its style and manner, but it has got to hold us to account and every company has got to step up and make sure they deliver their capital program and deliver their performance targets. So I think it's a 2-way contract, and we're confident of our part of it, and we think that will be -- that will come across.

The other thing to note, I think, for investors is that I think government has been fair on calling out amazing performance. So we've seen quite a few clauses where government has called out the fact that we've had 6 years of 4-star status. No one have mentioned it yet, so I can't get it in. Since we have had 6 years of 4-star status, government has gone record and praised that excellent performance. That wouldn't have happened prior to this. We had 3, 4, 5 years of 4-star status, and it never got mentioned as a public record. We have seen that change as well. So I believe the moment has come when the rhetoric is moving. Now Shane, CMA...

So I guess from an investor or nonimpellent company perspective, there's probably 2 positives to call out. So the first is the cost of capital is 30 basis points higher. So that is helpful given I think it was a recommendation 23 government said the CMA should be setting a methodology for cost of capital. So that's good, which is also equivalent to our 30 basis points for outstanding that no one has mentioned yet, so I'll keep bringing that up. The other one is the frontier shift. So this has been a big debate amongst the regulators is what's the ongoing efficiency challenge each company should be delivering.

Regulators have been saying it's 1%. The economy has been delivering much less and the CMA came out at 0.7%. So that's a useful precedent going forward. I think the other interesting thing from the CMA case is base costs. So none of the apellnt companies raised base costs, but the CMA does a whole redetermination. So they've created their own models, which actually gives the sector less funding. So I wouldn't be worried about this in terms of the precedent setting because it goes against everything Cunmif has said, everything against the NAO has said because it's statistics led rather than engineering led. But it's still an interesting point, which is the companies are getting less money generally on base spending. But from an investor perspective, I think it's good for the PI29, higher WACC and a lower frontier shift.

Thank you very much. Mark, over to you.

Wishing you all the best for the future [indiscernible] and looking forward to seeing what you're going to do next. Just 2 questions. Firstly, if there's one regret that you've got over the last 12 years at Severn Trent Live, what would it be? And secondly, if there's one piece of advice that you would give James as you hand over the reins to him, what would that be?

All good questions. So there's one thing I've never done that I would have loved to have done. We've got the most amazing asset that brings water gravity fed from right up in the beautiful Welshmidp Wales down into Birmingham. And it's called the -- [indiscernible] it's absolutely gorgeous. And back in the day, if I've been the Chief Exec 40 years ago, I could have just popped down it, gone and seen it. We closed it once or twice a year to do cleans, and I could have walked along it and seen it, and it's got beautiful, beautiful tiling right the way throughout it. I mean no one ever sees it. Unfortunately, health and safety means I've got to do a 2-week confined space course to actually be able to go down it. So I would have loved to have gone down it, but I've never found 2 weeks to just confined space training to go down it. So I guess that is my one physical asset regret that I've never seen.

Other than that, the one unfinished business is clearly our performance on customer. So none of us remain happy that our CMEC scores are only mid-table. We'd like them still to be podium. So we've got good plotting plans to get there. And I know James will see those through, and he'll be able to then say, I knew I'd fix it now that Garfield is out of the way. So yes, so that is, I guess, the thing that we as a team still look at ourselves and say, how can we not be podium on that metric. So that will be that one.

In terms of piece of advice, I get the same piece of advice to every new Chief Exec. So I'll give the same to James, which is never go to bed without having done every single piece of work that is in your to-do list because you've no idea what tomorrow brings. And sometimes you think tomorrow might be easier, might be lighter, there might be no issues. And it's amazing how often the next day has something totally different that you couldn't have foreseen. So never go to bed without a clean inbox, never go to bed all your documents marks up, you can sleep less, but you can't make up time again. So that is my piece of advice to every Chief Exec.

Thank you, Mark. Good thoughtful questions. Alex, over to you.

Echoing previous comments, congrats, Liv, on a successful tenure at Severn Trent and all the best in future endeavors. Many congrats to you as well, James. Two from me, please. Just firstly, on the at least GBP 500 million capital efficiency. Just interested in how much of this is visible now? I'd assume buckets like procurement, I guess, you'd have pretty strong visibility on already. And then also, which of those 4 areas you noted in the presentation give the most upside opportunity given the at least GBP 500 million guidance point?

And then just on spills, where does the 27% year-on-year weather-adjusted reduction compared to your planned run rate? And does this bring the target forward for when you expect to hit the 2030 number?

Very good. So Helen, do you want to talk first about [indiscernible] 500.

Yes. As I say in the presentation, Alex, we are always driving for efficiency. So -- and you know plug and play, we talked about that first in 2023. So we've been on this road for a long, long time. So we're really confident about the GBP 500 million. We've been planning it for a while. We're well advanced on most of it. And so we're in really good shape on it. And that's why we're sharing it with you today because we are really confident about it.

In terms of the split, obviously, plug and play is a big part of it. But actually, it's quite evenly balanced across all of those areas, which is good. But with any of these things, as the program moves through, things become more prominent than others. So -- but it's pretty even split, and we're well advanced with all of those areas that I talked about.

I guess if there's any upside opportunity, I guess it would come from stuff like if we did get capital reopeners and we could do more of that plug and play, that would yield an upside. So I think at the moment, we think about GBP 500 million is the right number. But I guess for it to increase, then you'd have to believe other growth was happening. So at the moment, that's the right number based on 60% RCV growth nominal. If we ended up with more capitalopeners, we'd, of course, look to deliver more efficiently.

In terms of spills, good point. So just to remind you, I guess, of our spills ambitions, always good to rebase the target. So we said we wanted to get to around 14 by the end of the AMP, so under 14 by the end of the AMP, and we're expecting to do that this year, which would be excellent. Now that's one of our conditions for outstanding status. So that will be quite neat to tick that off in the first year of the AMP as well.

In terms of what we said we were going to do this year is we said we'd do about a 25% year-on-year reduction. So that would have taken us down to 18.8. So we are ahead of that. Now we are clear though that if weather was equalized for last year's abnormally bublically wet year, then we'd be about a couple of percent ahead of our run rate. And last year was particularly wet. It's not a normal year last year. This year it looks like it will end up normal. So I've had people say to me it's going to end up dryer. We don't believe that. We think it will end up about normal. So we think this year's performance will end up in about a normal year, and that means we're kind of like 40% ahead of a wet year, 27% ahead of a normal year.

So marginally ahead of track. We've got a lot of solutions that go live in the next few months. So that will give us a very strong start again to next year's number. So next year's number we'll have the benefit of all the solutions now in the next few months, and they'll get a full year benefit. Obviously, we didn't get a full year benefit for lots of solutions this year. Hopefully, that all makes sense.

Very good. Okay. A.J., over to you.

I'd like to echo the thoughts. Thank you for everything you've done for the sector and I wish you the best in your next endeavors. And congratulations, James. I guess my question is more around the infrastructure services, the doubling of EBITDA. Just to maybe get a little bit more understanding of the components that drive the growth and any sharing arrangements that we need to think about and maybe if possible, the profile of the step-up?

So we're definitely not going to give you the profile of the step-up, but nice try. And thank you for the nice comments at the start. So I guess -- and do you want to bring to life a bit of that, I guess, Helen, do you want to start? And maybe James might jump in.

Yes, I'll start. Yes. I love it, A.J. It doesn't matter what we give you, you always want more. you're insatiable. But yes, really pleased today to be able to share that we're expecting to double the EBITDA in Infrastructure Services. And it's a combination of all of the businesses within that. So obviously, we're -- in Green Power, we've continued to grow Green Power. We've got a big solar scheme that's just in progress at the moment. In services, we've got opportunities to win new contracts. So that's a key focus for us as well. And of course, property, we committed by 2032 to deliver GBP 150 million of profit, and we've got some great stuff coming through. It's been tough in property over the last couple of years, as I'm sure you'll know, but we're starting to see that turn a corner now. So that's in there as well.

And we're really pleased to share today the 2 acquisitions we've made, one in water and one in waste. And the opportunity we see here is for Infrastructure Services to really benefit from the growth that's happening in the water sector, specifically Severn Trent Water, but it also helps us secure that supply chain as well. So the opportunity is there, and we're really, really excited about it.

And I guess it's worth bringing out how we think this actually underpins and helps deliver the capital program because one of the other key parts is it's very nice to have an upside, isn't it, nice dividend cover, nice growth. But actually, it also helps lock in and secure our supply chain.

Absolutely. I mean, Helen has covered the bulk of the business really well there. But this was a strategic play on our part. We identified across the sector there were definitely going to be pinch points in certain aspects of the delivery. So for instance, if you look at the major renewal program, most companies have doubled what they did in AMP7. We see that as a particular pinch point. So identifying that early allowed us to get on the front foot and hence, create and acquire these businesses.

So in the first instance, we really see this as an opportunity to really help ensure that Severn Trent from a water perspective, really delivers its capital program and not only delivers it, but delivers it efficiently. Of course, then in the future, we can look at how we expand those particular businesses.

Congratulations to James. I just have sort of a couple of sort of questions. I wanted to go back to the reopener. Could you just sort of tell us a little bit about -- more about the process as to where we are? What are the next milestones and when you expect to get clarity on it? And then secondly, again, can you talk about the areas of focus within sort of this program? Because obviously, you have a huge capital delivery program already underway. So that's already a huge amount of work, et cetera. So I'm just trying to understand what areas could be of focus that could come through the reopeners.

Very good. So I'll get Shane to take you through the process. I mean, in terms of delivery, we've definitely got capacity later in the AMP. So let's be really clear on that. So if you look at our current run rate, we're calling GBP 1.7 billion to GBP 1.9 billion this year. But if you look at the in-sourcing we've done on some big areas, let's take Mainslay. So we've in-sourced the workforce now of Mainslay. We do minimal volumes this year internally, but that really grows in year 2 and year 3. So again, we have the capacity to do more with that workforce later in the AMP. So -- and I guess when you look at some of the acquisitions we just brought in as well, all of that just bolsters the fact that we've got a very, very large setup internally.

And don't forget as well that the delay often for others on their capital spend is the design part. They haven't got the time to design it. because we've got an in-house design team, and that means we were doing a lot of our design actually as part of transition spend in the latter part of the last AMP, we've actually fully -- we have fully designed by the end of year 3, this AMP. Again, that gives us the capacity for that team to move on to preplanning for AMP9 or to do more work on reopeners. So I think that's where the capacity comes from in our mind for the reopeners. Shane, how is the process work?

So in December, we expect the update to the methodology. Then for the fast track process, you'd submit your business cases in May, you'd have a draft determination in July and then the final determination in December, so you can then flow the numbers through the charge setting process. And then in terms of the areas, so [indiscernible] identified 10 priority asset classes from an asset health perspective, the big one being gravity sewers and then there's also assets at the water and wastewater treatment works and various tanks.

You've also got assets relating to growth. So whether that's building more water resource capacity, for example, boreholes or whether you're expanding wastewater treatment capacity to support new and faster growth in your regions. And then you've also got any new risk. So for example, if new legislation comes in relation to cyber or PFAS, then there's an opportunity there. So that will exist all AMP around.

Very good. Dominic, come back in for seconds.

A couple of questions from me, please. Firstly, on the EPA. So congratulations getting your 4 star again. The environment agency is clearly going through consultation at the moment, I think it completed consultation in a 5 star. I just wanted to know that if we're going to run under the new regime, would you be a 5-star company or a 4-star company? Secondly, I was actually a follow-up on the PFAS question actually. You mentioned that the new regulations coming potentially or the new risk on PFAS. I think your area is one of the PFAShavy areas of the U.K. I don't think you've got much in your totex for AMPA. Is it possible to sort of like give us sort of some color on the quantum of the potential PFAS expectation and how much we might be able to see in AMP8, please.

Very good. So 3 questions there. I mean, so annoyingly, 5 star doesn't come in for a few years yet. So the consultation is out there, but it doesn't arrive until 2028. So we'll all have to satisfy ourselves with 4 stars for the next few years, I'm afraid.

Sorry, does that mean that James might actually be a 5-star CEO.

You know what, I've had the same thought. And Dominic, it breaks my soul more than it breaks yours. So equally, as a top 100 shareholder in Severn Trent, you better be a 5-star company CEO. Otherwise, I'm going to be coming and having more conversations. So yes, so we only have only have 4 stars in the next 2 years. We're 10.5 months into the financial year at this stage. and we're looking in good shape. Obviously, a long way to go, 6 weeks to go. It's never done until it's done, but we're working our socks off to try and cross the line on 4 star for this year.

Then I think next year is a 4-star and another 4-star and then you get to a 5-star. So it is actually quite a while away until we get to 5 star. And we've been looking at all the metrics possible for a long period of time. We've been shadowing them. We've been getting ready and every around this table has every intention of moving to be a 5-star company when that goes live.

Now that's the first question. But yes, you're right, James, will be the first 5-star Chief Exec and I won't be. On PFAS, I guess, just on the budgets, Jane, do you want to mention how much money we had to put aside. We actually have quite a nice bit of money actually [indiscernible].

It was over $100 million in relation to PFAS, plus additional $300 million in water quality.

Exactly. So we've got a best GBP 0.5 billion in that water arena, just, I guess, to bring that to life. And typically, you're talking about tens of million pounds, tens of millions of pounds for a PFAS solution, not hundreds of millions of pounds per site, again, just to contextualize it, that was that. And then Bob, do you want to bring to life. I think sometimes it's interesting to context ourselves against us versus France, say, when you listen to PFAS, do you want to bring to life any thoughts on that?

Well, perhaps one of the key things is Marcus Wink, the Chief Inspector from the drinking water inspector, actually gave a speech at the British Water Conference the other week. And he was talking and compare and contrast to Europe and the U.K. and he put the U.K. quite a way ahead in terms of -- we've been looking at PFAS for a long while, actually since Buntsfield in 2005 when we had obviously the firefighting phones going to that system. So we're in really good shape. And for us, in our region, we've got our Witches Oak site up in Nottingham that we know exactly the process we're going to put in place to take out the PFAS.

So it's actually -- it's all good news. Lots of research going into clever ways because it's easy to take it out. It's not so easy to deal with the stuff that you then end up with. And there's a lot of research going on to make sure we find really efficient ways of dealing with that. So we're in good shape.

Very good. Bartek, over to you.

Thank you very much. And I would like to join all the congratulations, and thank you for all the great work -- just 3 questions, if I may ask, please. First of all, if we think about ODIs in AMP8 and you compare it to ODIs in AMP7 in terms of how much does it cost to earn additional EUR 10 million of ODIs. I just wonder, is AMP8 from this perspective much more challenging, meaning do you need to invest more to get the same result as in AMP7 in terms of ODIs? That will be the first question. Second question on this EUR 500 million of capital efficiencies. Maybe it was already discussed, maybe I didn't capture it, sorry for that. But what are you going to do with those efficiencies? Is it going to be reinvested into your network? And consequently, could it boost your ODI guidance or ODIs achievements in AMP8?

And the last question on leakage as you spent some time on your presentation on leakage. I can imagine it's becoming more and more expensive to get additional 1 percentage point of leakage reduction. And I'm just -- I would like to ask you whether you think Ofwat is ready to pay more for reducing leakage by additional percentage points, meaning in AMP8, in AMP9, when it periodically should become much more challenging to reduce leakage, whether they are happy to grant you higher allowances to do so?

Very good. Three very thoughtful questions. So I mean, you can't really work out like GBP 1 of ODI cost you X because it's very different per ODI. So each individual ODI is quite a different metric. And it depends on the weather conditions that happen in that particular year because that makes it harder or easier. And it depends on your start point on the targets. So it's not as easy to kind of say in AMP7 used to cost us X and AMP8 it cost us Y. That's not true.

What we can say, though, is that if you look at AMP7 versus AMP8, we've got less measures to go after. That's better for us. We have 21 metrics now. We used to have 43 back in the day. Keeping 43 metrics green is harder than keeping 21 metrics green. That's one thing. And the second thing is we have a much larger base budget. So when you look across the piece, we're growing our RCV by 60%, aren't we this time around, and it was about 11% last time around. So we do have more generic investment. And so what you can do is invest more in capital solutions. So rather than investing in OpEx heavy solutions every year, you can actually fix the source of the problem.

And so if you look at some of the big earners, like, for example, leakage or like, for example, spills, if you can fix that site permanently, you're going to earn reward on that site every year for the next number of years. So it is a very different dynamic, this AMP versus last AMP, I would say, on ODIs. So that's one. On the efficiencies, so what we've said is that we're going to make the efficiencies and then you should assume we're investing them as it currently stands. And whether we're investing them to land additional performance, like, for example, the EPA metrics, there are now more metrics and that will require more investment to hit those. It might be we're putting some of the metrics in to land force our status.

It might be that we're saving some money for the capital reopeners, and we might do that, put some money aside because those reopeners are really good, so we might save some money on that, but that keeps the guidance on gearing 60% to 65% in shape. And it might be that you have a long hot dry summer, like this one, and you have to spend a bit more money on moving the water around and creating more water. So it's just good prudent management to identify efficiencies early on. So you shouldn't currently assume more totex than plus 0. We've said that at the time, but you should feel very confident in our ability even in an inflation-heavy environment to still deliver our totex budgets. That's what we're currently saying. But we haven't been as clear as that. So I guess that's what we're saying is at least 0.

And then on leakage, -- it's an interesting question. I'm not sure I'm in quite the same place. I think Ofwat does accept that leakage is more expensive to deliver, and that's why they've given us all the money for May. So if you look at the money they have funded, they have funded GBP 0.5 billion worth of May investment. That's new. That's fair. And then I guess for us, interest to talk about stuff we're doing on pressure management because that is funded by ourselves. There's just a better way to run the company.

Yes. So I think we've got to innovate on both find and fixed to keep the costs down. So from a fixed point of view, I've talked about Pegasus, so pressure control in valves across the network that we can automate, which reduce burst and leakage. But we're also -- we've gone really big in the last 6 months on Origin, which is a solution which we push into the pipes to seal the leaks, which means that we don't have to pay for expensive road closures or use our crews for 2 days when they can do a job in 20 minutes. So I think it's about innovation as well.

Very good. Thank you very much. So I think we have no further questions. I can't see any on the screen either. So in which case, I'm going to call it. So a massive thank you for anyone that dialed in for the half year Severn Trent Q&A. Much appreciate it. And thank you once again for all the support for the many questions, the guidance, the counsel over the years and well done to the team for a very strong first half to the year.

Hello. I'm Liv Garfield, Chief Executive of Severn Trent, and a big welcome to our half year results presentation for the financial year 2026. Now today, I'm welcoming you from Wanlip in Leicestershire. And this actually is the largest investment individual capital scheme over the next 5 years. So it felt like the perfect location to do today's results presentation. And it's around future-proofing all of the activities in our wastewater location in Leicestershire for the long term for our customers. Now before I get into my highlights for the first 6 months of the year, what I'd like to do actually is to share with you what I think now is a fantastic moment for investors to choose Severn Trent.

And there are 3 reasons that come to mind. The first is we are growing, as you can see, at a scale in terms of RCV. And what that does in terms of long-term RCV investment is it stores up value for investors. The second thing is that we're actually an outperformer. We lock in regulatory outperformance, and that again creates attractive returns for investors over the medium to long term. And lastly, of course, one of those unique companies is inflation linked, and that again creates attractive returns for investors.

Let me now go on to talk about the first 6 months of the year and my particular personal 5 highlights. Now my first highlight is the fact that we actually landed once again the leading status for the environment agency in terms of our performance. That makes a whopping 6 years on the bounds of being the sector-leading company with 4-star status. We were the sole player this year to actually land it, and it's such a testament to the hard work of all of our colleagues. The second highlight actually is we made a really strong start in the last 6 months to the 5-year period in terms of the ODIs. In actual fact, 90% of those metrics are green as we stand here today, which again is fabulous hard work from the colleagues across the business.

The third thing is that, that leads actually to the confidence to give an upgrade today in terms of our ODI performance for the year. We originally said we'd be at least GBP 25 million of ODI outperformance for the first year. We're now upgrading that today to at least GBP 40 million, which is again a really strong indicator of how we feel about the future. Now one of the strong correlators in terms of why we started so strongly is our spills performance. You'll remember, we've put in thousands of solutions to really make sure that we step change our performance in the area of spills. And that means we're confident this year of halving our performance year-on-year, and that generates some really good ODI performance. And all of that combines to give a really positive outlook in terms of RCV [indiscernible] well. So for this year alone, we're going to be growing our RCV by 13%. So at the end of the year, it will be a GBP 15.4 billion RCV situation.

Now I'm going to head deeper into the works, and you'll follow me in a second. But first, I'll send you back to the studio to talk to Helen to hear about the financials.

Thank you, Liv, and hello, everyone. Today, I'm delighted to share with you a strong set of first half financial results. And here are the highlights. We have invested GBP 769 million in the first 6 months of AMP8, and we remain on track with our full year guidance of GBP 1.7 billion to GBP 1.9 billion of capital investment. To fund our record investment program, we have raised over GBP 900 million of new debt in the period, around 80 basis points lower than the new debt allowance, giving us confidence we will outperform on financing for a 10th consecutive year.

Our adjusted EPS is up 74% year-on-year, and this reflects group EBIT growth of 57%, driven by higher revenue and effective cost management. Financing outperformance alongside another year of strong ODI performance means I'm confident to guide to a regulatory return for this year of around 13% Finally, our proposed interim dividend is 50.4p, in line with our AMP8 policy of growth by CPIH. In the regulated business, PBIT has grown by 59% year-on-year. Turnover in the first half of the year increased by GBP 215 million as a result of the expected bill increases as well as higher consumption due to the drought conditions since April. Our turnover for the period also included over GBP 25 million of ODIs earned in the previous AMP.

The higher turnover is partly offset by additional costs incurred because of the drought due to higher volumes of water production and cost of moving water around the network. Driving efficiency continues to be a focus, and we have delivered GBP 18 million of efficiency in operating costs through reducing cost of failure and the use of no-dig technology to repair leaks. We have seen GBP 6 million of pricing effect as a result of increases in pay, business rates and regulatory fees, partly offset by lower energy price.

We have spent an additional GBP 39 million on investment in the year, which includes new technology costs and higher depreciation on our capital program. Finally, I'm pleased to see bad debt remain in line with previous low levels at around 2.1% of core household revenue. This year, we expect profit to be weighted more to the first half than in previous years. This is as a result of higher core revenue in the first half as well as increases in both depreciation and infrastructure renewal expenditure in the second half.

With the GBP 15 billion totex plan, it is essential that we continue to invest efficiently. In addition to delivering operating cost efficiencies, we are targeting at least GBP 500 million of capital efficiency in AMP8. We have been developing these plans for a while, and there are 4 key areas we see as key to delivering this. Firstly, through a new materials framework, we have evolved our direct procurement program from AMP7, which enables us to buy directly from the manufacturers and access preferential rates for critical components.

Secondly, thanks to our in-house design team and site managers on smaller projects, we can work directly with Tier 2 suppliers to deploy cost-effective solutions more quickly. And third, by adopting innovative technologies, we can reduce the need for additional infrastructure. And we can use new digital capability to more precisely monitor the performance that cites to the agreed permits, enabling more targeted investment. And finally, to bring our plug and play program to life and the progress we've made, here's a short video.

[Presentation]

You can see from the video that our plug and play strategy of heavily standardizing and designing the high value components in our program reduces the time taken and the cost of delivery. This drive for capital efficiency creates contingency in our plan, which gives us choices. If we choose to, we can invest more for outperformance. And with additional investment available through Ofwat's reopener process, our track record puts us in prime position to access even more funding.

Efficient growth and a requirement to invest more drives long-term value. The benchmark for calculating outperformance is the regulated company's asset base or regulated capital value. RCV is used to calculate returns for value creation and is a key focus for our business. The chart on the left shows that while we have delivered RCV growth in previous regulatory periods, AMP8 represents an inflection point for Severn Trent. By 2030, we will have more than doubled the value of the RCV over the last decade.

The return we generate on our RCV is split into 2 parts: return on regulated equity or RoRE and the inflation on the RCV. RoRE is made up of the base return plus outperformance against the regulatory framework. Outperformance comes in 3 main categories: customer outcomes, total expenditure and financing. As you can see from the chart on the right, over the last 2 ounce, we have delivered strong RoRE performance. We led the sector on returns through delivering customer outcomes or ODIs and skillfully managed financing costs to a lower level than the regulatory allowance. On totex, our strategy has been to efficiently manage our costs to create further capacity to invest in our business.

The RCV stores value by growing with inflation. I am pleased I can give confidence our strong returns will continue with a regulatory return of around 13% this financial year. Along with RCV growth, our long-term value creation is underpinned by sustained outperformance of the allowed return. The 14% average regulatory return delivered in AMP7 was the highest in the sector. In fact, in real terms, the majority of companies earn less than the base return, whereas we more than doubled it. We have delivered this due to our continued operational performance along with financing helped by inflation.

Further analysis in the chart on the right shows that in AMP7, we were able to deliver the highest ODI outperformance for the lowest overspend on totex, demonstrating our unrelenting focus on making ourselves more and more efficient. We have a culture to strive for outperformance in any situation. In AMP7, we lived through a pandemic, very high energy costs, high construction costs and more extreme weather. And we were able to manage our cost base and deliver the most for customers. Over the next decade, with the platform we have built, I am confident of sustaining this whatever the next regulatory framework brings.

As a group, we have strengthened our balance sheet and additional facilities extending liquidity. So far this year, we have raised over GBP 900 million of new debt, which has been issued at around 80 basis points lower than the regulatory allowance. And with embedded debt also locked in, we are confident financing will continue to contribute to outperformance. Spreads have continued to tighten, narrowing around 20% since the start of the year, and this has helped us maintain the tightest spreads in the sector.

Our regulated gearing is 61.5% at the half year, and we reported the lowest regulated gearing in the sector last year, giving us the financial strength needed for the growth. And I'm pleased to share today an end of regulated gearing range at 60% to 65% Finally, I'm delighted we have substantively agreed our triennial pension valuation with the trustee, and our expectations remain that the pension scheme will be fully funded in AMP8.

Even though we have a sustained record of totex management, we are more confident we can outperform because of the additional protection given through the regulatory model. This protection, whilst not seen in cash flows until next AMP means over half of our totex is linked to a cost-specific index for inflation purposes. 77% of the enhancement cost allowance is protected by the Construction Output Price Index or COPI, and a National Construction Wage Index. 38% of base cost allowance is covered with energy costs linked to an industrial power price index, protecting from power price volatility. And labor costs are linked to a national wage index.

And finally, our financing costs are protected through a new cost of debt allowance, which is determined by the iBoxx plus 30 basis points, where the iBoxx is strongly correlated to movement in both gilts and credit spreads. So if gilts increase, so does the iBoxx. And therefore, the cost of debt allowance also increases.

We are growing more than ever before at 60% in AMP8, which is more than double our historic average and more than our listed peers. Based on our gearing range of 60% to 65% at 2030, the equity element of RCV will grow to between GBP 7.7 billion and GBP 8.8 billion over the next 5 years.

Outside of the regulated business is Infrastructure Services, previously Business Services. This division creates cash flow for the group as well as EBITDA growth and dividend cover. We continue to invest in Infrastructure Services to generate more energy in green power and growth in operating services. Our property development business remains on track to deliver GBP 150 million of profit by 2032. We have made 2 small acquisitions in the first half, Watertight and Industrial Water Jetting Systems, which form part of a strategic vertical integration of the Severn Trent Water supply chain. This creates opportunities for Infrastructure Services to benefit from the increased sector investment over AMP8 and beyond and gives us further supply chain resilience.

Typically, Infrastructure Services has generated EBITDA in the region of GBP 50 million per year, and we are announcing today that we will double that to around GBP 100 million in FY '30.

Finally, this shows our updated technical guidance and outlook. The 3 key elements of our outlook are: we're reaffirming the doubling of adjusted EPS from 2025 to 2028. We have also announced we expect regulated gearing to be between 60% to 65% at 2030. And we expect Infrastructure Services EBITDA will double to around GBP 100 million by the end of AMP8. Thank you for listening, and I'll hand you back over to Liv.

Thank you, Helen. Now I'm going to start now by taking you through the operational performance over the last 6 months. But before I do that, let me show you what's behind me. Here, we've got some old decommissioned assets being knocked down to make way for some new brand-new settlement tax. And it's that example of consistent investment in our assets in growth and that we're creating real value. And people often say to me, what is it Severn Trent doing to actually outperform the rest of the sector? And I believe there's 4 reasons as to why we're doing so strongly.

The first thing is that consistent long-term investment in assets, making sure they're in strong shape, ready for the long-term needs. The second is that we've embedded a really strong operational culture in Severn Trent. Our people have got a real passion to succeed and to outperform. Now thirdly, over a long period of time, we've actually become a sector outlier in terms of a heavily in-sourced organization. And that means, of course, that we can throw our resource on to activities that need it. It means we've got more ability to be adaptable as issues arise. But actually, you can also embed that genuine passion for operational outperformance. And all of this means that we've had an unrivaled opportunity to do a fast start, both in terms of transition spend, but also in terms of our ODIs in the first 6 months of the 5-year period.

So with that as context, let's head over now to our brand-new built ASP lanes, and I'll talk to you more when we get there. So I brought you over now to see our brand-new ASP, the activated sludge plant. And you'll see there's a huge tower crane, and that helps us build the 10-meter high wall structure. Now when it's complete, the way it works is that the ASP effectively, it pumps oxygen into our wastewater. And that creates or bacteria. And from that, we end up where we break down the actual matter and that creates a beautiful cleaner wastewater product that continues through the wastewater treatment journey.

Now thinking about our capital investment, we feel in really strong shape. Part of that is because we've contracted early. We're actually going to have over 80% of our enhancement schemes contracted by March 2027. But it's also because we stood up our delivery activities in really strong time. And partly, that's because we kind of contracted. It's partly, of course, because we've in-sourced heavily. It's partly the fast start, but it's also critically our plug-and-play technology. It's because of this fast start, because we've got such a strong situation in place that we're so confident of all of our PCDs coming good, both the 2 due this year, but actually the GBP 50 million of outperformance we've called over the course of the 5-year period.

Now with that, I want to take you now to actually take the sample of our final effluent, and then we'll take that to the lab. So we're going into the lab shortly and actually do a test. But to do that, we first of all need to collect the final effluent and take that over to the lab, and then we're going to test for phosphorus once we get there. So what we do is we lower this down carefully and we go and make sure it doesn't get tangled up, put it into the final effluent, sink the bucket very clearly, there we go and then put it back up. And then we take this in a bottle over to the lab, and we'll do the test over there to check that we've got perfect phosphorus standards. Let's go to the lab.

So as you can see, I'm now in the Wanlip lab. I've got a final effluent sample that we just collected a second ago, and I'm going to test that to make sure that there is -- that the phosphorus levels are perfect. Now remember, the reason we test for phosphorus is to make sure that it's actually really, really bad and it's not good for river quality. So we want to make sure that it's absolutely perfect in our final effluent in terms of phosphorus standards. And pretty much every app we get, ever tightening P standards, and that's all part of our desire to make our contribution to the environment even better each and every 5-year period.

Now the way that we do the test is as follows. So we take a bit of the final effluent sample, okay, ready. We take a bit of this perfect, put that in there like that. We then take a bit of the agent here just like this. Okay. one second. I got to use my multiple skills now. Okay. Yes, perfect. We add that into there as well. We then put the top on it. We turn it upside down 4 to 5x just to make sure that the final effluent and the agent are fully mixing. We do that. There we go, there's 3, 4, 5, and then we place it on the machine here, and that will take about 10 minutes. So plenty of time for me to talk to you about water.

Now then our water business has had a really strong start to the AMP. If you look at the big metrics, supply interruptions, leakage and water quality complaints, all of those have had a really strong start. And leakage in particular, is a massive highlight. Now you know that it's a 3-year rolling metric, which means a strong first year, bodes really well for the next few years, which is excellent. We are really pleased this is going to be one of the highest performing ODIs for us financially over the course of the AMP. And we're so proud of the fact that even with a long dry summer, we've still done a brilliant job. We're probably one of only a handful in the sector that will do well on this metric, and it's all testament again to the activities we've done previous. But let me not talk about it. Let's do a video to bring it to life.

[Presentation]

So the good news is the samples come out perfectly clear, so 0.12, which is below the permit. And that's thanks to all the fantastic hard work of the One LIT team. Now these permits, phosphate permits in particular, they tighten, as I said, each and every app. And we know when we look to the future because we've not got a coastline, we have even tighter permits than most people across the sector. So it's great that our performance is so strong, but it also means long-term increased investment across hundreds of our works over the coming AMPs to come. Now then with that, let's head out there again and actually going to talk about spills.

So behind me, you'll see a hive of activity. What we're doing here actually is we're taking repurposed assets and use them for the future. These are old digester tanks that we no longer need. We've got some new brand-new shiny ones you can see right in the distance. What the team thought to do is to take those old assets and actually use it for additional storm water storage. That's just one of the many thousands of interventions being done to improve the number of spills that we have to the environment each and every year. Now we know this is a critical hot topic. We're investing GBP 1.5 billion between now and 2030 in creating literally thousands of interventions, all of which will bring that spills number down.

We were the sector leader in the 2024 performance year, but we weren't happy with our performance. We knew there was loads more we could do. And actually, this year, all of those thousands up to 2,700 interventions over the last couple of years, that's actually helping us come down to what we believe will be an on average 13 spill rate this year, which actually is ahead of our 2030 target already in 2025. Now we've got hundreds of colleagues tirelessly working to achieve that. And there will be some cynics that might say, but hasn't it been a dry year? And yes, it has been, of course, drier than last year's biblical rain, but actually, we've been modeling very carefully. And even if we had exactly the same rainfall as last year, this year, we still would have seen a 27% improvement, which again is fantastic engineering and hydraulic modeling by the team.

Now this isn't just a single AMPS investment. When we look to the future, the next target we need to hit is to make sure that every individual one of those CSOs spills no more than 10x per year. So right up to 2050, we're going to be investing billions of pounds. We have the largest estate actually of CSOs in the sector, over 2,500. And that means this is going to be a long-term capital-intensive investment program for us right up to 2050.

Now with that, I'm going to take you now to see the final settlement tank and talk to you about our wastewater performance. Come with me. So you won't believe it, but I was here 2 weeks ago, and all there was 2 big holes in the ground. I come back 2 weeks later and the teams are flat out and we've now got one fully built final settlement tanker left of me and a very, very well advanced one behind me, which shows the scale and pace that we're building investment across the Severn Trent organization. Now it feels like the perfect location here at Wanlip, here at one of our largest wastewater sites to talk about our wastewater performance for the year across all of the metrics. And of course, I want to start with pollutions.

There's probably no bigger metric, I would say, than pollutions in our sector. When we think about pollutions, we know that we've been a top 3 performer for the last 5 years. Every year of the last AMP, we're a top 3 performer. But that's not enough. We want to go even further with the performance in this space. And that's why we've invested strongly and heavily over the last 12 months and will do for the 5 years to come, be that the 400 pumping stations we're upgrading, be that the AI that we're investing in storm harvest to try and predict pollutions of the future or also making sure we've got fast response teams to get on site even quicker to make sure that we contain any possible risk of damage to the environment.

Now that means that we've seen already at least a 20% improvement in this year on our pollutions performance, which will lead to strong outperformance financially, which is excellent. But as I said, we want to go even further. Now it's not just the pollution metric, though, we're actually green on every single one of our wastewater metrics so far this AMP, which is fabulous performance. And that's true, whether it's external sewer flooding, whether it's pollutions or whether it's spills, it's a really strong start.

Now we know that the crown jewel of wastewater performance is to be green, to be 4-star on EPA, and that's our aspiration. We've landed it for the last 6 years, and we're pushing hard to make it 7. So with that, let me take you over to talk about 4-star status over the sludge settlement tanks. So I'm delighted to be sitting in front of our shiny brand-new sludge settlement tanks. Now the reason I want to stand here and do our update on EPA metrics is partly because we're excited about these because they're IED compliant. That means less emissions, better compliance and reduced risk of any pollutions, but also because they're a key one of our metrics to land 4-star status, and it has to be 100% compliant on the sludge metric, and these are a great supporter towards that.

Now we've just achieved something that no other company in the sector has. we've landed 6 years of 4-star status. It's very hard to do a single year, never mind 6 years. That means a whopping 24 stars from the environment agency. When you look at the measures to achieve EPA 4-star, you get a sense of the wide range. You've got to be good at pollutions. You've got to be good at making sure that all of your wastewater sites are compliant on permits. You've got to be fantastic on sludge treatment. And of course, you've got some water metrics in there as well in terms of managing the balance. So it is a huge accolade to achieve this, and the whole organization is so proud of our track record in this space.

Now 10 months on, I'm pleased to be stood here to say that actually, as we come towards the end of the performance year for this 2025 year, 10 months in, we're green right now on 4-star status for year 7, which would be an even greater achievement.

With that, let's move on to another part of the site. So we've talked today a lot about investment, but I want to move now and actually talk about customers because that investment is actually aimed at making sure our customers receive exactly what it is they want, and we deliver all the improvements that they voted for as part of the price package. Now our commitment to customers is as follows. The first thing is we wanted to have a fast start. We want to make sure that from the very first moment the bills arrive, customers have accelerated upside from all of our improvements, and we did that strongly with the GBP 450 million transition spend.

The second thing is we want to make sure that we deliver at speed. And we're really proud of the fact that we're on track with all of our commitments so far this AMP, making sure that we can still confidently call the full outperformance on PCDs. We want to make sure as well, though, that customers get fantastic service on the everyday measures that we know they care about most, and that's the ODIs and that's the environment agency's EPA metrics. Add to all of that, though, we still know there are some customers that just physically can't afford the bills. It's too much for them. And that's why we've got such a spectacular customer affordability package. And over the course of the 5-year period, we'll help around 1 in 6 families who are struggling to afford to pay for their bill.

Now as well as all of that fantastic work we do to either impress customers, support customers or serve customers, we also like the fact that we're actually part of the community in the Midlands. And we were so pleased this year to once again be named in the top 10 of the Social Mobility Foundations Index. And actually, we came in at a fantastic second place, and that's a testament to all the amazing work we do in our community to support people that need just a little bit of extra help. And of course, all of this comes down to the culture of Severn Trent and to our colleagues. And we know that the single most important thing is making sure that we have a really engaged, highly committed workforce. And as such, we were so proud last week to get our engagement scores, which got higher again to our highest ever score, putting us once again firmly in the top few percent of the global utilities rankings. And that is down to the truly brilliant atmosphere that we have each and every day across Severn Trent.

So with that, it's now for me to summarize for today. So what we've created is a virtuous circle, I believe, at Severn Trent. We've got a really engaged workforce. We've got fantastic assets and capital investment to keep those in a strong place, and that leads to outperformance. So when I think about my summary messages that I'd love you to take from today, the first thing is to remember that we're actually going to grow the RCV by some 60% over the next 5 years. The second thing is that we've got a culture of outperformance and confidence in at least GBP 300 million of ODIs and PCD outperformance over the next 5 years.

The third thing is that we again have started strongly, and that means we continue to reiterate our guidance of doubling the EPS between 2025 and 2028. And all of that added together means that you can look forward to industry-leading returns for the next 5 years but also well into the future because we feel that we've got such a well-setup organization and machine for delivery.

So with that, I'd like to say thank you for listening today and welcome you to any Q&A with myself, Helen and the senior team shortly.