Publication date: 28-06-2025
Severn Trent Water Limited is a monopoly provider of essential water and wastewater services in the Midlands region of England, serving 4,7 million households and businesses. Its operations are fully regulated by the UK government. Prices (tariffs) are set by Ofwat, the independent regulator for water companies in England and Wales, based on each company’s operating and capital costs. This framework provides strong earnings visibility and protection against cost inflation.
The company operates under five-year regulatory periods known as Asset Management Plans (AMPs). The upcoming AMP8 period (2025–2030) includes a £13,3 billion investment plan aimed at improving infrastructure and environmental outcomes. Ofwat has set a return of 4% above inflation for Severn Trent’s regulated equity in AMP8, and added a bonus for the company’s high-quality business plan.
Severn Trent’s performance is assessed using Outcome Delivery Incentives (ODIs), which reward or penalise the company based on service levels. In FY2024/25, the company earned £68 million in ODI rewards and achieved a 9,3% return on regulatory equity (RoRE). In September 2023, the company raised £1 billion in new equity to help fund its investment plans. As a result, its debt level (relative to the value of its regulated business) is expected to stay around 65%, while the value of that regulated business is forecast to grow by about 40% over the next five years.
The 6,25% coupon bond maturing in June 2029 is senior unsecured, guaranteed by Severn Trent Water, and rated Baa1 by Moody’s and BBB+ by S&P. It offers a solid income option for investors in GBP, backed by a stable and well-regulated business.
as of 31.03.2025 GBP bn
| Column 1 | Column 2 | Column 3 | Column 4 | Column 5 | Column 6 |
|---|---|---|---|---|---|
| Assets | 15,9 | EBITDA Margin | 42 % | CFO/Debt | 0,1 |
| Revenue | 2,4 | Net debt | 8,6 | FCF | (0,9) |
| EBITDA | 1 | Net Debt/EBITDA | 8,3x | Equity | 1,8 |
| Net Profit | 0,2 | EBITDA/Interest | 4x | Debt/Equity | 5,5x |
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