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Olivia Garfield: 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.
Sarah Lester: Good morning. Well, we knew the day would come Liv. 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, about 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.
Olivia Garfield: Brilliant. Okay. So first of all, thank you very much. There are 11,000 Severn Trent's 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 answer 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?
Stephanie Cawley: Yes. So we're doing really well across the piece, but it's the big 3 that we're really excited about, so it's 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.
Olivia Garfield: 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?
Helen Miles: 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.
Olivia Garfield: Very good, James.
James Jesic: 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 AMP8, 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.
Olivia Garfield: Very good. And I guess what's going to come next year in terms of that performance, plus performance on totex and RCV growth?
Unknown Executive: Yes. And 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 GBP 500 million. That was additional LCV growth. And 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 a 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.
Olivia Garfield: Very good. Fantastic. You can come back later with any more questions. I'm going to hand to Dominic now. Dominic?
Dominic Nash: 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 continue to 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, sumo 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, so sure it will be fine. A couple of questions for me, please, actually. 1 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% RoRE 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 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?
Olivia Garfield: Really, 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 the record there were 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 Trent will 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 are 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 of 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 RoRE. 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 RoRE 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 Seven 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 through 3 things. 1 is don't forget the sources of water we have. 2 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.
Bob Stear: 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 Derwent area and Elan 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.
Olivia Garfield: You always send the 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 Julius, next.
Julius Nickelsen: Congratulations to the strong results. And obviously, very sad to see you Liv. 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 [indiscernible] here, but what makes you think or like what convinces you that Severn Trent even without you Liv, can continue to be like the highest quality company in the sector and continue to outperform on the ODIs like it has done in the past would be interesting to hear your thoughts.
Olivia Garfield: 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 I will continue. 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 GBP 2 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?
Helen Miles: 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 our path 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.
Olivia Garfield: 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're 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 Pat.
Unknown Analyst: 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.
Olivia Garfield: I love it. Feel free to cry. I'm okay. If you want to cry, you need tissues.
Unknown Analyst: 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?
Unknown Executive: So I'll start with the second one first. I mean I'd rather you saw Emma Hardy'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 was shared desire to see the sector succeed. So I think there is absolute desire by both Emma Hardy 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 please.
Shane Anderson: So I guess from an investor or non-impellent 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 just keep bringing that up. And 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 appellant 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 [indiscernible] 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 PR29, higher WACC and a lower frontier shift.
Olivia Garfield: Mark over to you.
Mark Freshney: Wishing you all the best for the future Liv and looking forward to seeing what you're going to do next. Just 2 questions. Firstly, if there's 1 regret that you've got over the last 12 years at Severn Trent Liv, 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?
Olivia Garfield: 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 Welsh mid pop of Wales down into Birmingham. And it's the called Dee and [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.
Alexander Wheeler: 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. 2 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?
Olivia Garfield: Very good. So Helen, do you want to talk first about at least GBP 500 million...
Helen Miles: 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. And 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 capital reopeners, 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 biblically 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 dry year. 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.
Olivia Garfield: Very good. Okay. A.J., over to you.
Unknown Analyst: I'd like to echo the thoughts. Thank you Liv 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. And 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?
Olivia Garfield: 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.
Helen Miles: 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.
Olivia Garfield: And I guess it's worth bringing out how we think this actually underpins and helps to 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.
James Jesic: 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.
Olivia Garfield: Ahmed?
Ahmed Farman: Liv thank you from my side as well. And 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.
Olivia Garfield: 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?
Shane Anderson: 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 Ofwat's identified 10 priority asset classes from an asset health perspective, the big one being on 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.
Olivia Garfield: Very good. Dominic, come back in for seconds.
Dominic Nash: 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 with 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 PFAS heavy areas of the U.K. I don't think you've got much in your totex for AMP8. 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.
Olivia Garfield: Very good. So 3 questions there. I mean, so annoyingly, as 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.
Dominic Nash: Sorry, does that mean that James might actually be a 5-star CEO.
Olivia Garfield: 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, Shane, do you want to mention how much money we had to put aside. We actually have quite a nice bit of money actually, Dominic.
Shane Anderson: It was over $100 million in relation to PFAS, plus additional $300 million in water quality.
Olivia Garfield: Exactly. So we've got a few 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?
Bob Stear: Well, perhaps one of the key things is Marcus Rink, the Chief Inspector from the drinking water inspector, actually gave a speech at the British Water Conference the other week. And he was talking about 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 Bruntsfield 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 this year 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 do 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.
Olivia Garfield: Very good. Bartek, over to you.
Bartlomiej Kubicki: 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 GBP 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 GBP 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 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?
Olivia Garfield: Very good. 3 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, or 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 mainslay. So if you look at the money they have funded, they have funded GBP 0.5 billion worth of mainslay 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.
Helen Miles: 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.
Olivia Garfield: 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 subject 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.