Severn Trent PLC (LSE:SVT) has reaffirmed its guidance for the 2027 financial year, moving quickly to reassure investors following a regulatory investigation into its wastewater operations.
The FTSE 100 water utility confirmed that trading since the start of the financial year had been in line with expectations, with both operational and financial performance continuing to build on a strong start.
Management said it remains confident of delivering at least £50 million of total performance incentives during the current financial year.
The update follows an Ofwat enforcement investigation that concluded with the regulator finding Severn Trent had breached its duties and acknowledging there had been serious failings in its handling of drainage and sewage services.
Despite those findings, Ofwat decided not to impose a financial penalty, citing the fact that the company had identified the problems itself, invested to address them, and cooperated fully with the investigation.
The decision not to fine the company will come as a significant relief to shareholders, removing a potentially material financial liability from the table at a sensitive point in the business cycle.
Severn Trent said its investment programme remained firmly on track, with around £440 million of capital expenditure recorded in the first quarter, representing a 22% increase on the same period a year earlier.
The company expects to invest between £2.2 billion and £2.5 billion across the 2027 financial year as it continues upgrading infrastructure across its network.
Severn Trent also highlighted a refinancing of its core bank facilities completed in June, increasing committed facilities to £1.65 billion across Severn Trent Water and Severn Trent as a combined entity.
The company said the refinancing strengthened its liquidity position and reflected favourable access to debt markets at a time of continued heavy capital investment.
Investors will have a further opportunity to assess progress when the company reports its interim results, which are scheduled for mid-November.