Severn Trent Plc

SVT

GB00B1FH8J72

Water Utilities

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Severn Trent : Governance Report 2025

Published on 06/10/2025 at 01:04 pm IST

Publicnow

SEVERN TRENT PLC

-0.36%

Christine Hodgson

Chair

My governance highlights from 2024/25

Outstanding PR24 Business Plan - the Board invested
a significant amount of time overseeing the response to the Draft Determination on our PR24 Business Plan, rated as 'outstanding' by Ofwat, and considering it, and the Final Determination, in the context of the interests of Severn Trent Water's stakeholders.
AMP8 Dividend Policy - having considered the impacts
on all stakeholders, including the many retail shareholders who rely on dividend income in return for their investment, the Board was pleased to announce the Dividend Policy for AMP8 of annual growth in line with CPIH.
Succession planning - the appointment of a new Independent Non-Executive Director, Nick Hampton, with effect from 4 April 2025, in readiness for Kevin Beeston's retirement from the Board.
Culture and colleague engagement - instilling a high-performance culture is a continual focus for the Board, informed through a programme of site visits and dedicated activities, including scrutiny of our employee engagement survey results to satisfy ourselves that the Group's culture supports delivery of our AMP8 plans - read more on pages 98 to 99.
Net Zero Transition Plan ('NZTP') - in line with the Company's commitment to mitigating and adapting to climate change, our NZTP has been revised to reflect the Final Determination outcome, and an advisory shareholder vote is being tabled at the 2025 Annual General Meeting ('AGM').

Chair's Introduction to Governance

Governance | Chair's Introduction to Governance

Dear Shareholder

I am delighted to introduce our Governance Report for 2024/25, on behalf of your Board and in accordance with the 2018 UK Corporate Governance Code (the '2018 Code'). This report outlines how we have ensured that best practice and effective corporate governance procedures are in place to support the creation of long-term value for the mutual benefit of all our stakeholders.

As highlighted in my Chair's Statement, on pages 8 to 9, this has been another exceptionally busy period for the Board, following developments in both the regulatory and listing environments, with the introduction of the Water (Special Measures) Act 2025 and our ongoing preparations for the 2024 UK Corporate Governance Code which applies to us from the current financial year, 2025/26.

My report, and the pages that follow, set out a summary of the important work that the Board, and its Committees, has conducted during the year in discharging its oversight over the Group's strategy, performance and supporting the long-term sustainable success of the Company, generating value for our shareholders, customers and employees, and contributing to wider society.

Your Board

As announced in March 2024, Gillian Sheldon stepped down from the Board on 14 May 2024, having served on the Board for almost three years, to focus on her Executive appointment. On behalf of the Board, I would like to thank Gillian for her invaluable contribution to the Board's work. We welcomed Richard Taylor to the Board on 1 April 2024, and he succeeded Gillian as Chair of the Treasury Committee. Richard introduces his first Treasury Committee Report on page 127.

Kevin Beeston retired from the Board on 30 April 2025, having served nine years. I would like to express our sincere thanks to Kevin for his invaluable contribution throughout his tenure on the Board, in particular as Senior Independent Director. Kevin's expertise, professionalism and unwavering commitment have

been a tremendous asset to the Company. Over the past nine years, he has significantly helped to shape the direction and success of Severn Trent. We are immensely grateful for his service and wish Kevin all the very best.

Nick Hampton joined the Board as an Independent Non-Executive Director on 4 April 2025 and became Senior Independent Non-Executive Director on Kevin's retirement. Nick's induction is ongoing and he has already met many colleagues across a range of sites.

You can read more on page 111.

PR24 Final Determination

Following a detailed review and consideration of a broad range of stakeholders, particularly customers, colleagues and investors, the Board was pleased to accept the Severn Trent Water Final Determination for the period 2025-30, as published on

19 December 2024.

I, along with my fellow Board members, am eager to see the results of the increased investment over the course of AMP8. This will allow us to deliver significant progress on customer service and the environment, all whilst maintaining the second lowest bill in England and supporting around one in six customers with their bills by 2030 through a £575 million affordability package. In addition, we make this investment with extensive regulatory mechanisms in place which offer protection to both customers and investors. You can read more on page 5.

Environmental performance

Another topic of significant Board, customer and wider stakeholder focus is environmental performance. This is an area where our long-term investment continues to deliver performance improvements. However, we are not at all complacent and this year has highlighted that, despite the performance improvements made

in some areas, we know there is more we can do to improve. We have invested £1.7 billion in 2024/25, a 40% increase year on year, bringing our total investment in AMP7 to over £4.8 billion. It is pleasing to

see this investment reflected in our Environmental Performance Assessment ('EPA') performance; we achieved EPA 4* for the fifth consecutive year last year, although we were disappointed with our overall pollutions performance. Read more on page 18.

We are confident that we will achieve EPA 4* for a sixth consecutive year this year. We have also reduced the Severn Trent Water share of Reasons for Not Achieving Good Status ('RNAGS') to 10.8% as our Combined Sewer Overflow ('CSO') Improvement and Get River Positive programmes drive long-term improvement in river quality.

Our Green Recovery programme has also now completed, resulting in numerous benefits to the environment in our region. You can read more on pages 22 to 27.

Severn Trent Plc Annual Report and Accounts 2025 | 95

Chair's Introduction to Governance continued

Dividend

Whilst this report sets out the matters considered in relation to the Severn Trent Plc dividend (the 'Group dividend'), in response to

increased stakeholder focus on regulated company dividends within the water sector, the Board applied particular focus to the proposed Group dividend during the year, in consideration of:

our regulated company performance in the round and over time, particularly service delivery for customers and the environment;
the Company's long-term investment needs; and
financial resilience.

Detailed disclosures on the Severn Trent Water Limited dividend can be found within that company's Annual Report and Accounts and Annual Performance Report. A link to where these reports can be found when they are published on 15 July 2025 is provided below.

To provide transparency for our shareholders and wider stakeholders, we have summarised the process that the Board undertook to assess the Company's performance in the round and stakeholder impacts, ahead of determining whether a Group dividend should be paid. Further detail can be found in the schematic on the next page.

Following this assessment, in line with our formal Dividend Policy, the Board determined that the proposed Group dividend would not impact the financial health of the regulated company, nor its credit ratings.

The Board also considered that the proposed Group dividend was supported by the regulated company performance in the round for customers and the environment, both now and over time. The Board is therefore proposing a final dividend of 73.03 pence per share, to be paid on 15 July 2025, taking the total Group dividend for the year to 121.71 pence per share.

Given that many small retail shareholders, and many pensioners, rely on our dividend payments, we are pleased to be able to sustain our dividend commitments for the next five years, with the Board approving the AMP8 Dividend Policy of annual growth in line

with CPIH.

I had the pleasure of meeting shareholders again this year to discuss our performance. Our consistent results emphasise that we are well placed to uphold our high standards of service delivery for customers, and the environment, and provide a sustainable platform for investment and performance improvements in areas that are important to our stakeholders.

Stakeholders

The Water (Special Measures) Act received Royal Assent on 24 February 2025. A number of provisions came into force

immediately, including those in relation to financial reporting and transparency outcomes. At the date of this report, the outputs from Ofwat's consultation related to performance-related executive pay is still awaited. The Board will consider carefully the outputs of the consultation, and associated guidance, when published. Similarly, the Board will also apply focus to the wider proposals outlined

by Ofwat in its consultation on its rules on governance, including customers' involvement in decisions that are likely to have a material impact on them. In line with our established and robust governance approach, the Board remains fully committed to facilitating meaningful engagement to gain authentic insight from all of its stakeholders, particularly customers.

Our people

One of the most valued and enjoyable aspects for our Board is the opportunity to meet and spend time with colleagues across the Group. The conversations that take place inform our direct understanding of the sentiment of our workforce and their views on the Group's operations, risks, successes and challenges.

We each enjoy attending the Company Forum, our chosen workforce engagement mechanism, to hear directly from employees and members of the Trade Unions, but also to share the topics on the Board's agenda and answer any questions on these. During the year, we held another 'Meet Our Board' event, which was attended by

a variety of colleagues from across the Group. I would like to thank those who took the time to attend and share their experiences with us.

Alongside these direct interactions, everyone that works for and with us has the ability to report any concerns in strict confidence through our independent 'Speak Up' process. They can raise concerns through their line manager, Senior Management or HR Team, and through our confidential and independent whistleblowing helpline and online channel, 'Safecall'.

As set out on pages 98 to 99, these interactions assist the Board

in assessing and monitoring the Group's culture, beyond the scores and feedback from our employee engagement surveys. The Board has concluded that our high-performance culture is embedded across the Group and we observe it being demonstrated consistently at all levels.

Looking forward

Despite only being a few months into AMP8, we have already made great strides in delivering our plans, particularly focusing on the investments that will provide improvements in the areas that our customers and wider stakeholders have told us are important

to them.

I want to thank everyone involved in Severn Trent this year - our customers, communities, investors, regulators and suppliers, and

a very special thank you to our colleagues, for their passion and hard work to ensure a strong end to AMP7 and the commitment to the next five years of providing a high-quality, essential public service.

Christine Hodgson

Chair

Scan the QR code to visit the Severn Trent Water Regulatory Library - the Severn Trent Water Annual Report and Accounts and Annual Performance Report will be available from 15 July 2025

Quick facts

Christine Hodgson was considered independent upon appointment to the Board on 1 January 2020.
The Board considers that all Non-Executive Directors remain independent.
The biographies of individual Directors are set out on pages 100 to 101 and include details of the skills and experience each brings to the Board to contribute to the Company's long-term sustainable success.
All Directors are subject to election at the AGM which will be held on 10 July 2025. Following the completion of this year's performance review, the Board concluded that each Director standing for reappointment continues to contribute effectively.
The Board recommends that shareholders vote in favour
of those Directors standing for appointment or reappointment at the AGM, as they will be doing in respect of their
individual shareholdings.
The version of the Corporate Governance Code applicable to this Annual Report is the 2018 Code. This Annual Report

explains how we have applied the principles of the 2018 Code and confirms our compliance with its provisions for the financial year ended 31 March 2025. Read more on page 103.

96 | Severn Trent Plc Annual Report and Accounts 2025

Performance in the Round

Governance | Chair's Introduction to Governance

Interests of the Company's employees

Robust assessment of the Company's commitment to its employees, supported by deep dives and consideration of impacts on employees as follows:

Assessment of employee benefits
- including talent management, career development and broader incentives.
Health and Safety performance
- including our people, supply chain and the customers and communities we serve. Read more on page 20.

In its assessment, the Board also considered the impact of the proposed Group dividend on

employee shareholders, including the overwhelming majority of our employees who own Severn Trent shares, either directly or through our share plans - such as Sharesave, which over 70%

of our employees participate in.

Performance for the communities we serve

Robust assessment of long-term value creation for the mutual benefit of our customers and communities, shareholders in

our communities, the environment and our people, supported by deep dives into the following key areas:

Affordability.
Read more on page 21.
Societal Strategy.
Read more on page 21.
Health and Safety performance.

Read more on page 18.

This reporting-based approach is supported by site visits to bring operational challenges to life and enable the Board to meet employees involved first hand.

Read more on pages 98 to 99 and 106 to 107.

Financial performance and resilience

Assessment and scrutiny of the proposed Group dividend in the context of Ofwat's

PR19 methodology, subsequent guidance and Companies Act 2006 requirements, in particular that dividends may only be paid out of profits available for the purpose. This process included an

assessment of the proposed Group dividend, and historic dividends paid, in the context of the Company's:

Ongoing liquidity and solvency
to ensure the Company's ongoing financial resilience.
Performance against its determination.
Scrutiny of the various scenarios and sensitivities underpinning the Company's viability assessment, financial performance and resilience.

The assessment also considered the impact of the proposed Group dividend on the strength of Severn Trent Water's covenant as the sponsor of its defined benefit pension schemes.

Legal and regulatory requirements

Consideration of legal requirements under the Companies Act 2006 and regulatory requirements in relation to the Group's regulated water companies. The Board's assessment sought

confirmation that:

The Company has sufficient distributable reserves to pay the proposed Group dividend.
The dividends declared will not impair the Company's ability to continue as a going concern.
Ofwat's requirements relating to dividends paid by the Group's regulated companies are considered in those companies' Annual Performance Reports.

Interests of shareholders and debt investors, and the need to act fairly between members of the Company

To make the investment needed, companies need committed long-term investors to fund the significant investment for AMP8 and beyond, improve service delivery for customers and the environment over time, whilst promoting intergenerational

fairness. The Board's assessment included consideration of:

Gearing impacts, in particular that dividends should support appropriate gearing to maintain the balance of risk between existing equity and debt investors.
Attracting investment in the sector, recognising that dividends are a key factor
in investment decisions for shareholders, which represent the main return to equity both now and to promote long-term investment into the sector.
Investor expectations to earn

a fair return on their investment and the higher risk taken by equity investors relative to

debt investors.

Decision in determining whether a dividend should be paid

The Board also considered that the proposed Group dividend was supported by the regulated

company performance in the round for customers, communities and the environment, both now and over time. The Board therefore proposes a final Group dividend of 73.03 pence per share, to be paid on 15 July 2025.

73.03p

final Group dividend

All areas of performance, and stakeholder impacts, are considered in the Board's decision in determining whether a dividend should be paid.

1Plan

2 Measure

3 Improve

4 Review

5 Monitor

Inform future activity

Severn Trent Plc Annual Report and Accounts 2025 | 97

Our Culture Why is culture so important to the Board?

Culture drives effective thinking, behaviour and action, and supports

a high-performance culture. It ensures that we always try to improve, learn from events and adopt best practice from around the world. This means we achieve the best possible outcomes for our customers and wider stakeholders. As such, it is crucial that we have the necessary culture in place to achieve the Company's purpose of taking care of one of life's essentials.

Severn Trent's culture, underpinned by our Code of Conduct, Doing the Right Thing, ensures that the Group's

values are embodied by our people and teams when they make decisions and elect to take a certain course of action. This builds trust and fosters an environment of transparency, open communication and collaboration.

The Board recognises the need for the Group's culture to be inclusive, so that all colleagues are able to bring their whole selves to work, fulfil their

How does the Board satisfy itself that our culture is aligned with our purpose, values and strategy, and is embedded throughout the Group?

The Board spends a significant amount of time engaged in activities that provide insight into Severn Trent's culture. Through this engagement with our people, the Board can observe how the culture is established throughout the Group, aligned across directorates and demonstrated by each and every colleague. More detail is

provided below.

Company Forum

Our chosen workforce engagement mechanism, the Company Forum, provides an opportunity for employee and Trade Union representatives to meet with Board members on a regular basis, helping them to stay connected to the direction of the Company and be involved in business decisions.

Members of the Board and Executive Committee attend the Company Forum on a rotational basis, so each Director has the opportunity to listen directly to what employees have to say and for our employees to hear about the matters that the Board is reviewing and considering. Agendas are comprehensive and varied, so attendance at the Company Forum provides Board members with a better understanding of day-to-day operations, the practical execution of strategy and the cultural context in which employees work. It ensures that views from

a diverse cross section of the workforce - in terms of seniority, gender, ethnicity, tenure of employment and job types - are

considered in Board discussions and decision

making, and each meeting generates

potential and perform at their best in order that, as an organisation, we can deliver our strategy. Culture is also

a key ingredient in attracting and retaining the talent we need in the workforce to deliver for our

customers and other stakeholders, both now and in the future. It is also inextricably linked to our succession planning processes.

The Board and individual Directors must act with integrity and lead by example in order to promote the desired culture, which is why Board members complete the same mandatory e-learning modules as

Our Company Forum provides a brilliant, in-person opportunity for Board members to engage directly with employees on topics they are passionate about.

Sharmila Nebhrajani

Independent Non-Executive Director

wide-ranging exchanges of opinion and insight. Feedback from the Company Forum indicates the great value placed on the attendance of Board members.

Through attendance at the Company Forum, Directors can observe whether the Board's chosen workforce engagement mechanism remains effective. Directors provide feedback to the Board as a whole through reports tabled at subsequent Board meetings.

Read more in our Stakeholder Engagement section, including in relation to engagement undertaken with the workforce around Executive remuneration, from page 84.

colleagues, covering topics including Doing the Right Thing, Anti-Bribery

and Anti-Fraud, and Modern Slavery Awareness.

Our values

Ask Our Board and Meet Our Board events

Following the success of our virtual 'Ask Our Board' events introduced to continue the direct dialogue between the Board and workforce during the COVID-19 pandemic, we moved to in-person 'Meet Our Board' events

during 2023.

Our most recent 'Meet Our Board' event was held in January 2025, which was attended by colleagues from across the Group. The session built on employees' understanding of the Board's and individual Directors' roles at Severn Trent. Employees were also able to pose questions directly to Board members. Feedback from the event has been wholly positive, with both Board members and attendees reporting that the open and inclusive tone of the session provided an informal and trusting approach to engaging with each other.

Latest news about Severn Trent Plc

11/02	FTSE 100 climbs ahead of US nonfarm payrolls	AN
11/02	Severn Trent confident in 2026 as "highest-ever year" of investment	AN
11/02	Severn Trent's financial performance is in line with expectations	RE
11/02	Barratt Redrow profit up; Severn trading in line	AN
11/02	Severn Trent Says Trading in Line With Expectations	MT
11/02	UK stocks - Factors to watch on February 11	RE
03/02	Morgan Stanley cuts Antofagasta	AN
29/01	England, Wales household water bills rise by average 5.4% from April	AN
23/01	Jefferies Upgrades Severn Trent to Buy, Boosts PT	MT
23/01	Jefferies raises Severn Trent; Davy cuts Weir	AN
23/01	UK retail sales rise; Babcock CEO to step down	AN
20/01	Stocks sink as Greenland tensions hit sentiment	AN
20/01	Berenberg cuts Whitbread; Citi ups Severn Trent	AN
19/01	UK Shares Start Week in Red Amid Renewed US Tariff Risk	MT
19/01	Goldman Sachs ups targets for Schroders, LSEG	AN
12/01	Miners drive FTSE 100 up despite Fed probe worry	AN
22/12	Severn Trent CFO Helen Miles sells GBP600,000 in shares	AN
12/12	JPMorgan Downgrades Severn Trent to Neutral, Trims PT	MT
12/12	Jefferies says 'buy' InterContinental Hotels	AN
05/12	FTSE 100 falls despite benign US inflation print	AN
22/11	Severn Trent PLC, Q2 2026 Earnings Call, Nov 19, 2025
21/11	Europe falls after dramatic New York reversal	AN
20/11	Berenberg lifts Atalaya Mining to 'buy'	AN
20/11	Severn Trent PLC Announces CEO Changes	CI
20/11	Severn Trent PLC Announces Board Changes	CI

Chart Severn Trent Plc

Duration

Period

SVT: Dynamic Chart

Company Profile

Severn Trent plc is a British leader in potable water distribution, waste treatment, and supply of environmental services. Net sales break down by activity as follows: - drinkable water distribution and decontamination services (90%): water distribution and management of sewage systems for over 4.7 million households and businesses in the United Kingdom; - renewable energy production (5.3%); - services (3.8%): design, building and operation of wastewater treatment facilities, consulting and maintenance services, etc.; - other (0.9%). All net sales are generated in the United Kingdom.

Employees

9,846

Sector

Water Utilities

Calendar

27/05 - Q4 2026 Earnings Release (Projected)

More about the company