Severn Trent PLC (SVT) Earnings Call Transcript & Summary

Good morning, and welcome to the Severn Trent 2021-2022 half year results Q&A session. So hopefully, you've had a chance already to view the presentation and see to the links of the videos, which works well. And in the room, you see James on camera now, but actually we've put the whole senior management team. So feel free to ask any question you wish because we've got the whole presence of our senior management team with us today. Now in terms of how do you ask a question, you might be thinking, remind me, Liv, how do I do it. So you go to the reactions button, which is the bottom right-hand corner of your screen right now. And then you click on the raise the hand option, and that will then allow you to either ask questions live, so we'll come to you during the course of it. Or you can also decide to ask a question online. So that's how it works. So I'll hopefully see some questions begin to come through.

In the meantime, I've got one that has come through here, and on, James, it's for you. So it says, walk me through your reaction and feelings on inflation?

Okay. So I think the key takeaway on inflation is that it's positive for water companies, but it's particularly positive for Severn Trent. And that's because when you look at the overall model, we only have -- we have less than 30% of our debt that's index-linked. So there'll be lots of focus on our interest line at the half year. But actually, a lot of that is around timing. So keep in mind that every 1% that you see of inflation, you may see an impact on our interest cost line, but 1% additional inflation means an extra GBP 95 million of RCV growth. And then when we think about next year, the impact on revenue, that 1% of additional inflation is worth around GBP 14 million of additional revenue next year, and it's the November CPIH number that is taken into account for revenue. So based on current projections of where we think CPIH might be for this month, we're looking at an extra GBP 55 million of revenue next year, just as a result of that higher inflation in this month. So there is some timing going on. When it comes to actual costs, I feel very confident that the team here at Severn Trent can manage those costs effectively. So on energy, there's quite a few moving parts, but the key takeaway is that on energy, we have a very effective 50% self-generation hedge, which means that even seeing the very high wholesale prices that we've seen this year, which are feeding into that inflation number, actually, the impact on our RoRE is neutral. We're talking sort of low single-digit basis points on RoRE because of that natural hedge. On capital, my colleague, Helen has got a lot of our activity already contracted in. So we feel in good shape to manage inflation on our capital base. And of course, as I said in the results, in my presentation, for labor, we have a 2.3% pay deal, and we're in year 2 of that 3-year deal. So I feel very confident that the team can manage our costs below inflation and the result of that good news to come through in RCV and revenue as that inflation flows through into future years.

Very good. Right. We're going to get to our first live question now. Mark, it's yourself. So we've got a nice Crédit Suisse banner on the top corner. Over to yourself.

Can I ask you a question, please, Liv, just on flow to full retreatment environmental agency conditions? I mean, as I understand it, Ofwat, some of the other regulators have become suspicious that the industry is not reporting everything. How confident are you that your business has been reporting all the various overflows and -- how confident are you?

Brilliant, thank you very much. So you would have seen that we've welcomed quite openly the investigation this morning. Regulators have got a critical role in our sector. And if ever they feel that they -- there is an issue in the sector, into sector wide investigation, as you said, and quite rightly, they've got to call that out and they've got to investigate it. And we welcome scrutiny. We're perfectly comfortable for -- that's what we want regulator to be. We say openly that strong regulators make for strong sector. And we've got a strong track record of being very open and transparent with all of our data. And as such, we'll be submitting our data pretty promptly over the course of the next few days, the first wave of data into Ofwat to the EA. And we've been in active dialogue on all parts of our business throughout this price view and the loss. So feel comfortable that they are opening an investigation and feel comfortable submitting our data as promptly as possible to allow them to prove it and then move forward. Don't have any idea on timeline, I'm afraid, if you're going to ask that question. So the first thing, and the only thing we can do at this stage, is the supply of data they've asked for and allow them then to crack on with their analysis.

Okay. And just a follow-up question for James, just on the energy hedging. Self-generation, and that may rise over time. You mentioned on the video that you've accelerated some of the hedging earlier this year on the 50% that's not self-generation. How far have you done that hedging? And how does it compare to what was in the FD?

So we've got about -- for the rest of this year, we're hedged out to around 97% of our energy prices. We've got a few hedges that extend out into future years. But the key thing to keep in mind is unlike a lot of other companies, the level of self-generation that we have provides a very effective economic hedge. And what I'm focused on is that impact on RoRE. So I feel very comfortable as a group across our regulated and our nonregulated business, we're in the right place to manage wholesale prices as they go up and down over the next few months.

And simply, we've outperformed against the FD when you look at our stat we have on energy, and I guess, we'll be looking to do the same this time around, right. So I guess we're any more guidance than that in terms of that, but that's a strong track record for the past down hopefully for the future.

No hedging for '20 -- year ended March 2023 above the 50% self-generation?

That's not what I said. What I said is that for the remainder of this year, we've got hedging that covers it 100%. As we go out into future years, there will be some hedging, it won't be 100%. But you typically -- we focus on that economic hedging, which is effect -- gives us an effective 100% hedge when you take into account, the cost sharing across the price controls. And that's the key -- the key point for investors.

I move to Dom now. I think you've sleekly got in with 3 questions there. Nicely played, but we're going to move to Dom now and see what questions he's offers.

Can you hear me okay?

We hear you beautifully.

Fantastic. A couple of questions from me then, please. Firstly, going back to your first point, on inflation. Can you just talk through exactly how the financing outperformance will work and flow through and what's our cost sharing -- financing sharing that you're going to have to do with consumers as the high inflation comes through the high allowed nominal cost of debt versus your book? Secondly, on the ODI numbers, you obviously increased those this time around, which is good. But I think a couple of weeks ago, Ofwat pretty much said that I think GBP 45 million of ODIs from the previous review of being deferred. Do you think this GBP 75 million is likely to be permanently deferred? And do you think we'll start to see that added to the RAB, will come through in revenues in the future years. And then so I think I just wanted to follow-up on Mark's question on the Ofwat investigation. Do you think you have been misreporting your outflows?

So let's get to all 3 of those. So we'll do ODIs, which I'm going to start off with and then I'll also hand to Shane just to cover off and link those charges. I'll pick up the Ofwat question, and I'll get James to do the inflation question. So imperatively, the way that it's at a high level, earning more ODIs, obviously is a great successor, because it means that the measures our customers care about most, we're improving our performance against it. And actually, I think what was pleasing for us about the Ofwat recently is it ratified all of our performance in terms of the first year, the AMP7, because obviously, you've got new measures, you've got a new AMP. And that first year is to really work with them and just I guess, fully submit all the data and all the evidence, and then to conclude and move forward. And certainly, for other people, there were some changes for us, it was a really strong performance that Ofwat recognized, our strong performance in that first year, and that gives us confidence pushing forward for the remainder of the AMP against those measures. But we choose actually how we take the revenues. So we've chosen to defer that number, and that's because we don't want bill-shock, but I'll let Shane talk you through it.

Yes, that's right. So we're not permanently deferring the ODIs. We just have a number of different components this year. So inflation, the RFI adjustment, Green Recovery and K factor. So next year -- so after we set this year's charge, the RFI will drop out, so we'll create more headroom to take some of the ODIs. So it's not a permanent deferral. It's just managing the bill impact. As we did last one, use 1 of only 3 companies to do that. So we'll just be looking to manage that again this AMP.

And one of thing we said, in an ideal world, and you've never know if you've got an ideal world. But in an ideal world, you would be able to create a bit of a war chest to carry over into the next AMP. So actually, that for us is what we've consistently said. When we look at our success of going from AMP6 to AMP7 and being confident in our long-term progressive growing dividend policy, having the war chest of ODIs meant that even though the WACC was particularly low this time around, we're able to shield ourselves and it was a really tight price control. I mean PR19 is a very, very tough price control to deliver successfully against and having that war chest for ODIs certainly shields us and give us full confidence. To be fair, if we're able to deliver strongly now, if our inflation numbers are good, if things are good across the piece of this AMP, then being able to carry that war chest over into the next AMP or some of those ODIs will be part of our long-term strategy. We've always been open that we would see as positive. So we'd be confident to take some in period and some not put it as necessarily as the balance sheet adjustment, but actually to carry over as revenue into the next price control. And don't forget, they come to you as an advance, so anything you owe in years 4 and 5, you have to carry over into the next AMP anyway because that's just the nature it works.

So it's just probably, they are adjusted for inflation and time value of money as well. So we're not missing out of that.

Very good. So I think we've covered that in full detail. So give me a second one. I mean -- so which was your question about Ofwat investigation. So I think the question you're asking is, do I feel confident that we've consistently shared good transparent open data with the regulators? Yes. That's what I feel is the situation. Do I feel that our wastewater business is well run? I do think it is well run. And I think the only thing I can say to look at is 2 things. One is we've got -- we're further ahead with monitoring of that particular asset class than anybody else in the sector. We're actually it's over 80% monitoring of that asset class. Whereas actually the second competitor to us is somewhere like 60%. So [that show] is an asset class that we've been focused openly on and working strongly to make sure we have strong hones. The other thing I'd reference is 4* status. So one of the key measures of 4* status is compliance to work and we've been consistently green against that measure. So I can't give you more than that, but hopefully that gives you some sense of positivity in terms of our experience and our performance more critically in the [indiscernible] business. And now literally ready to pass. Go for it.

So yes, so I think you asked 2 components, the impact of inflation on RoRE. And where you see it, Dominic, is on the financing line. So you get this slightly counterintuitive kind of impact on RoRE that even though in-year interest costs rise, they actually -- if you've got the right structure in your debt, then you actually see RoRE improve in a higher inflation world. So I am expecting to see our RoRE performance improved, not least because of the ODI performance, but also because of the impact of inflation on financing. So you will see a higher number this year if inflation continues to be as it's been. In terms of sharing that outperformance, well, there's no sharing about outperformance. That's for us to keep. And it's probably worth kind of reminding you that, that sharing kicks in when you have very high levels of gearing. And of course, our gearing is now down in the low 60s. So that doesn't apply to us. Does that answer your question?

Yes.

Perfect. Okay. We're going to add to Martin, next. Martin, Investec.

Yes. Two questions, if I can, please. The first gets back to the sewage spill issue. But I guess, looking at it in a slightly different way, there is a bit of a narrative from the industry that the rules could have been adhered to. But obviously, this has gone up now in the public conscience. What changes do you think we could be thinking about longer term in terms of what requirements might be imposed either by Ofwat or the EA and what do you think that means in terms of investment for the industry and yourselves? And then getting back to inflation, obviously, high inflation feeds through to the consumer pocket. Just wondered how you square the circle here of affordability of higher inflation on bills?

Brilliant. So 2 reading questions. So on the first one, so the way that we see this, is that we want to be as a company, a company that adds fantastic quality value to river of all stages. And if you look at the 25-year environment plan, it gives a really perfect detailed outline. It's now passed into law, hasn't it? And it is a perfect outline over a 25-year period of what every sector has got to do to get ecologically good river status. And the ambition for the nation is to get 85% of rivers to ecological status over a 25-year journey. And what we think the answer is in Severn Trent, which have been open for the last month or so about is that we would like to have to make sure that we deliver in 9 years, not wait for 25 years. So between now and 2030, our commitment to our regions, to our customers, to our rivers is that we'll improve all aspects of our organization to make sure that we deliver all of these things. They're called RNAGS, reasons for not achieving ecologically good status and they're quite a nice little thing up until now, but I suspect they're going to become mainstream. So your question is, what do I think will change. One of the things that will change, I think, is that people will talk openly about RNAGS and that you'll ask us about them, and I'm sure in future results, we'll be saying to us how many RNAGS you improved this year. And in the last year alone, we've actually improved over 10%. And this is something we're going to begin openly reporting is RNAGS, we think genuinely it's a really important measure, because it shows every aspect of our interrelationships with the rivers, how improving. So that's one change that we'll see. I think the second change that we're going to see is, we're in all likelihood, likely to have a future investment strategy that invests on an average number of spills. So again, when you look at the next AMP, I think you can imagine moving into a conversation topic about that. The CSOs are a critical part of the infrastructure in the U.K. and Europe. So that if we don't have CSOs effectively, you are -- you'll have surface drainage, possibly spilling houses. So I think the second big change you might see is an ongoing ambition around reducing that spills with CSOs. Now the water that comes to CSOs, as you know, actually, the [indiscernible] river is very minimal. It's about 3% of the total reasons for not reaching ecological status. But it does, as you say, have high press content, and it has a really high dilemma in terms of the [indiscernible] public. So I think that's likely to be the conversation topic. So 2 things we'll talk about more, I'm sure going forward, is RNAGs and number of spills. So hopefully, that helps in terms of giving a sense of where it's going. In terms of affordability, I mean, we're passionate about this, right? James is going to jump in.

Yes, absolutely. So affordability is absolutely at the heart of our customer offering. Now you have seen in our RNS that we're now helping over 160,000 customers who are struggling to pay. We have a number of schemes, including the big different scheme, which has been running for, I think, 5 or 6 years now. We've got the Severn Trent Trust Fund, which has GBP 3.5 million that we help customers who are struggling to pay their bills. So there is a lot of help. And the other thing to keep in mind is that lots of household bills are rising. But the Severn Trent water bill is one of the lowest utility bills that our customers have at around GBP 1 a day. So I think there's a lot of lot of support there already. And another small thing that we're doing, just as an example of the kind of things we're helping to keep our bills affordable. So we've got a really big drive on at the moment on voids. And why is that important? Well, if we can identify and rapidly convert those voids into -- so these are properties that are marked as void if we can convert them into paying customers, then that reduces the average bill for the rest of our customers. So we've got a really big drive on voids as well. And I think the overall package is one that I think is very much focused on making sure that our bills stay affordable for all our customers.

I don't think this is a very -- sorry, Shane.

It's probably worth the money. When we set our tariffs, we set them based on customer feedback and what they find is affordable, which is around GBP 2 to GBP 2.50 per month. That kind of increment isn't material to their lives. So that's the basis for the way we've deferred our ODIs...

The first point I was going to make is, actually the bill that we set is based on customer feedback on what they can manage and anything else we manage in terms of when we defer our additional revenues to. That's the first key thing very different to energy. And the other thing I think is different to energy is, overall for this 5-year period, the water sector's bills were decreasing for the 5-year period across the sector. That I think that's a marked difference to what's going to happen in the other utility bills and also to be fair in the other telecom bills. There are actually quite a few fundamental differences. One of the things we need to do a really good job of talking out is, how different it is between the various utility sectors right now in terms of the policy decisions that we're making. Very good. Okay. Martin is happy, so I'm going to be now to Jenny.

A couple of questions, please. Just firstly on the ODIs. Liv, you've refrained from sort of giving an uplift in ODI targets before ahead of winter, obviously, depending on whether and how cold it gets and how many pipes burst et cetera. So can you just talk to us how comfortable you are in meeting that GBP 75 million as we stand without knowing what the weather brings. Secondly, just on information, we talked about energy. Can you also talk about chemicals and other costs for other parts of the -- sort of the cost and whether there is any supply chain issues in getting hold of chemicals. And then just lastly, going back to the sort of waste investigation and data breaches, et cetera. Is there -- if we turn it on its head, is there a way we can think of that comes out of this investigation could actually help the more efficient providers that could create a growth opportunity for the life of Severn Trent?

I'll take the last one first. I think we've got to do this as going through the investigation. I think long-term RCV growth, I think, is already a very strong given in the sector anyway. I think if we look at some of the likely challenges coming up against us, whether it's population growth in the U.K., which means you invest in infrastructure, supply demand, because we want to make sure there's more water readily available for the long term with abstraction licenses limiting what you can take of rivers. If you look at the fact that bathing rivers for example, we're building 2 this AMP, I think they're becoming a real cause celebre across the U.K. People want more wild swimming and more investment. So I think there are lots of reasons to have confidence and faith in long-term RCV growth. I don't think we should link that straight to the investigation. I think for the moment, we'll complete the waste water investigation, hopefully, as promptly as possible. And separate to that, I think you can feel confident in long-term growth of the sector from an RCV perspective. But I wouldn't want to end up looking to be linking the 2. In terms of the other 2 then, so I'm going to hand it to James because I think you're right, we do sometimes say, and it's still through this year, that a hard winter will definitely cost you. We say openly, it could be GBP 5 million-ish on ODIs is what hard winter cost to you. That remains the case. But actually, things have improved on a whole range of things, and I'll get James since he has delivered all the hard work to talk about it, which is why we decided that it was right to tick up guidance right now. So over the last couple of months, quite a number of things have gone our way. So I'll let James talk about the hard work his team has delivered. And then I'll hand to Helen to talk about supply chain.

Thank you, Liv. Yes. As you're aware, we have uplifted guidance. I think the most important aspect for us, though, is actually the fact that over 90% of our measures are actually on or ahead of target. I think that for us is a key underlying stability in our overall performance trend. We've seen some really good performance improvements across water, and we've sustained that through summer. And as you know, summer can always be a challenging period for us. And we've also managed to really keep the momentum that we've had through AMP6 and through the first year of AMP7 in our waste area. And that's given us real confidence that we can get through the winter period with some risks, but we're confident that we've built up resilience over the period of time. Throughout that time, we've managed to really use data to identify challenges in our network and make sure we address those proactively, but also think about how do we involve customers in our overall performance. If you think about the waste space, for instance, we've really worked hard within our local communities to educate customers on the sort of things that they can put down into the sewer network that can then cause problems. So we've got a multifaceted approach across all aspects of our performance underpinned with some real new and exciting innovation across the piece, which is why we're confident.

Very good. I'll hand you over to Helen now to talk about why we're still sure that we've got the cost under control regardless of inflation.

Yes. So I guess we're shielded to [indiscernible] inflation. Some of our contracts are index-linked, but some are fixed price. So we have a mixture in our portfolio. We also, as you can remember going back, we stocked up when Brexit was happening, and we did that again through COVID. So we've got a stock holding. And the other thing that we've done to protect our capital program, and we did earlier this year with 2 secure manufacturing slots and preorder critical components and that's given us some shielding as well. On things like chemicals, we are seeing some inflation as a result of energy prices. So we are seeing some of that come through. But again, we've got a mixture of index-linked and fixed price contracts, so we are shielded [indiscernible] on that. In terms of supply issues, we're not seeing any major issues there across the supply chain at all.

Very good. Does that answer all your questions, Jenny?

Perfect. Thank you very much.

Excellent. Verity, you're next.

I've got a couple of questions. The first one is about your annuity assets that you've just bought in this new policy. And I noticed it, did it cost GBP 111 million in cash? I'm just looking through your notes. If you could just confirm that. And I just wanted actually a follow-up on ODI rewards indexation. So if they're rolled over, they're indexed, so can you just confirm that because I'm interested in that. And then the other thing I just wanted to ask, which is a more long-term question about your environmental plans. How are the trees and peak in restoration reflected in RCV, if you could just remind us?

Very good. Okay. So James, annuity assets.

Yes. It didn't cost that much, Verity. You'll be relieved to hear. So I think the actual cash cost is around GBP 5 million. So it was a very modest cash payment. The benefit, of course, of doing that is that we now have effectively an insurance policy that covers the risks for that mirror image scheme. So it's a really effective way to de-risk. It is a small part of our pensions portfolio, but it's just another part of the kind of de-risking journey that we've been going through.

Very good. Shane will talk about ODI rewards and how they get...

So ODIs indexed and adjusted for time value of money, so that answers that question. In terms of the trees. So PR14 separated the type of expenditure and RCV growth. So it's based on your pay-as-you-go rate that we work out independently. So then Ofwat will apply that rate to our totex spend. So I think of it -- I can't recall, but on my head, roughly 65% is fast money and the rest goes on the RAB.

So I don't think you don't have to do that straight divide of CapEx, OpEx. It's totex now, and so it rolls up. So yes, all spend. So for example, peak [indiscernible] they are an RCV growth rate. I guess it's fair to think about it in that sense. Very good. Okay. Go back to Dom.

Yes. Just a couple of quick follow-up questions for me. Firstly, on totex. I might have missed this one, but you're saying that your performance is improving. Could you give us some guidance on your RoRE expectations on totex? Basically, the totex allowances do rise in line with inflation. So as long as inflation is greater than the underlying cost structure, we should see a gap widening there. Can you just confirm that one? And secondly, on M&A, that's been quite quiet from the Ofwat fund. It wasn't that long ago, we were potentially looking at [indiscernible] merger. Obviously, you bought Dee Valley and there's a couple of other sort of water, smaller ones going. Do you think that we're in a bit of hiatus at the moment on sort of corporate activity on sort of consolidation in the industry?

So can't comment on others on the M&A piece, right? I'm not sure what there is to say on that. So I guess, so we've been open that we think that the right opportunities for us at the moment are Green Recovery and fantastic ODI performance. We see that, that gives us growth. The Green Recovery, which was GBP 624 million worth of award. It's like buying a reasonable size water only actually to be fair, and that no risk growth on our own base, in our own patch with our own people, working through it. So that's our total attention at the moment to successively delivering Green Recovery. ODIs, you keep all the upside. There are things for customers really care about most. And they put you in a stronger space, right? They make you more efficient. Typically, you perform well in your measures, you are more efficient, which helps you with the cost base for the next time around. And you have less waste in your business because you're getting things right first time. So that's our focus, probably worth asking others if they've got different focus areas.

On totex, I think, Dom, our ambition is to spend our allowance, right? So I think we've been very clear that over the 5-year period, our expect -- your expectation should be and our ambition is to spend all of the money we've been given because we've got lots of great things that we want to do. And I think it's been very clear that when we spend our totex, you will see benefits in improved service, you'll see benefits in ODIs. So the ambition is to spend that totex. To the extent that you get a little bit of a higher inflation and some of the good deals that Helen's done, I think that gives you a little bit of a tailwind when it comes to totex investment. But I think I can find or James can find lots of good investment opportunities for me to spend that money that will translate into better performance and better ODIs.

I think it's fair to say that our call, which sets our strategy to do that. It's one of the reasons why the ODI is a sector leading right, GBP 79 million in the first year and at least GBP 75 million this year. And we think that's partly because we have chosen to spend that money well, spend it wisely, go early in terms of the IRE spend. We think it's helping us, and we think that will be the right call on all of our asset classes. Waste is our leading sector business. That's why we consider the sector leader. We just got fantastic momentum. And I think that will prove to be the case that, that spend was a good thing to do. Over to Bartek now.

Just 2 questions, if I may. Firstly, long term, if we look at 2 developments, a, you have the RCV growth and consequently allowed revenues increase going forward for the next, whatever, 10, 20 years. But on the other hand, there's a pressure to decrease the water consumption. So as a result, the built per a liter of water consumed should be increasing. How do you think it will be working in the future? I mean do you think the billing will change into more fixed tariffs versus variable tariffs. I mean I just wonder what is your view on this one. And secondly, we are talking about GBP 75 million of ODIs in the second year of AMP. What do you think -- or what benchmark does it give to or what basis does it give to ODIs in the last year of AMP where actually some of them are back-end loaded?

Great questions. So we've always said that there's an extra GBP 50 million in the last year of the AMP, and that still remains the same. There are end of AMP measures, there is an extra GBP 50 million. So if you [indiscernible] that to the start and that remains true still to now. And of course, that will roll over into the next AMP because any measures in the years for 4, 5 brought over into the next one, but our guidance remains unchanged on that point. In terms of the first one, it's interesting, and I know that Shane would jump in as well. I mean, I think the way you've got to view this is that water is cheap, I mean that's just the reality. When you look at everything that you get for [indiscernible] today, water is very cheap and the per liter of water is very cheap, right. So you'd have to go up quite a lot for water not to become still cheap. And one of the interesting of COVID is that COVID actually means that really working on consumption has become very hard work. So we've actually seen over the last couple of years, people have really re-come back to, whether it's washing their hands for longer every day, whether it's more water is being used domestically. Actually, that is the case. So we would welcome the chance to look at innovative, long-term tariffs has always been our situation. And we've done some good strategic work on that. And I'll let Shane jump in.

I think the key point is, we've just been designated as water stress, so we will be rolling out more metering. So we won't be moving to a world where it's a fixed component -- you have a fixed charge. We're having more unit rates because that helps us drive demand. So I think, don't expect to see more fixed rates. We'll have more metering, more metering penetration that will allow us to be more innovative in our charges.

Does that answer your question, Bartek?

Yes, it is.

Very good. Okay. Let's see if we've got any more questions coming through. We do, Verity?

Just a really high-level question actually. I mean, you sat in front of the environment select committee along with your peers. Excuse [indiscernible], you think the climate has changed on allowing bill increases to actually fix environment problems? Or are we still at the same old, same old, a must get bills down? Did you get any sense that there's no encouragement from politicians and for customers to actually spend more to fix things?

I think my answer to that and I'll let [indiscernible]. Doing your job well by the basics is what every customer should expect and what every regulator expect. And I think that should be done within our current alliances. So we are confident that we already run a good company and a strong performance we deliver all of our commitments across all parts of our business. That's the first part, and that should happen right now. There's been a different debate that says, do you want more? And typically, increased RCV and increased investment, it's more. It's for the next wave of the frontier. So whether it is a -- and so I think the types of areas where we will see more RCV growth, and we will see a change in things like bathing rivers. So we're doing 2 right now, as possible recovery scheme. It feels to me [indiscernible] has moved. They would like to see bathing rivers within, I don't know, 50 kilometers, 50 miles of every single person's house in the U.K. It feels like the type of thing that does actually exist in Europe and might be something that might change here. I think that kind of step change in the environment or for example, net-zero water supplies. So people all accept, all of our customers want us to be net-zero. They love the fact we've got that ambition. And they're probably also acknowledge that, that requires some investment. So I think investment in net-zero is another situation that you can imagine, RCV growth for the future, done well, done very, very judiciously as to how it's delivered. But I think the nation does want the planet protected. I think that is good RCV growth. Doing your day job and actually haven't been funded to do the day job well for a long period of time, has to be managed within the models and with your current performance. And so -- and I think the select committee just reemphasized that. There is a desire for maybe us to help solve other nationwide issues and in solving those. That's a new ask. That new ask will come with funding. Should we see any more questions? There are none -- only other one online, so none since that online. Very good. Mark, so I think that is us done. So I'll just give another 2 seconds just to wrap up. But a big thank you for lots of wide-ranging questions across the piece, and thank you to the team for their hard work over the last 6 months in delivering those results. And with that, I'm going to call it a wrap. So thank you very much for dialing in today, and we look forward to seeing all of you over the course of time in visiting our investors over the next couple of weeks. Thank you very much.

Thank you.