Severn Trent PLC (SVT) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to what is a disused building in Coventry, so this is going to be the venue for today. And as most of you know, we spent the last 3 days literally here with all of our first-line managers and it has been absolutely brilliant. It's my favorite time of the year when we get all of our leaders together and what an amazing opportunity to not just get them together, but to talk about the future for the next 7 years, it has been properly, properly exciting. Now if you're going to take over a bit of a disused IKEA, you've got to go on brands, right? So during the course of today, we don't even get ourselves embarrassed, we're going to shamelessly plug some concepts around the brands. So by the time at the end of the day, you'll be feeling a little bit left keen possibly on IKEA. Now in terms of why I wanted to be in this building because it is slightly straight ocassion, one of the things that we're passionate about in Severn Trent is over the course of the 10 years or 9 years left actually since we set the strategy, we want to try and change 100,000 people's lives in our region. There are 400,000 people that live in our region that are long-term unemployed. They don't have good job prospects, maybe they're currently in prison doing time, maybe their kids are the third-generation unemployed families. For whatever reason, maybe they're in a job, but it's a very lowly paid job, and they've never had the opportunity to see that there is more to them and they can achieve more. And so we set ourselves a bold societal ambition. But between now and 2030, we're going to have 100,000 people out of poverty. And we've only been at it a year, and it's going really well. I'm not going to give you a detail on it today. We'll save that for future events. But 1 of the reasons for being here is that this actually is going to transform into being part of the Coventry City cultural gateway, and we're going to take a permanent presence. It's 1 of our contributions back in our region, the societal strategy. Coventry has a very high level of deprivation, and we're going to create a permanent presence here that will have employability training right in the heart of city. For some people that are really struggling, even having an academy 2 miles out of the city is just psychologically or financially too far for them to get to, so they have a physical presence in Coventry makes total sense. This is our hometown. We're headquartered here. We love Coventry. You might not have seen best of it on the journey from the stations to here. There are more good bits to it, and we genuinely are passionate and proud to be able to help it. Now actually in researching IKEA though, you might not know, but this is the motto of the chat that actually creates IKEA and it's quite fascinating how similar this is, I think, to the price review process. You take many people, many, many hours of work, you work them all together, they take joy out of it. And in the end, you get happy souls through the course of working together. That I promise you is like PL24. It's like that in motion. So this document has felt just like that. There's never been a dark day in the lead up to our 2,500 page submission. And it's perfect timing because today, we can unveil it. We can talk about it in all it's s glory. We can bring it to life 3D, and we've got about 35 senior Severn Trenters that you can quiz and ask them anything they do and what they're up to, as to their thoughts on it and why they're excited about the next 7 years at Severn Trent. Now is our boldest price review. I recognize many in the room have been around for more than 1 price review. And it's a boldest, we are properly excited that it covers such a range of activities that customers have said, they really, really want us to be into. It's a price review that's founded on the belief, but actually, there's been a lot of public press about Severn Trent, about the sector, and we need to lean into that and make sure that this particular investment program really allows a transformational change on the sector performance and actually addresses some of the big parallel activities that are, I guess, the context points. And to bring the context of life, I thought I'd just talk through these 6 things. This is the context against which we've crafted the price review. We're very clear that the media attention is very, very different, say, 5 years ago when we had a similar Capital Markets Day unveiling the plan back in Leiceisture, it is tenfold, twentyfold, more focused in terms of media attention. At the same time, that media attention, and whilst we are the good performer in the sector, I guess, we'd say and the regulators would back us up on that. Nonetheless, it has affected the whole set of credibility. We need to work our socks off now to really create that sense that trust back with every single customer about the future and about the fact that we've listened and we've heard exactly what they want us to do. We know that new tech is properly exciting, and we're going to embrace it as an organization. So today, we're not really going to cover actually AI and detail I'm afraid, even a tall -- small [indiscernible] . But actually, when today ends, tomorrow begins. I guess, the more exciting phase you could argue my job over the next while. I begin the all-people events. So from tomorrow morning, I do 75 all people events across the company. I educate all 8,000 people in Severn Trent on what the future looks like for the next 18 months and a massive chunk of those individual road shows is on AI. It's about getting them to embrace it an understanding. You see it as a copilot, as an extra person in your team, it's somebody else doing some of the jobs that maybe you didn't fancy doing. That's how we're rolling out and embracing AI. And we've got 3 brilliant examples we share with our colleagues that I know we're going to get them as excited. So whilst we don't cover as much detail today, actually, as an organization, we are very, very excited about the opportunities that new tech will bring us. The fourth context point then is climate change, and it links to population growth. They're the 2 big dilemmas certainly for our sector. The speed of which climate change is arriving. But also in our region, the speed the population growth is also arriving. Over the next 20 years, we got quite dramatic as a vision, second highest growth rate actually after the Southeast. And we need to prepare for that, we need to get ahead of the curve. We experienced 40-degree heat last year in Mansfield for like 7 days on the bounce. There's an unheard of territory in our region. And again, that kind of long, hot, dry summers and wet winters is a reality that every infrastructure organization will need to manage and still deliver brilliant assets and brilliant service. And last, by no means least, is the economy. So we announced a price review with some pretty big numbers that says it's GBP 12.9 billion of investment. It is a bill that goes up by just over 1/3 by 36%. And that actually sounds huge, doesn't it, that kind of sense, and we'll talk and lean into that today because you've got this cost of living situation. And yet, we worked with tens of thousands of customers to ask their opinion of what's the perfect plan. We offered them lower plans with less investments. And yes, they consistently are going back to, what we really want is maybe helped by the media attention over the last couple of years. What they really want is a plan that truly invests and leans into these activities and people accept that comes with a bill increase. And our acceptability is incredible. 76% of customers wanted this version of the plan which is higher than last price review when the bill is going down. And I think, as I said, that media attention has definitely assisted with customers wanting something different going forward. Now 1 of the things that we did 5 years ago, year 4 of the AMP is that we did some big bets. As a senior team, we sat down and said, if you just keep delivering what the regulators almost set you do, you don't transform. You've got to sit down as a senior team and work out. What are the things that we could do now that would set us apart. And effectively, you're taking decisions and say, you've only got so much money to invest. What are the things that you truly believe will be the game changers for your organization? And I thought what I'd do now is to share with you the 5 big bets you made last time around with a bit of context. And then excitingly, I'm going to share with you the forward-looking big bet to something we didn't do last time around, we almost delivered and then told you about it. And this time around, we're going to tell you in advance about the 5 big bets that we're making for the future and actually take you in on that journey. So see what I've done here with the IKEA photo frames? I'm really sticky with my theme, right? So these are the 5 big bets that we made 5 years ago, year 4, the last AMP. And they're quite different to style, but all of them have had incredible impact. They've changed Severn Trent in a different way, but all of them have been meaningful towards our performance. Start with the Academy. Many of you would have heard us talk about the Academy. And at the same time, as many, many companies were downsizing, reducing activities, not spending money on development, outsourcing, we look kind of going the other way. And we've realized in order to do our ambitions, in order to have the technical activities, the experience we wanted to manage the skill shortage maybe across the U.K., then you needed a dedicated home of learning. And we invested in it, and it's been absolutely brilliant, just 3 statistics to bring it to life. The first is we've had 3,000 individual events since the day the economy opened. Now some of those training events have been kind of like just small they've been like a few hours' worth of education trading on leadership maybe. But some of them have been like 6-week long apprentice deep dive educations on leakage, for example. So 3,000 different training events shows you how busy the Academy building has been, but also the amount of hours that are -- effectively our colleagues have gone through an education of upskilling, that's definitely helped us be a more educated person. We've an empowered organization. You've got a single person at the site at 2 o'clock in the morning that is reading very complicated data and dials, we've got to make decisions. And having a very, very technically competent organization is part of our success, we convinced. It's also allowed us though to do more for the community. In the last year alone, we've done 113 hours of employability training. So I mentioned to you, we want to help 100,000 people get out of poverty. To do that, you've got to put real work in. And we've done 113 hours of different training. You can go along and we'll help you write your CV, you can pop along and we'll do actually a fake interview. In fact, our interview performance is quite impressive. If you go along and have a fake interview at Severn Trent, if you're one of my customers in my region, you can put this on your opportunities for the future, then we have actually a high 80s percentage chance you get the job if you gone in the mock interview with Severn Trent. So we are actually quite good as it turns out a mock interviews, but that whole sense, we've altered a loads and loads with teenagers coming out of COVID on confidence training, lots of late teens didn't come out of COVID lockdowns the same as they went in. We've done a huge amount of work on skills like that as well as more technical skills. So that's the first of the big bets that we think are only just getting into a zone, it's going to be even more impressive with future in-sourcing. The second then is probably the most expensive. So this is the 1 we put most of our cash into, which was in-sourcing design, and it's been absolutely fabulous. So we chose to say that rather than actually allowing all of our design to be done by supply chain, and we've got some of our lovely members of supply chain in the room with us today. It doesn't mean that we do all of it, but we do the vast majority of the design ourselves. And the reason that helps is it means that we got people in our organization that know our assets better, they have better connections since we have seen. So when they're designing it, they're designing it with more knowledge, maybe not more knowledge of the supply chain, but more knowledge of our organization, what will work best for us. But it also gives us a chance to when we get those multiple designs. If the budget have changed, if inflation has gone up as we've seen pretty widely over the last couple of years, we can sit down and say, add earmark GBP 50 million for that project. The favorite design you give me is GBP 20 million, I don't want to put GBP 20 million into it. What's the GBP 50 million design look like? Let's tweak it slightly. That's completely brilliant, that works well. So it's given us more ownership of being able to manage what has been the very significant cost base increases across consumables, we've been able to manage that better by having our own design team in-house. It also means we've got 300 people that have got extra technical skills they can help again, pass those technical skills on. And again, it helps us with that inability to fight with everybody else with the same supply chain. We've been able to have real advantage by having those people in our organization contributing to more debates than just the physical engineering design. The third team is what we call the Blue response team. It's called the network response team and basically the NRT. If you end up, and god forbid where you do have a burst pipe and you are going to have customers of supply. We don't worry about it. We send our tankers straight out and they just get there straight away. And what they'll do is they'll set up maybe an overland, there's a piece of pipe that goes from 1 hydrant to another that avoids the area that has currently got the burst pipe and keeps all those customers on supply. And it's been fab for us. We have the business case was based on supply interruptions. You'll remember that in AMP6, our supply interruptions performance wasn't good enough. We lost a lot of money on that ODI by investing in this organization. In all of these tankers, it has been such a game changer to us. The unintended consequence there, which has been brilliant, is actually in downtime, these teams have been able to do more work on the network, calming the network, getting it better, but also more work on discoloration, which has meant quite a lot of award on water quality complaints, something that wasn't actually in the regional business case, there's been a really good opportunity by having this organization in-house to us. Bet 4 was Green Power. Now I guess since you're investors in the company, I should probably say we predicted it. We saw that energy was going to go up by tenfold, and that meant that we brought in the Green Power. Clearly, we didn't, but we did see that Energy is our second highest cost. And on that basis, it made sense to think about the fact that actually Green Power is not a dissimilar skill set to buy resources. We're excellent to buy resources internally. Lea's here today who runs it. You can guess chat with her or breaks on what does she do to be so good at it. But we realized actually that skill set would work really well. Why didn't we buy food waste assets and actually begin to inject more gas into the grid. And it would help us with our carbon neutral commitments and it's been really good. We've gone from 140 gigawatt hours a few years ago to 350 gigawatt hours actually just as it adjust from Green Power, which is amazing. We now self generate about 60% of our energy needs and consistently every year, we tip that up, and it's been a real success story for us. And last of big bets is 1 that maybe we haven't discussed as much, but internally, is massively popular. It's the truck mains team. Previously, we would have had spent on supply chain if we had a truck mains first or an issue on a site with the truck main activity and ask them to come along. They have highly attractive jobs for the supply chain because they're not particularly big jobs. They're not big moneymaking jobs, and we need them now. And they're already busy and tied up and quite rightly, they've got the resource schedules. To have it in-house means that if we do have an issue, we've got people with that caliber and that skill is totally available. But also, again, in downtime, they've been able to do so much practice work on the biggest largest pipes in our sector and our organization, that means that actually we've seen a 30% reduction in reactive workload as a result of their 17,000 proactive tasks. Again, something that has been above and beyond what we thought might have come out the business case. So that brings to life some of the bets we made 5 years ago. And as I said in a second or 2, I'll unveil the new ones. Now you've got to try and get yourself ready for a price review by going into it in the strongest possible position. And I guess we enter with some good things. We enter as the only 4-star company in terms of environmental metrics. We enter as a leader on ODIs, and we're very focused on continuing that journey. And we definitely enter scene, I think is 1 of the people that Ofwat say, actually whether it's financial resilience or service performance. Actually, we were the sector leader on both for the first couple of years. We're a bit gutted to drop down to a middle of the pack this year with the rest of the gang. But as you can imagine, we're working flat out in year 4 to get ourselves back into that sector leader position or measures. I've never enjoyed middle of the pack. They're not words that I love. So we're going to work our socks to get us back to be in the sector leader on service. And as it stands today, we're in great shape on that. So I thought I'd show a now. It's a video that we use internally with our people. So I did debate, so I show it on us. But actually, I think it brings to life a whole heap of things we've worked on over the last period of time. But actually, Severn Trent to be proud of. And there'll be a few steps in there that might actually be interesting to you. But I think also it brings the culture of Severn Trent across. We're quite an informal kind of like low key culture. And I think you get a bit of a sense of that in terms of some of the humor that is built into it. So I'll let you watch this. [Presentation]

Very good, right then. So you are now very educated on lots of statistics. But let's talk about the plan. So -- and you see what I've done again. I'm sticking with my IKEA theme. So there's going to be no Alan Keys during the course of today. You wouldn't have to make any Billy Bookcases. But it's worth bringing into life, just that size and scale of what the plan is. So as you know, GBP 13 billion. We genuinely believe that because so much of it is either base spend or statutory spend that we're in great share we need to get going. And so having effectively had huge support from yourselves to the equity raise, having had huge support from customers in terms of their desire. Having discussed the plan during the course of the summer a lot with Ofwat and Defra and the environment agency and being confident that actually the areas we're focused on all the right areas and all the areas that they want us to focus on in this exact time and it feels that we just need to get going. And that's the whole message we've been saying to our people over the last 3 days that actually we just start. And the most important thing we can do for our customers is to deliver the benefits early right now, and we can get moving. So key dates to the process, just so you got it in your mind. So we're in what I'd call the pen pal phase. So I don't know how many of you remember, but when I was like -- yes, I'm older than quite a lot of you, but when I was a child, we used to have like -- we used to be given kind of pen pals. I used to have this guy called Laurent in France. And every other week I was made by my [indiscernible] to write him a little note and he'd right 1 back. It's not dissimilar with ourselves and Ofwat right now. So the plan went in on the 2nd of October. And then from then on in, they write us note. I mean they were a little bit less cheerful in some of the notes [indiscernible] Laurent's work. And they were a little bit speedier, Laurent was not a good writer and Ofwat it turns out can be. So it will give us 48 hours to reply. Now we will get a very good sense of what they think of our plan, how they feel about us based on queries. So we've not had any and yet we've had 1 that just asked, can you give me a link to a document that doesn't count the query, but they will begin to come, and that's the first big phase of the plan. That typically lasts, I guess, 2 to 3 months. And then the crew is right up and then effectively, you're into moving towards anouncement phase. So Ofwat have said that they categorically will give just termination in May-ish, but they look like they will also give early feedback as to their thoughts on the plans and companies sometime in March. So that's what we're assuming is they're the 2 key dates is March, some kind of early feedback, May drive termination, final determination, obviously, all the way through to next December. Now we know that, I guess, the very best what's the plan will be judged to outstanding. We'd love to be it. We've been open all along. So we'd love to be seen as the very best plan. But our job is to make sure as well, we have a plan that actually delivers everything our customers want beyond what else, that is the responsibility of the leadership team is to create a plan that delivers everything customers have asked for, but also to do it in a brilliant fashion and to keep moving the sector forward. The sector has got a mixed set of results across the base. We want to be the leader that consistently pushes the sector forward. Like we did with [indiscernible] positive, like we've done with the CSO target, we want to make sure that we're moving on the big things and keeping things going. Now in terms of how Ofwat would judge the plan, they've already been clear haven't they? They've got 3 lenses, they will judge the plan frame. They're going to look at deliverability. They will look at affordability and they will look at financeability. And on deliverability, there's a whole section today that's going to bring to life for you why we believe that our plan is probably more deliverable than any other. So when you cross compare and you would have done this, I'm sure, you cross-compare the amount of capital run rate of every single company in the sector, there are only 3 companies that are running at the right rate of capital spend right now, 2 of which obviously Severn Trent and Ofwat and Defra, and 1 company, I guess, in the East region. And effectively, you would have seen that. Other companies would have to do a massive step change to deliver deliverability. And we've been working really hard to make sure that we seamlessly glide in natural fact, we accelerate spend. So we give ourselves capacity at the tail end of the next AMP to accelerate AMP9 again. So we're confident not only delivering the 12.9, but we've created ourselves a few hundred million pounds worth of capacity in year 5, next AMP, to be able to bring forward early start spend to glide seamlessly into the next AMP as well. So that's our sense around deliverability, but of what we'll certainly look through measures like current spend, supply chain mix, variation, what you deliver before, have you delivered your dates this time around, all of those type of measures, and we'll share some ideas. We've got some new things that avail you today. James Jesic will take you through some few new exciting things in our deliverability slot later today. The second thing is affordability. And they will want to look at actually pounds affordability. We're delighted to be honest with the fact that not only us I'll build the second lowest bill now today, it ends the second lowest bill at the end of the next price review. We've now looked at every other plan, and we end the second lowest in the land. So whilst you will see sometimes in the press that our percentage looks higher, it's because we start such brilliant good value. So in terms of actual power notes, which is the way of we looked at it, we do end second lowest in the land at the end. They will also want to look at how much disposable income is moving. It's broadly static. You're going from 1.2% median income in the Midlands to 1.3% median income in the Midlands over that 7-year period. So again, almost static in that sense. And then there's a big debate about, but some people cannot afford that, even going up by not too much. Nonetheless, people can afford it when we get that. We don't want anybody in our region to ever feel our bill. We announced only 18 months ago that we didn't want more to poverty in our region, and we were committed to resolving it. And we said that by 2025, we'd be ahead of the curve for any customers that we can see now. That's true, and we will continue to do that. So we're making it available up to double the numbers. So 1 in 7 families can be supported by the time we get through to 2030, that's 700,000 customers. It's a GBP 550 million package. Again, we've now read all the plans. It's the best plan in the sector from an affordability perspective, there is more support for more customers. And the last section then is around financeability. And clearly, you guys have played a massive, massive, massive part in that financeability. You might be in the room today, somebody that we raised that with. So thank you for that. So you might be in 1 of the room actually recently contributed to our equity raise, which we are hugely, hugely grateful for that support. And so to bring it to life, I've been asking Helen over the last couple of days to share with our people what it means, right? What is an equity raise? What does it mean? And she's not going to do that with yourselves because you understand that. But she's just going to bring to life why this is so important and why we genuinely think being at our own swim lane on financeability and having read all the plans, we are the only company to actually have the money available today. There are a couple of others that were privately owned. They say that they have got the support from their shareholder base and they're confident they could. If the WACC was to be good enough, we are the only people here today fully funded. With that, I'll hand to Helen.

Thank you, Liv. Good morning, everyone. Great to see you all today. For those who I haven't met, I'm Helen Miles, I'm the CFO here at Severn Trent. So I'm going to cover 3 things. I'm just going to find my split. I'm going to cover 3 things today, I'm going to talk about the funding and our thinking behind the equity raise and how we think about that. I want to talk about finance out performance and financing generally. And thirdly, I do want to touch on how we're thinking about growth and how that relates to earnings. So to start on funding. I guess, as a company, we've always been focused on the long-term financial resilience of our company. And we know, as Liv said, the Ofwat, we'll be looking at our plans to say, are they financeable? And it's 1 of the 3 key tests that they will do. And AMP8 is an unprecedented opportunity to invest in the things that our customers want that we -- things that we can invest into the environment and obviously, things for our shareholders as well. And we didn't want to miss that opportunity. So we recognize there was a role for equity to play, and we were delighted with the response we got and the support we got for that equity raise that allows us to make that investment and bring our ambitious plan to reality. Now it does raise a couple of questions which you may have, which I will cover now. Why did we do it now? Why did we do it now? Why didn't we wait for the draft determination or the final determination? Why did we go so early? Well, there's a couple of really good reasons for that. Number one, we wanted to submit our best plan. We wanted to submit a plan that covered deliverability, covered affordability, but also was really clearly financeable, and that's why we went early. We also, because of the significance of the Totex uplift, we wanted to get going now. We don't want to wait until the end of AMP8 to deliver some of the benefits for our customers and the environment. We want to get going now. And we've accelerated over the next 18 months, will accelerate GBP 400 million. And we've been -- as Liv said, we've been telling the teams for the last couple of days, get on with it, get starting. And we've got loads of people at this minute working on AMP8 back at the ranch. And I guess the second question is, we haven't had our draft determination or final determination. Why are you so confident that you're going to get this plan approved? Well, there's a couple of really good reasons for that as well. Number one, 93% of the investment that we're going to make is EBA, base running costs, around GBP 8 million of it is base running costs, and enhancement -- and the enhancement is mainly statutory. So it's things that we've got to do. So yes, there might be some debate around the edges around the costs, but we've got to do it. And on the base cost, we're really confident that we've got an efficient cost base. So we've analyzed the models. Shane and his team have been doing the things they love to do, analyzing the models and making sure that we've got efficient costs. And lastly, very importantly, we've -- our statutory spend. We know it's been signed off by the regulators. It's impacted by a number of regulators, and we know they signed it off. So we want to get on with it. We want to start and get on with that. As we go through today, you're going to hear loads of stuff about how we're spending this money. And the thing that I love about this plan is that it's broad. It's not in 1 specific area. It's not in 1 specific area of the business, it's broad and it's across the business. So you'll see that later on. So moving on to financing out performance. So I know James [indiscernible] in the audience. I don't want to over praise him but for the last 7 years, we have outperformed our financing allowance, and we're really confident we can do that in AMP8. The embedded debt allowance that's set by Ofwat is going to be based on the averages of all the companies. We're 1 of the -- 1 of the lowest in the sector, the third lowest. So we're confident that we can beat that part of the plan. And in the same way it is for AMP7, new debt raises is indexed to the iBox. And we've been really successful so far this AMP raising money that beats the iBox to around 18 basis points. And we're really confident we can raise at competitive rates because we've got strong credit ratings. We've got great liquidity, and that means we can be really flexible about when we go into the market. We don't have to go at certain times. So something is happening in the market, we can not go all go, depending on which way around it is. And we've got a little and open strategy, and we'll go far on why to get our financing and make those opportunistic deals as they come up. And of course, you'll know that we've got really strong ESG ratings. And the plan that we're talking about will only enhance that. So moving on, I do want to touch on growth, efficiency and earnings. And the reason for that is, as you know from our plan, which I'm sure you've all read in detail, is we're going to deliver with this planned 31% real RCV growth, that's real RCV growth. And we're in this fantastic position that we're quite certain about that. We're quite certain that if we get the plan signed off, we will deliver that growth. And that's really unusual position to be in together, that level of growth with quite a lot of certainty. But what you're going to see from me is that when we deliver that growth, we're going to do it in a responsible way and we're going to do it efficiently. It's very easy in companies that are growing quickly for costs to not be managed efficiently. And what you're going to see from me is a real focus on making sure that we do deliver efficiently, and we keep our focus on hitting -- building on the great base that we've got to continue to do things really efficiently. And when you go around today, you're going to see that we're investing in people. We're investing in technology, some really exciting technology. We're investing in systems and processes. All of those things are going to make us more efficient. They're going to make us better and they're going to make us more efficient. And if you combine that with really good old-fashioned cost control, it's a really potent combination to make sure that we grow in a controlled and managed way. Because what I want to do is I want to make sure that the RCV growth that we're delivering does translate into earnings because yes, RCV growth in itself is brilliant. We get to make the investment for our customers, the environment, but we've got to make sure that at the same time, that flows through to earnings, and that's 1 of the things that we -- that I will be focused on. And we must not forget, I know we're talking about the regulated business primarily today, but we must forget the nonregulated business, which is going from strength to strength, and it's complementary business to our core business. And you'll have seen -- we'll have -- we've completed the Andigestion acquisition back in September. And those are the types of things, the opportunities that that we want to take as we go forward. So just to summarize, we're in this wonderful position. Thanks to the support from our shareholders that our AMP8 plan, as we stand here today, 18 months ago is fully funded, a great position to be in. We know we're confident that based on the way the model works and based on the way our approach to financing that we can deliver outperformance. And we're really focused on making sure that we grow efficiently and that we can turn that growth into earnings growth as well. And with that, I'll hand back to Liv.

Very good. So now I get to unveil for you, what are the big investments. Now when we've been doing this our people in the last few days, it's been like Bonfire night. I've been saying we're going to invest in X, and they've been going, "Oh." No, I'm not going to get you to do it because I can sense the audience would not be relishing the opportunity to join in, but it has been wonderful. It's been like electric in here the last few days. So it starts with concept, one which is a fast start. We invest over GBP 400 million over the next 18 months to get ourselves in a brilliant shape. And of course, we're going to invest in areas that make sense for us to invest in. So we're going to be making sure that we focus on spills, zero spills is obviously a big one. We're going to spend more money on activities at a customer service orientated, but we're also going to make sure that we spend real cash investing in areas where we've got early regulatory dates. So as we go into the next price review, we know that the 4-star status changes, for example, 3 new measures come into it. We love our 4-star status. We're going to make sure that we continue to have that by getting ahead of the curve on anything that could be in that space as well. So what are the 5 big bets that we've decided to spend money on? So these are aimed at transforming us but also getting us in the best possible shape for the long-term future, and they're hugely empowering for our people, and they've been so popular over the last few days. And I genuinely believe they will create contingency for us because there'll be efficiencies that come out of it. But I also think they'll create us a very, very strong operation performance, that means as we go into the next AMP, we will be the clear sector leader. So big bet #1 is around in-sourcing. So we are the most in-sourced organization in our sector actually. And we generally believe it's 1 of the reasons that we performed well on lots of the measures. And we're going to go further and faster. We're going to do an extra 1,000 jobs this year. We actually did 500 jobs just a few weeks ago. So it's 500 to go. And this is around us taking back control of things where we know that we're going to do better. And we know that actually having permanent Severn Trent resource would give us just a different OOMF. So the most recent activity we talked back in was waste networks. So the guys and girls that go out, they do jetting, they go to customers' houses that manage blockages, but also the need to know the network and work out actually there's something weird going on in this particular occasion, there must be something we can do maybe education or maybe we should reline the network. But I want that learning come back in. I don't want with a highly attrition orientated contract base where I'm paying day rates, but somebody who is doing the job and going home and not worrying about the network. I want the love that comes with a dedicated field force that knows they own that particular part of the network. So that's 1 is our first big bet is in-sourcing. And actually, if you can imagine an [indiscernible] organization that you're going to in-source more that's more opportunities or more promotions, it's a really, really engaging thing for all of our leaders over the last few days. The second big bet is around what's called plug and play. And it's hard to bring this to life, to be honest in words. So what we're going to do today is we're going to bring it to life in detail with some videos and with some colleagues showing it. But the way you would imagine is we're going to deliver GBP 12.9 billion. As part of that investment program, we want to try and work out some activity types, how do we do it cheaper, quicker, more efficient? And there's about GBP 750 million that we think we can deliver to a totally different supply chain that we haven't used before. It's an automotive capability, it's factory led. So I think for tanks, for dosing rigs for CSO screens, for example, how do you end up creating them literally on a factory run, so they're kind of like created straight off, and then they go straight into [indiscernible] probably save us 1/3 of the time, quite considerable costs and that will be really helpful to go but actually also accesses a new supply chain. We've got so much work for our current supply chain, even with all of our new partners. They're taking out a chunk like this sort of kind of like very steady work isn't their most exciting work is brilliant to put it into a plug-and-play situation. You'll see it brought more to life in 1 of the breakouts. The third big announcement then I guess, as we seen over last few days, is you are seeing today in RNS, that we've signed a deal with Octopus to use their system, Kraken. And for us to get to be the very best in the organization as we want to be on [indiscernible] we know that we need to invest. Our billing system isn't good enough. Our CRM capability isn't right. But even more importantly, we know that 1 of the big ODIs for the future is PCC. We know that leakage is essentially linked to it. We know a smart meter and we did 1 million smart meters as our plan fairs. You need to be able to read that to communicate that, manage it with customers, you need a CRM system to do that, and that's why we're investing in Kraken. We think it will genuinely transform the relationship we have with customers over the next few years. We are properly excited and actually we've got 1 of the senior team in the room today from Octopus, from Kraken. So again, good opportunity to talk to them and quiz them during the course of a break. So a good chance to do that as well. The fourth then kind of big bet that we're making is around a dedicated ODI Center of Excellence. And the point on this is, I want the Ops teams, and they're all of them today to own their ODIs, there's no escape on that basis. And I want us to continue to be brilliant on ODIs, no escape on that basis. But actually, there is more data, there is more AI becoming available, more things you can mine. And so we're going to put Shane. Now he's got the price review done, [indiscernible] nothing to do. So we're going to Shane to actually host as well as his other event. He's going to lead this new dedicated ODI Center of Excellence, and we're talking about smart, perfectly formed good people. 7, 8, 9, 10 people, the leaders already identified during the same, and we know this is going to be great for us. We're talking about literally a handful of super bright capable people quarter through data to give insights back to the operational teams to get even further and faster on ODI outperformance. Remember, we've now seen what everyone else has chosen to put in their plan in terms of ODI targets. And our start point is strong. We're in a very, very good position on a whole range of the metrics. And last, by no means least, is we know that the single biggest debate point in the sector from an ESG perspective, from a press debate, but actually from a customer debate is the whole conversation around spills. And so we went bold in the plan. We've gone from an average of 14 spills, which is frontier, leader versus everybody else. And actual fact, there were some companies that don't get to our 2030 target until 2050. So it gives you a sense of the sheer range in the sector of how bold and ambitious people will be on this. We've heard it. We know our customers want us to go faster. So the best way to do that is to embrace who is the best in the world. And actually, 1 of our partners that we've been working with the Danish company Osband, they are brilliant in this space. So we've kind of realized and learned that we should set ourselves for our people to understand it, we need to set ourselves a dedicated center of let's go towards psychologically 0 spills in the hub. By calling it that by actually engaging our people on the fact that's our long-term ambition, it will give different creativity rather than just trying to grind out a small improvement every year, they'll look for those new, new innovative things and it's 1 of the areas that we're going to spend about GBP 70 million to GBP 100 million over the next 2 to 3 years, is directly into this innovative area. We're very, very confident. We can find ideas and solutions that will bring down the whole sector's costs on CSOs. We don't believe the current estimates are being discussed. We think it can be done for less, and we're going to evidence that over the course of the next few years. Now you might be thinking, what am I doing today? Am I looked in this room for the next 6 hours, and I'm pleased to share that you're not right. So -- I obviously didn't click on enough to that. So there we go. I've managed to break my own solution. There we go. Well, I know what it is anyway. So the good news is I need it. So what we're going to do now is break you into groups and you're going to go through 4 zones over the next little period of time. And just to get your context as to what you're going to be doing, 1 zone is going to be all around ODIs. There we go, all around ODIs. And we're going to share with you what's changed, what it looks like and what we're going to do to make sure we're still ODI winners. We love being the best ODIs. We're not going to give that mantle up just because there are a whole lot of new metrics in a new format. We stand ready to go to once again be a success story. The second of the slots you'll see is you'll go into, okay, what are we spending the GBP 12.9 billion on? And that's important for our people to see that. So it's all about the UMEs, the unmodeled expenditure, the enhanced expenditure. And actually, in that slot, you get the chance to understand the types of individual projects, which I think is fascinating, it brings to life the scale of how many things you'll be working on. And again, I think they'll be really super helpful to see the scale of environmental improvements. You'll then obviously want to understand at some stage, how are you going to deliver this? So make sure that we then take it through the deliverability or the activities we've got in that space, which again, I think will probably hopefully really give you real confidence in our ability to hit the ground running and deliver the GBP 12.9 billion. And last by no means least, you'll enter into a zone, which is around customers. You'll talk about the bill, the affordability package and also what we're doing on some of the metrics that customers want to know more about. So actually, when customers talk to us, they want to see bill progress. People don't mind the bill going up as long as you get more for it. People get frustrated that when the energy bill goes up, you turn on the light and it's the same light. They get frustrated that they have to pay more of their can of beans with the same number of can of beans. Actually, all of our interaction with customers has been, if I'm getting more for actually what you're giving me rather than just the same quality of water, the same activities, I actually buy into that. The press has educated me, I need to make investment. I'm in for that as a concept. Now we're going to divide you to 2 groups. That's why you've got your wrist bands. You're going to do 2 groups before lunch, 2 groups after lunch, and you've been mingling along the way. That's the plan. So with that, I need to find out which group stays here. You're both going? No one stays here? Good let's all move. So I guess, you'll need to get out there. You'll see the -- colleagues' flags. So if you were a pink wrist band, follow a person, obviously, with the pink wrist band, and vice versa, if you are at the other color, but that's the idea. So stand up, and weave our way out this way and follow the flag. Purples is that way. I think about -- purple is that way, pink's this way. There we go. That blue? Probably blue.