Why do you need to borrow money? Is that a bad sign?
We need to make significant investments to keep supplies fit for the future and protect the environment. To be able to pay for it today, like many other companies, and like the UK government, we sometimes need to borrow over and above direct shareholder equity injections. Raising investment funds through the debt market is also typically cheaper than the other routes. This is especially the case for Severn Trent Group as they have a strong financial position and investment grading to attract some of the best market offerings available.
Planned borrowing to pay for long-term improvements is also a sensible strategy. Effectively we’re getting a better infrastructure now and charging for it over a longer time.
Our revenue (the money raised from customer bills) will largely pay for day-to-day operations, with only a small portion of the bill going towards payment of investments in new infrastructure. Without this, customer bills would be much higher and more unpredictable from year to year.
Do executives get big bonuses even if the company performs poorly? And who’s paying for them?
Executive bonuses aren't automatic, and poor performance can mean little or no bonus. Nor do customers foot the bill. Executive performance-related pay is funded by Severn Trent Plc’s investors and excluded from Hafren Dyfrdwy’s regulatory costs, so it isn’t paid for by customers through their bills.
Our Executive Directors receive a specific Hafren Dyfrdwy bonus which depends entirely on Hafren Dyfrdwy’s own performance. 60% of any bonus depends on performance outcomes for customers and the environment ,which is set by the regulator, whilst the remaining 40% is linked to operating financial performance. The pre-set targets are designed to be stretching, and the maximum award is capped at 25% of the salary associated with their Hafren Dyfrdwy responsibilities. Amounts paid are published in our Annual Report and Accounts each year and totalled less than £10k for FY25/26 year.