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Good morning, everyone, and welcome to the Severn Trent 2021 Half Year Results Q&A Session. I'm Liv Garfield, Chief Executive. I've got James Bowling, CFO; Shane Anderson, Head of Reg and Strategy; James Jesic who runs our customer operations area. I've got Helen Miles, who could talk to us about all things capital; and Andy Smith, who can talk about contact centers, IT and of course planning.

So we're looking forward to sharing any questions you've got today. [Operator Instructions]Very good. So I think what we'll do is we'll start with the question we've got here. So thank you to Alex Wheeler for sending us one in advance. So first question from Alex then is, James, part 2 view. Has the extension of the furlough scheme altered your view for the second half of the year in terms of cash collection? And does any drop here now look more like a full year '22 event?

Yes. Thanks, Alex, for the question. So a couple of things to keep in mind. I think as I've said in my presentation, I think we've taken a prudent but appropriate approach to our bad debt position over the first half of the year. We are obviously watching closely the unemployment forecast and also what the government plans to do with furloughing.We've seen good cash collection over the first 6 months. I said it was up around 4% year-on-year, and that seems to have continued through October and November. So it is quite early to say what's going to happen in the second half of the year. But I think we've made a very prudent approach. And I think the other thing to bear in mind is that we are strong performers in this space. If you look at the Ofwat way of measuring bad debt performance and you can see that we started on a good position. And I think the key difference this time around versus for example previous recessions, is we've got a lot more ways that we can help our customers stay on track with their bills this time around, with The Big Difference Scheme, with our new Back on Track scheme as well. And I think those will certainly help to make sure that the impact of future unemployment is mitigated.

Very good. And I think on that exact note, I'll just ask Andy just to bring out a fresh bit of detail in terms of exactly what are we doing to make sure for the medium term that we continue to improve our cash collections performance.

Yes, sure. As James said, we traditionally and will continue to take an approach where working with customers is the right approach to this. And we've got at our fingertips now better data, more detailed data that helps us to tailor our approach to work with customers to help them to pay. Most customers, the vast majority of the customers want to pay. And as we're seeing -- as we've seen some of the impacts of COVID and so on, we've seen some of our customers are new to debt, they've not been in this position before.And as James mentioned there with our Back On Track schemes and our Big Difference Scheme and so on, we were able to help them avoid getting into debt and to keep paying. And we'll continue of course to push our direct debit, where we're growing at 2.5% a year. We're at 64% at the moment.Our digital strategy is really helping us here as we make it easier for customers to pay, for example through the web. 30% of our customers are paying through the web. So you can rest assured that we'll continue our approach. And as James says, keep your eye on that Ofwat measure of bad debt. It is the most consistent measure that there is.

Very good. So we'll go on to some live questions now and come back to the first half of Alex's question later. So Martin, I've got you with your hand in the air, so we're going to come to you first. Classic 2020 phrase, isn't it?

Hopefully, that's now unmuted. It wouldn't be right to pass up the opportunity on a water company's set of results not to ask a question on pensions. So I guess this one is directed to James. Given what the government was setting out yesterday about a refinement of the method to calculating RPI from 2030, wondered what implications that would have for you on the pension side of things. And I guess there's probably an impact as well on the way that you finance the business and the sort of the run-off that's linked to RPI on the [ rev ] front.

Great. Yes. Two questions for me then, so I'll take the first one. So on pensions, I think what you saw yesterday was the chancellor effectively saying we wouldn't intervene before 2030, which I think is largely what was expected in the market. So the impact of that change, I think, was pretty much factored into inflation forecasts. So the inflation forecast that we use for our IAS 19 number, for example, probably had most of that factored in. There'll still be, over the next few weeks and months, you'll see a settling of the market as the market digests that. But I think a lot of that was factored in. On the second part of the question, yes, it will mean that in -- I think it's AMP9, the financing of the business will get a little bit cheaper. And I had a quick look to see of the GBP 1.5 billion that we've got in index-linked debt, around GBP 1 billion of that matures after 2030. So I guess that's a nice present for the CFO who's here in AMP9. If that's me, that's great, but it could be one of my successors. But financing will get a little bit cheaper on that debt from 2030.

Very good. Thank you for that, Martin. I love it when we give James tricky technical question for the first one of the day. Now Jenny, you're the next person that's flashed up with their hand up in the air. Are you going to stick with the technical questions?

No. If I may, 3 for Liv, please.Firstly, just on totex. In the presentation and the press release, you didn't really talk very much about totex outperformance. And I just wondered, given what you've said before in terms of giving up totex to achieve ODIs, given the cumulative need of it, how much totex did you have to effectively give up in order to achieve that at least GBP 25 million that you talked about today? That's the first question. Second one, if you can give us an update on where we are on the talks about bringing additional CapEx through from AMP8 into AMP7? Any further clarity in terms of size and ways of remuneration? And then very lastly, it may be a nonquestion, but I just wondered from a CMA investigation, final determination point of view, if they do come out with a final WACC that's a whole percent higher, is there any scope for those who didn't appeal to get through to some of that? I know iDocs is out of the question. But is there any other ways which the rest of the industry can tap into that higher return?

Very good, so 3 really good, meaty questions. So let's start in the order you've gone with them, which is totex first. So we are confident that we will live within the totex allowance that was set for us this AMP. We've been pleased with our final determination since we received it. We broadly received the same amount of money that we asked for originally. So we've always felt that, that was the right amount of money for us to run the business. We've got the right money we need to do maintenance. We've got some good money to invest.So the reason we've not talked much about it is we're only 6 months into the AMP, but we've had a first start in terms of acceleration. We feel good that there is continued opportunity for us to make savings. And you're right, we think that because of the fact you get to keep the ODI outperformance, that as those savings materialize, it feels to us that this is an AMP where in you invest your totex back in. In terms of the GBP 25 million worth of ODIs so far this year, they've been generated through investments we did in AMP6. So we made investments at the end of AMP6 to have a strong start. And that's why we're confident quite early in the AMP to be calling at least GBP 25 million this year. And we feel that ODI performance typically tends to be something that once you've cemented it and you've got your business running at those levels, it's a repeat situation for the years to come. So we feel strong that our operational performance with 80% of the measures in green already, that feels like a good performance.So that's broadly what we see on totex at this stage. So the business isn't -- there's always more opportunity for us to find efficiencies, but we think there are also opportunities to think about investing that back in and possibly continue to improve the ODI outperformance in the future. In terms of question 2 then. So I don't see any conversation on bringing AMP8 to AMP7 money forward in terms of RCV. What I do see are 2 different discussion points, one of which I'll hand to Shane to talk about, which is that we do still have some real option schemes which were originally agreed in our first determination which are becoming clearer. And that is extra RCV growth for us and extra performance, but it's not an AMP8 acceleration per se. But I'll let Shane to talk about that. And then there is a good government conversation right now about green recovery. And I think that's about companies that have got strong operational performance, have proven that they're ahead on their capital spend, are companies that are environmentally strong. Could they do more over the next few years on different activity areas and actually help the U.K. be a greener society at the end of it? We are having some good conversations around that with government, with Defra, with Ofwat. And I think we'll know more in the next few months about that. So I'll hand to Shane just to talk about the points you mentioned there. And then I'll come back to your last one, which is the CMA. I won't miss it.

Thanks, Liv. So as Liv mentioned, we have 2 types of mechanisms that effectively allow us to increase totex and to kind of the AMP8 totex that you're talking about. And so the first relates to real options that we introduced. So these relate to the WFD program, where we expect at least GBP 100 million additional spend on the Amber schemes. Alongside this, we have the end-of-AMP ODIs. So of all listed companies, we have the most of these. We have 5, and we're expecting these to be quite substantial as well at the end of the AMP.

Very good. So hopefully that adds some flavor into that. And on the CMA, I mean it's a protracted, drawn-out affair, isn't it? So we're not going to know more know until February. And I guess you know I was going to say that hypotheticals are never good conversation topics, right? So on that basis, it's -- I don't get drawn on hypotheticals. Let's see what happens in February. What I do say though on the CMA situation is it has lent to a very good, long-term debate about climate change and about green investment. So I suspect whatever comes out in February comes out, but I do think for the sector, it's just shot a light on the fact that we are likely to need continued investment to become net-zero carbon, continued investment to play our part of the decarbonization agenda. And I think that's one topic that has firmly come out in the CMA. And so Jenny, if you're very good, you can come back and ask some more questions, if you want if that hasn't fully satisfied those. Dominic, I can see you're the next big smiley face on my screen, so we're going to go to you next.Now you unfortunately are muted to us.

Okay. Can you hear me now?Okay. Yes, I've got 2.5 questions, the half being a follow-on from one of Jenny's. So first of all, on the -- in M&A, it looks like Pennon are obviously looking at opportunities to consolidate in the water and wastewater industries. Do you think this could potentially catalyze a consolidation in the water sector as a whole? And do you think Severn Trent should be involved in that?The second question is on ODIs. Do you think that you will beat the last AMP's GBP 174 million, I believe, is the ODI number. And just following on from Jenny's question, could you actually quantify what you think the extra CapEx or the extra totex you could get in this green recoveries, please?

Very good, 3 -- well, yes, that would be 3 questions. I don't know how you get to 2.5 there, Dominic, but I think there's definitely 3 firm questions there.So on the first one, I mean typically what we tend to see is every AMP, we see at least one player consolidated. So I guess we bought Dee Valley, although actually create it into a new license at Hafren Dyfrdwy. But Pennon bought Bournemouth. I guess history of time shows that every AMP, there is typically one was consolidated. So I don't know what happened this time around. That's why it's a hypothetical. In terms of M&A, you know my sense of it. It's one of a number of opportunities. And right now, what we're focused on is on operational delivery. We think there is some genuine opportunity outperformance for us on ODIs by delivering fantastic service for our customers and really improving against what are pretty stringent challenging targets from Ofwat that was set across the sector to make everyone's measures as hard as each other's. We think, nonetheless, we can rise to that challenge and do well. So that's, I guess, my thoughts in terms of the first part. On the second, I'm not going to give you guidance months -- I guess, 6 months in for a 5-year period of what we might do on ODIs. Far too soon to give you any sense of that. We've not even on our first winter. So we definitely can't give that. I think we've given you pretty bold guidance to give at least GBP 25 million at this stage. What I will do though is get James just to talk about the range of ODIs that we're doing well against, to give you some flavor of where the ODI outperformance is coming from. So James, if you want to come back?

Yes. Thanks, Liv. And as Liv has already talked about, we're around 80% of our measure are already green, which we're really, really pleased about. And I guess more pleasing for me is those are spread across a number of our measures. So it's not just in waste, we are performing well in water, too. And I think going ahead over the next few years of the AMP, we've got some really exciting innovations also on how we continue our improving run rates. So for instance, if you look at blockages and also what we're doing from a catchment management perspective, we see those as real key ODI measures to drive performance in a number of our operational areas. So for some blockages, if we can really drive that down. We'll see improvements in flooding, and we'll also see improvements on pollutions. Now some of that is already starting to pay dividends. The blockages are on a really good run rate, and we are actually on track to see our best-ever pollutions performance. Notwithstanding, we're also investing much further in our Waste Infranetwork. So we're looking at investing probably around GBP 15 million across the AMP and around 40,000 sewer sensors. These will be an early warning system across traditionally what has been what we class as quite dumb network. So really looking at how we improve our intelligence and monitoring and managing that asset base. Similarly, from a catchment management perspective, we've made real good strides in developing our catchment solutions already over the start of this summer. And as I say, I think the GBP 25 million that we've got already is a really good indication of where we're heading to, notwithstanding typically it's always a good indication of what you'd see throughout the rest of the AMP, particularly the -- it doesn't tail off. Usually, you do see a kick up towards the back end of the AMP. So that's probably as much as we're going to give. Liv pushes me as much as you push Liv in terms of more. But that's where we are at the moment.

Very good. And on the last question then. So we can't quantify the green recovery exit. It's just right at the start of the process. So I will get Shane just to talk about what the process looks like though, so you can get a sense of timings and begin to share the journey with us. Shane?

Yes. So actually on the specific point on process, we expect a letter from Defra within the next week. Basically what Ofwat and Defra and the other regulators want, companies to come forward with innovative and creative ideas and also think about what you do in terms of pulling forward the next spend. So we're developing these options, also going through the normal process like a price review, so customer engagement and additional research on costs. And then we'll be submitting towards the end of winter. We expect Ofwat to make a decision in the spring.

Very good. Okay, fantastic. Thank you for that, Dominic. I think Fraser's next. Fraser, are you there?

I thought it was Ahmed.

One moment. One second. Well, actually, we'll change. I think we're going to Ahmed now. Okay. Sorry, moved around. Ahmed, are you there?

Yes. Just a few questions from my side. I think just firstly, on the COVID impact, I think in the pre-recorded webcast, you mentioned that the first half impact was towards the lower end of your expectations. I just wondered if you could sort of elaborate a little bit about your expectations for the second half and put that in the context of the overall range for the full year, which you have maintained?And secondly, on the CapEx acceleration, I think you referenced opportunities within -- or taking advantages of opportunities within the supply chain. And I just wanted to sort of see if you could elaborate on that point as well. And finally, on ODIs, clearly a strong start to the year. You've sort of already talked about the 80% of them being in the positive territory. Maybe you can have sort of a little bit more color on some of the challenges and where you see opportunities for improvement.

Really good questions. So James is definitely chomping at the bit for the first one.

Yes, yes, yes. So right. So look, we're all estimating what the impact of COVID-19 is, both for the half year and the full year. The impact that we saw in the first half was very much in line with the guidance. So the GBP 33 million that I talked about was really, if you break it down, it's around GBP 54 million, GBP 55 million of impact on nonhouseholds. So that's business customers, who we know were quite seriously impacted in the first lockdown. And then that was offset by higher household consumption. Now each region is going to be quite different in terms of the balance of household and nonhousehold. So we have got a big manufacturing sector in the Midlands, so it wasn't unexpected to see quite a big impact on business revenue.And then equally, we're slightly different to for example, the southwest where they had quite a big influx over the summer in terms of people going on holiday there. That probably would have created more of a balance in their overall revenue. So the overall impact of around GBP 33 million at the half year, as I said, was in line with guidance. Now when we look ahead into the second half of the year, we're in the middle of a lockdown, too. So there is a key uncertainty as to how that is going to impact in particular business customers and certainly those in the hospitality sector. At this stage in the year, we've probably read around 60% of the meters, even for the beginning of the year. So there's a lot of uncertainty in the rest of it. And that's why I've left the guidance as it is. And of course we've got that opportunity in February to give you an update as to how we see the impact of lockdown 2 impacting our full year numbers. And more importantly as more meter reads come in, we can give you a slightly fuller picture as to the impact for the year to date.

And the key thing to remember, Ahmed, is at the end of the day, the revenue comes back over 5 years. So this is a timing situation with revenue that maybe doesn't arrive this year, but does come back in 2 years' time. And obviously over the 5 years, you're kept whole. So I'll hand to Helen now to talk about how we've managed to accelerate GBP 80 million worth of spend into the first year of the AMP.

Yes. Thanks, Liv. So we did 2 things really early. Firstly, when COVID broke and the first lockdown hit, we took the decision straightaway that we wanted to continue work on our capital program, which we did. And our supply chain supported us. And we took capacity that was there where other companies have stopped work. So that was one thing we did. We kept going. We were very keen that we wanted to not pause and to keep a strong start. And the second thing that we did was we capitalized on the design market. So design is something that can broadly continue when we -- with COVID and lockdown. And we have our own in-house design team, as you know. But we also brought in some additional designs to allow us to really get onto the front foot for year 2 of our program, and that's where we've seen the acceleration.

Brilliant, and a good question to ask is what's not going so well. So 80% green, but of course that by the math means that 20% are not as good. So let's talk about some of those. So James, do you want to pick up your top 3 or 4 things that you're still working on?

Thank you, Liv. So -- and as always in any operational business, there's always areas that are challenging. That's an annual challenge that we have. But across the piece, we are performing well, as you rightly say. I think the key areas for me of focus at the moment, we have seen a challenge around per-capita consumption. With the hygiene messaging that's coming out of the government associated with COVID, people are using more water. That's a fact, and that's given us a bit of a challenge at the moment how we address that. But I think one of the things that I have seen during this situation is that it's brought out the best in innovation and people trialing new things. So for example, we were behind on our LEP program. We weren't able to access homes. But by working a bit -- sorry, not homes, schools. But by working a bit differently, engaging differently with the local council, we've actually been able to get ahead of our program already for this particular year. And we've done the same in the Welsh region of our business. Similarly, we are facing challenges around supply, which is one of those measures that can be up some years, it can be down some years. Notwithstanding, we've invested a lot to improve our network resilience. And although I'm personally not happy with that particular measure this year, we are 30% ahead of where we were for the average for AMP6. So in the round, I'm still really pleased where we're going. I think there's lots we can do to continue to improve. And I think we will continue on a good trajectory for the rest of the AMP.

Very good. Our next question is coming from Chris.

I guess a couple of questions from me, please. The first on RoRE. You haven't provided a RoRE for the first half, and it's still perhaps too early. But could you give us a flavor for some of the moving parts? And I guess on finance, there were some comments in the release and relating specifically to how the RoRE measure may differ from our initial view of your reduction in finance costs. And some clarity there would be terrific. And just on the CMA, it's a bit cheeky, but given what's happened, has that been a surprise to you so far, the process? Because it's been a surprise to us, I think. And any regrets? Because I know that the energy companies now get the luxury of sitting back and waiting to see what the final result is before they decide themselves, and it sounds like they're gearing up to wheel in the lawyers. But if you knew what was going to happen, would that have influenced your decision? I know you're probably not going to answer it, but I have to ask.

Very good. So we -- on RoRE, we never give guidance at this stage of the year on RoRE. So it's not an unusual thing that we've forgotten to put it into the RNS. It's just something you don't do. But we have given you the building blocks, haven't we, James?

We have, yes. So I mean you know that the main 3 building blocks are ODIs. We've given you some guidance in terms of at least GBP 25 million for the year. On totex, I think expect it to be neutral for the reasons that Liv discussed. We're investing for the future, which I think is -- which is why we're giving that neutral message. On financing, we're in -- as you know, it's a low-inflation year. And I think you've seen in AMP6, in years where we've had high and low inflation, we've called that out because it does have an impact on RoRE and our financing performance. Because RoRE is a real measure. It kind of strips away inflation. So inflation kind of does funny and counterintuitive things to your RoRE. And even in a year where you've seen financing costs, our financing costs have gone down 40 basis points in the year. And that's on top of the 120 basis points that we reduced financing costs over AMP6, even in a year where we're outperforming on the nominal allowance that Ofwat set for PR19. It does funny things to the real financing performance in RoRE. So just keep that in mind. Consultation still draft, I think, with Ofwat in terms of how we're measuring financing. So watch this space.

Very good. And on the CMA situation, I mean, they're just journeys, aren't they? And I always think that as a team, as a senior team, what we've got to do is you've got to look at when someone offers you a deal, a final determination, you've got to look at it and say, does that finance my business? Does that allow my business to outperform? Which is what shareholders expect from us, is to be an outperforming senior team. Does it allow us to build the right Severn Trent for the future? And I think having 2.5 years of uncertainty is quite a big call at the same time. Having had the previous 18 months of certainty, we then got approved that we can maximize that. And so you've got to hold us to account. But did that 18 months of certainty translate into much better operational performance than maybe people that went to pursue CMA? Did it translate into a better ability to deliver on our cost base? And has it led to us being confident for the long term, whether it's areas like green recovery or end-of-AMP ODIs? Have we maximized the time?Because that's the thing we've gained, isn't it, is we've gained time maybe at the expense of whatever is the final results. So I guess we'll be judged over the course of the AMP as to whether the timing acceleration yielded proper financial and real tangible benefits. And that's what we're going to hold ourselves to account to.Good. I think Dominic might be coming back for another question. Is that correct? It flashes up on my screen like he might be. Now is he shaking his head or is he saying yes?

Yes, just sort of like a bit of a follow-up here really on totex and ODIs, which is United Utilities reported yesterday and said pretty explicitly that they saw the world in a way which they would look at sacrificing some totex in order to gain ODIs. Is this -- do you think ODI returns are more valuable than totex returns on the sustainability of it? And is this the way that you will be looking at the world going forward? Or will you be looking to outperform both?

I want both. It's really clear that I wouldn't let my team -- definitely I've got my team here. I can't afford to say, "Don't worry, team. You can let ride on your costs as long as you deliver ODIs." That's not the way I think we should run the business. At the same time, they are worth to you -- and I guess if Shane just talks to the reg mechanism, then ODIs are -- they are a better financial return. If it was pound for pound, like for like, you'd rather have the ODIs than the totex, wouldn't you?

Yes, that's right. Totex outperformance, particularly through the network controls, is shared 50-50. Whereas with ODIs, you retain 100% of the value. So again just from simple mathematics, ODIs are worth more.

And so they are worth more. So I guess if you were down to that choice, then the choice is the right math. The way we do it is that we've got a totex budget, which was exactly the budget we asked for. We feel confident we can do everything that we want to do within that budget. And part of our plan was always to outperform on ODIs. We outperformed last AMP, as you say, by GBP 170 million in ODIs. We intend to outperform this AMP strongly as well.So on that basis, we've assumed in our totex allowance to have the ability to throw off ODIs. So I'm confident we'll live within the totex allowance, and we'll deliver strongly on ODIs. I'm not expecting to trade between the 2. Good. I think Martin went back for a second question. Is that correct as well? This tense moment beforehand.

Hopefully, you can hear me now. I mean yes, just a couple of follow-up questions if I can, please. The first is on what was being said about finance, RoRE. Are there any implications at the end of the AMP7 period with true-up mechanisms or inflation deviating from expectations in respect of financing costs that you might not incurred on a real basis or you have incurred on a real basis? And then the second question relates to the National Infrastructure Strategy that came out yesterday afternoon. And a couple of things there. One, are there sort of positive long-term direction of travel matters that you can draw from what was being said and put out in that document? And then secondly, I note there was a section about economic regulation or making economic regulation fit for the 21st century. I wonder if you have any views as to how the regulation of networks and water in particular might be changed or tweaked to make it fit the 21st century.

Very good. Dangerous questions, okay. So James, do you want to go first?

Yes. I don't think there are specific true-up mechanisms for inflation in the regulatory model. But there are, as you know, true-up mechanisms for the cost of new debt. And as I understand it, that true-up mechanism, it is on a real basis. So inflation does have a component part in the calculation of the true-up when you look at the iBoxx. So still working through it, but that's how we see that. Before I hand over to Liv to talk about the infrastructure stuff, the one thing that I did like to see, I did see and I liked seeing yesterday was the idea that they're going to set up a U.K. infrastructure investment bank. That is quite exciting. Because you know in the past, the EIB has been a good source of financing for the sector and for Severn Trent. So I think we've done really well over the last -- since Brexit, to find competitive low-cost sources of finance, absent EIB. But I think it's very welcome that the government's recognized that there is a part to play for a kind of a national infrastructure bank, and we're looking forward to seeing what that means.

And in terms of the infrastructure news yesterday, I think it's good that as a nation, we're kind of outlining across multiple sectors, and particularly because we are, as a nation, changing. So I think we are embracing the fact that climate change is here, more extreme weather patterns are real. That is going to create a massive change to infrastructure investment. So the types of things that I interpret the wording as being that for example is taking some real facts and stats and saying let's incorporate this in our regulatory process going toward. And the most evident one to pull out is the fact that going forward, you've got to look at flood risk on a 1 to 500 year, so I think that gives you a sense of it. So we're not talking about fit for purpose for the future, it's fit for purpose considering climate change and the fact that more extreme weather is a reality and that customers' expectations are much higher. So I think we will see some interesting real changes coming out of that. Shane, anything you want to add to that?

No, I think just a strong emphasis on climate change adoption. The "1 in 500 year" drought is quite helpful because we've only had a signal to this. This becomes the new requirement that will feed through in PR24 plans. I think it was also a positive acknowledgment of the movement Ofwat's taken, and our regulators are setting up rapid to make this transition to the "1 in 500 year" requirements and to support more investment. So yes, very positive.

Very good. I've got a couple of questions now before we go -- let me get Fraser on the line in a second. But first of all, I'm going to ask the ones that have come through on the Internet. So first of all, Helen. So why was CapEx brought forward to this year? So that's from [ Nick ] at [ Burendolphen ].

Okay. So we wanted to accelerate any CapEx we could. We looked at CapEx that would improve ODIs. We wanted to accelerate anything that would help us with efficiency. And we also wanted to accelerate anything that would help us with sustainability. And that's what we've done. As I said earlier, we took advantage of the supply chain capacity during COVID and during the first lockdown. And so that's helped us as well.And if I look at where we have, what we've accelerated, we've used those criteria. And we've accelerated in our waste program primarily so where we can support pollutions, where we can support flooding and also the green agenda. So we're really pleased we've been able to do that. We will continue to push for more acceleration, but we're in good shape.

Very good. A question from Verity. To -- they're flying in from Verity. We'll do Verity's first one, then we'll go to Fraser. So Verity's first one was regarding the ODIs. So carried over GBP 191 million worth of ODI carryover, of which we've taken GBP 38 million in this period into the revenue number. How should we see the remainder spread? So I guess, Shane.

Yes. So the deferred ODIs are spread across in the key factors that we already have. So each year, we'll be adjusting our bills based on these key factors. So the deferred ODIs include this. But also other factors including the revenue adjustments that James talked about. So where we've under-collected this year, we're collecting that in future years. We've also got inflation, and we've also got the current and period ODIs. So we'll be taking all these into account on an annual basis as we set tariffs.

Very good. Fraser, shall we get your question next?

Three quick questions, please, if I may. First of all, can I ask about the rehab plan for Water Plus? How are you thinking about the security of the GBP 90-odd million of loans that you provided? Will it take more investment to improve the underlying position? When do you think it will be back in the black?The second question is how you're thinking about M&A opportunities. Is there scope for you to add some value with some add-ons? And then last, why have you moved Bioresources back into the water segment? And will it stay there?

Very good. Okay. So James, do you want to cover off from Water Plus?

Yes. And I think [ Phil ], my CFO, he touched on this yesterday. It's been a really tough year for all of business, particularly those in the nonhousehold water sector. But there have been some really positive signs. I think they've had a great operational start in terms of improving their working capital management, improving their revenue assurance. And the margins are looking healthy. But it is a fact that their revenue has been hit by lockdown, but we're really encouraged by the operational performance. And it's looking good for the future. I think the other thing we've welcomed is that Ofwat have recognized that it's been a tricky year for the whole sector. And I think they've done a really good job in terms of the support that they've provided. So a tough year, but a positive outlook would be my summary for Water Plus.

And without COVID, they would actually have been in, well, almost certainly a positive territory. So it's a tricky situation, but I think we just got to play this through another year. So I know it feels like we've said that last year, but honestly the underlying performance of the business team of what's going on really step changed. And I think and [ Steve ] and [ Phil ] covered that yesterday as well. Question 2 then, one for me, which is do we think that M&A is an opportunity for us to maybe add some size in? I mean fundamentally M&A is just one opportunity, and that's the way that we look at it. So of course we're going to keep an eye on where we think our business can perform well, where we think that, like we did with Agrivert, that actually a small acquisition like that in an area that we think is core for us, can actually do well. So I think we see ourselves as having a good opportunity on an ongoing basis for growth, whether it's through the RCV growth. We are pleased with our RCV current growth rate and see possible opportunity through the green recovery scheme. We also see growth through ODIs, and those ODIs are critical to us. We think that's a stronger play for us than maybe other businesses. And right now, that's our attention is to have an absolutely cracking year 1 on ops performance. Because if you get your business running in great shape on what are significantly harsher measures than we've had in the last AMP, then that is likely to last for the next few years. So attention is firmly in terms of a strong start to this AMP, across the RCV growth rate and across ODIs. But we'll keep our eyes peeled, but that's as much as we'll say there. And Bioresources, it has moved around, but I guess that's because the regulatory model has changed a bit.

It has, and it also reflects the fact how we run the business. So we're running the business with Bioresources firmly back with the customer operations team, and that's why we've moved that. I think it makes it a little bit easier. I know it's been chopped and changed, but there is a benefit that it's much clearer now. You can see that our customer operations very firmly show our regulated business. And our business services is now much more about our nonreg business. So it's a little bit cleaner for you guys to kind of see the split between the reg and the nonreg business.

And we imagine this is how it's now going to stay. That's our current plan. Very good. Okay, good. So we'll do the question I've got here from Verity. It's for you actually, James. So your tax charge is lower than other companies because of the capital allowances. Can you talk through how you see the trend in the AMP?

Yes. I mean I think when you look back, our effective interest rate is low, but that is largely to do with the shape of the capital program. And as you know, we take advantage of the capital allowances that are there to incentivize investment. And that does push down the rate.So I can't give you guidance for the full year. You should expect us to continue to have a competitive effective rate because of those capital allowances.But I'd also draw your attention to our Fair Tax Mark this year. So we got accredited again this year on the Fair Tax Mark. This says that we are paying the right amount of tax. And I think that recognizes that our underlying rate of around 19% is absolutely in line with the corporation tax rate. But as I said, we do get that advantage, in common with lots of other companies that have big investment programs of those capital allowances.

And it's a fact we had such a mega year last year, isn't it right? GBP 800 million last year just plays into that in terms of how it rolls forward.Very good. As it stands now, I believe we have no further questions. So I've answered the ones that came through in terms of questions online, and we can't see any more waving frantically their hands on the screen. So with that, I'm going to say a massive thank you very much to the team for their response to questions, to yourself for dialing in and asking questions. And we'll speak to you all again very soon. Thank you very much.