Interim results 2018 Thames Water Utilities Limited consolidated interim results: April to Sept 2018

Last reviewed:

Interim results 2018

Steve Robertson, Chief Executive Officer of Thames Water Utilities Limited, said:

“During the intense summer heatwave we worked tirelessly to protect our customers from supply restrictions. However, along with the impact of the ‘Beast from the East’, it has delayed our progress on leakage and other performance measures. We remain focused on building a better future for our customers and the environment.

“Our profit decreased over the period as we brought forward regulatory penalties, to benefit customers, and hired more employees to improve customer service and tackle leakage. Our capital investment increased, with £554 million spent on improving our water and waste networks.

“Our long-term investors are committed to the high investment levels required to face the challenges created by climate change and population growth, and continue to not take any dividends. Our record £11.7 billion business plan for 2020-25 will help to further transform our infrastructure and customer service, as well as provide the necessary extra support for people in vulnerable circumstances.”

Doing more for customers

 

  • Increased water production by 450 Ml/d, or 17%, and managed high demand through direct text message engagement with customers in hotspots to prevent restrictions during summer heatwave
  • Increased support for customers in vulnerable circumstances
    - Homes on social tariff at 53,671, up 10%
    - 62,671 customers on priority services register, up 4.4%
    - 3,353 customers supported through customer assistance fund
  • New approach to customer engagement through ‘Water Royalty’ efficiency advertising campaign, and ‘pop-up’ free tap water bars at Chelsea Flower Show, Notting Hill Carnival and Countryfile Live
  • 200,000th Smarter Home Visit completed, helping customers reduce water usage and keep household bills down
  • £30 million, 20km water pipeline providing a more reliable water supply for thousands of customers in North Oxfordshire
  • Over 8,000 lead water pipes rehabilitated since April 2018


 Extreme weather delays progress

  • ‘Beast from the East’ (freeze thaw) and prolonged summer heatwave has enduring impact on leakage, despite best repair performance in 10 years
  • Leakage performance 683 Ml/d (Sept 2017: 665 Ml/d)
  • 1,431 leaks fixed per week, best performance since 2008/9, and up 37% year-on-year
  • 26,987 leak-detecting acoustic loggers installed to date
  • Installed further 44,105 smart enabled water meters, with total of 265,000 transmitting data to help pinpoint leaks
  • Supply interruptions and complaint volumes also affected by climate events. Household written complaints at 11,083 (Sept 2017: 8,242)

Operational performance in other key areas

  • Water quality compliance at 99.96% (2017: 99.96%)
  • Pollutions incidents at 217 (Sept 2017: 202)
    - 10% year-on-year reduction in incidents from wastewater pipes
    - 301km of proactive sewer maintenance
    - 762 sewer sensors installed since January 2018 as part of plans to digitise sewer network

Building a better future

  • On track to migrate first small tranche of customers to new billing system from December 2018
  • Major review, to demonstrate cross-sector leadership in governance, near completion
    - Cayman Islands entities are no longer subsidiaries of Thames Water Utilities Limited and are in final stages of closure
    - Appointment of three new Independent Non-Executive Directors: Alistair Buchanan, Jill Shedden and Catherine Lynn
    - New dividend policy in place
    - No dividends to external shareholders until 2020/21
  • Investing £60 million in IT systems to improve performance and customer service
  • Submitted ambitious plan for 2020-25 based on feedback from 1 million customers
    - £11.7 billion spend including extra £2.1 billion to improve resilience
    - Plan to drive 15% reduction in leakage, 18% reduction in pollution incidents and increased support for customers in vulnerable circumstances
    - Modest dividend payments of c.£20 million per year between 2020 and 2025
  • New Net Promoter System to launch in second half of financial year 

Financial overview

  • Signed £1.4 billion, five year Revolving Credit Facility with interest rate tied to sustainability performance. Outperforming the ESG benchmark will result in a lower interest rate, with any financial gains boosting Thames Water’s charitable fund
  • £650 million of Hold-Co financing raised to refinance £400 million bond, with incremental proceeds to be used to de-gear Thames Water

 

 

Six months ended:

 

30 Sep 2018

30 Sep 2017

Revenue

£1,025.6m

£1,042.8m

Capital expenditure excluding intangibles

£554.3m

£532.7m

Operating profit

£246.8m

£288.4m

Profit before tax (excluding NHH*)

£67.7m

£129.0m

Profit before tax

£67.7m

£218.5m

Sale of NHH

£0m

£89.5m

Dividends paid by TWUL to other group companies

£0m

£26m

Dividends paid by ultimate parent company to external shareholders

£0m

£0m

 

*Underlying profit before tax excludes gain on the sale of our non-household retail business to Castle Water in 2017

The interim report and consolidated financial statements present the combined results of Thames Water Utilities Limited and its sole subsidiary Thames Water Utilities Finance plc (“the TWUL Group”) as if it were a single economic entity. This provides all interested parties with a complete overview of the operating company and the finances in place to support its operations and enhance understanding, presenting the results of operations, financing and financial position in one place.

To read the full report click here.