Investment prioritised over dividend as Thames Water puts customers first

Last reviewed:

Thames Water Utilities Ltd financial results for 201718

Thames Water Utilities Ltd announces its results for the full-year ended 31 March 2018.

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

“We fully recognise the urgency required, have listened to our customers and stakeholders and made a number of important changes this year.

 

"We are committed to putting our customers first in everything we do. Our underlying profit is down and our Investors support the Board’s decision not to pay dividends to external shareholders for the next two years as we prioritise long-term investment to improve our service to customers. Despite some operational challenges, including the severe cold snap in March, our customer satisfaction scores continue to improve. 

 

"There is still much to do, and we will be judged on our results. On leakage, despite missing our original targets, we are confident we will get back on track with our commitments by 2020 and will reduce it by a further 15% between 2020–25.

 

"We are simplifying our corporate structure and have a new Chairman, committed Board and Investors and a refreshed Executive team. We are focused on ensuring we continue to provide high-quality, affordable and resilient water and wastewater services for our customers now and long in to the future.”

 

Ian Marchant, Chairman of Thames Water Utilities Ltd, said:

 

“We are responsible for providing our customers with one of life’s essential services. Better transparency is crucial to build trust with our stakeholders, so we have made critical changes to our governance and reporting. We are also closing our Cayman subsidiaries.

 

"It is only right that senior management get paid for performance. There will be no annual CEO bonus this year - or next - while we get leakage back on target with any future long term variable pay tied to meeting challenging customer commitments.”

Customer service

  • Helped 7,500 households with their water debt through our Customer Assistance Fund, up 20%
  • At £383 a year, household customers to benefit in 2018-19 from the second lowest average combined water and wastewater bill in England and Wales
  • 4% reduction in household written complaints and a 19% reduction in the volume of second stage complaints
  • Our Service Incentive Mechanism (SIM) Ofwat customer rating increased to 78.43 points out of 100 (Mar ’17: 77.3)
  • Introducing leading-edge billing and customer platform to improve their experience and system resilience, piloting later this year

     

    Financial performance

  • Following the appointment of Ian Marchant as Chairman in January 2018, the first stage of the governance review is now complete
  • We are closing our Cayman subsidiaries, with a major milestone passed this week (the formal agreement by our debt investors for closure)
  • Alistair Buchanan, former CEO of Ofgem, to join as Independent Non-Executive Director
  • Steve Robertson’s remuneration and incentives to be focused on customer outcomes – no bonus will be payable until 2020, and only if challenging customer commitments are met
  • £517.0 million underlying operating profit (Mar '17: £605.4 million)
  • £34.6 million underlying profit before tax excluding profit on the sale of our non-household business (Mar '17: £38.1 million)
  • Capital investment of £1,148.8 million in our network and other assets (Mar '17: £1,218.0 million), with around £13 billion invested over the last 13 years
  • No distributions to external shareholders (Mar '17: £100.0 million). £55.0 million paid to service group interest obligations and working capital requirements (March ’17: £57.0 million)

    Operational performance

     

  • Scored 99.96% drinking water quality compliance (Mar ’17: 99.96%), remains among the best in the world
  • Sewage treatment works discharge compliance of 99.43% - our best performance since 2013.
  • Committed to learn lessons from the ‘Beast from the East’ customer supply interruptions in March and will publish plan of action in late September
  • ODI net penalty, excluding leakage, of £20.85 million, to be returned to customers through lower bills

     Leakage

     

  • Our leakage performance for 2017/18 was 695 Ml/d (mega litres per day) from 677 Ml/d in 2016/17, as we played catch up with the previous year’s low levels of find and fix activity
  • Following the mobilisation of our leakage recovery plan, we are now completing an average of 1,000 repairs every week – a record
  • We expect our leakage performance to improve in 2018/19 and we remain on track to meet our original 2019/20 target of 606 Ml/d
  • Put forward a package of measures to Ofwat in order to remedy performance and provide adequate compensation for customers, leading to customer rebates of £65 million on top of £55 million of automatic penalties

     Investing for the future

     

  • Water investment of close to £500 million in 2017-18 included £52 million in metering programme, promoting water efficiency and helping to detect leaks. Increased investment in this planning period in our largest water mains by £97 million to improve resilience and protect customers from devastating effects of flooding
  • Wastewater investment of close to £500 million in 2017-18 included £64.9 million invested in our Deephams sewage treatment works upgrade to support regional growth. Additional £40 million multi-site spend to increase self-generation of energy and reduce risk of pollutions
  • Thames Tideway Tunnel: £39 million spent on interface works this year for a landmark project supporting London’s growth and preventing millions of tonnes of sewage from entering the River Thames

     Governance

    • Following the appointment of Ian Marchant as Chairman in January 2018, the first stage of the governance review is now complete
    • We are closing our Cayman subsidiaries, with a major milestone passed this week (the formal agreement by our debt investors for closure)
    • Alistair Buchanan, former CEO of Ofgem, to join as Independent Non-Executive Director
    • Steve Robertson’s remuneration and incentives to be focused on customer outcomes – no bonus will be payable until 2020, and only if challenging customer commitments are met

     About Thames Water

Thames Water is the UK’s biggest water and wastewater services provider. We have invested over £1 billion every year, on average, for the past 13 years improving service for our 15 million customers across London and the Thames Valley. For an average of just over £1 a day for our households, we provide 2.6 billion litres of clean drinking water and safely remove 4.6 billion litres of wastewater – every day, 365 days a year. We are regulated by Ofwat, the Environment Agency and Drinking Water Inspectorate, and our customers will benefit from our nearly £5 billion investment programme between 2015 and 2020, the largest in the UK water industry.

To read the full report click here.

Media Contacts

Thames Water                  

Sunny Tucker                                                                   07747 644 747

sunny.tucker@thameswater.co.uk

Stuart White                                                                    020 3577 4364

stuart.white@thameswater.co.uk

 

Maitland                                                                          0207 379 5151

Neil Bennett

James McFarlane