Thames Water Utilities Ltd financial results for 2016-17

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Annual report front cover image

Thames Water Utilities Ltd announces its results for the full-year ended 31 March 2017.

Financial performance

  • £605 million underlying operating profit (2015/16: £742.2 million).
  • £71.1 million profit before tax (2015/16: £511.2 million), due to fair value loss on financial instruments, increased costs and lower property sales.
  • Capital expenditure of £1.1 billion on network and infrastructure in 2016/17, with around £12 billion invested in last 12 years.
  • £100 million in dividends paid to external shareholders (2015/16: £nil).
  • Maintained strong investment grade credit rating (Moody’s Corporate Family Rating Baa1).

Customer service

  • 94.5% of complaints resolved first time, up from 90.9% in 2015/16.
  • At £374 a year, customers continue to benefit from the third lowest average combined water and wastewater bill in England and Wales.
  • £14.6 million reduction in bad debt expense caused by customer non-payment.
  • Our Service Incentive Mechanism (Ofwat SIM) score moves from 76.7 to 77.3 points out of 100.

Operational performance

  • Scored 99.96% drinking water quality compliance. Water quality remains among the best in the world.
  • After outperforming our annual target for 10 years, and reducing leakage by 100 million litres per day over that period - the equivalent of 40 Olympic-sized swimming pools - we regrettably missed our 2016/17 leakage reduction target by 47 million litres per day, which represents 1.8% of our average daily production.
  • Transformed our approach to preventing pollutions following offences at six sites in the Thames Valley between 2012 and 2014, for which we paid a £19.75 million fine in 2017. We’ve been more proactive in our wastewater network maintenance, changed our management structure in the affected region and invested heavily in our infrastructure and control systems leading to a 42% reduction in incidents since 2013.
  • Investment in producing energy from sewage is paying off with 267 GWh of energy produced in 2016/17 – our best performance to date, and enough to power 86,000 homes a year.
  • Largest water efficiency programme in the industry. Measures including the installation of 146,000 smart water meters and 60,000 Smarter Home Visits produced an annual saving of 22.2Ml/d, ahead of target.

Future plans

  • CEO Steve Robertson, who joined in September 2016, sets out new approach to running the business, after forming new leadership team, with promise to drive change that delivers more for customers.
  • Committed to additional investment in excess of £150 million by 2020 in critical areas, including £97m on our largest (‘trunk’) mains.
  • New major shareholders Borealis Infrastructure, the infrastructure investment manager of OMERS, one of Canada’s largest pension plans, and Wren House, the global direct infrastructure investment arm of the Kuwait Investment Authority, acquired the Macquarie-managed 26.3% stake. Sale completed on 31 May 2017 as planned.

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

“I am excited about this new chapter for Thames Water, with a fresh leadership team and new investors on board. We fully accept our responsibility for our legacy issues and our focus now is to ensure resilience in our provision of essential services and delivering maximum value for our customers, who continue to benefit from the third cheapest bills in England and Wales.

“Although we faced challenges during the year, the underlying performance of the business last year was sound and we will continue to invest to achieve operational and customer service excellence. We are committed to investing an industry-leading £20 million a week to meet our challenging targets, always thinking of the long-term. Recognising that additional investment is required in some critical areas we’ll spend in excess of £150 million between now and 2020, above our original plans, to replace more ‘trunk’ mains, reduce leakage, improve some of our oldest sewers and upgrade the IT systems that underpin our customer service.

“We remain committed to our push for more efficiency and innovation, including collecting and using data more intelligently – this approach has already transformed our performance in wastewater control. Most importantly, we are committed to improving the unique relationship we have with our customers across London and the Thames Valley, and protecting and enhancing the precious environment in which we operate.”