Thames Water Utilities Limited

Report Publication Announcement • Nov 29, 2019

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RNS Number : 1172V

Thames Water Utilities Limited

29 November 2019

Thames Water Utilities Limited

29 November 2019

THAMES WATER UTILITIES LIMITED

THAMES WATER UTILITIES FINANCE PLC

ANNOUNCE PUBLICATION OF CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019

Copies of these financial statements are available on the website: https://corporate.thameswater.co.uk/about-us/our-investors

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Thames Water Utilities Limited consolidated interim results: April to Sept 2019

Key highlights

·      11% year-on-year reduction in average leakage, from 683Ml/d to 606 Ml/d - our biggest reduction in 20 years

·      Nearly £600 million invested in water and waste services assets to boost resilience

·      Three quarters of household customers moved to new relationship management and billing platform

·      More than doubled number of customers on Water Sure Plus social tariff to 114,000

·      Good progress in restructuring the business to drive cost and operational efficiency

·      Advanced stages of recruitment for new CEO

Ian Marchant, Interim Executive Chairman, Thames Water Utilities Limited, said:

"We're making good progress against our key priorities including leakage, which is down 11% year-on-year, after sharpening our focus in a number of areas. We're now fixing an average of more than 1,400 leaks every week, thanks to the hard work of our expanded teams and the use of big data and innovations. This is encouraging progress and we're committed to keeping up the positive momentum. We will continue to put our resources into maintaining this level of performance over the crucial winter period, when colder temperatures make reducing leakage even harder.

"As we near the end of a challenging price review process, our long-term investors continue to support the prioritisation of historically high investment levels over the taking of dividends. We remain resolutely focused on maximising the benefit of every pound to create value for our customers, communities and the natural environment, amid the challenges of climate change and population growth."

Financial overview

·      Total revenue £1.1 billion (Sept 2018: £1.0 billion)

·      £301.2 million underlying operating profit (Sept 2018 restated1: £224.0 million), increase partly attributed to increase in revenue and other operating income

·      £54.3 million underlying loss before tax (Sept 2018 restated1: Profit £42.4 million), driven by bi-annual revaluation of hedging instruments to current market prices

·      Zero dividends to external shareholders as part of commitment not to pay dividends to external shareholders for the three years to 2019/20

·      £28.0 million dividend to immediate parent company to service third party debt obligations

Focused on improving customer service

·      Increase in water quality with 99.98% compliance with Drinking Water Inspectorate measure

·      Successful transition of three quarters of household customer accounts to new relationship management and billing platform. On track to migrate most accounts by March 2020

·      Nearly 75,000 customers in vulnerable circumstances currently helped through priority services register, up 7% since the start of 2019/20

·      More than doubled number of customers on Water Sure Plus social tariff to 114,000; up to 50% discount off what is the third lowest combined bill in England and Wales

·      Education programme has reached 100,000 young people during this regulatory period so far, including nearly 13,000 during the first six months of this year

Protecting and enhancing the environment

·      Reduced internal sewer flooding incidents by 13% year-on-year

·      Total pollution incidents from January to September: 212 (January to September 2018: 217), with 8 category 2 (January to September 2018: 6). Continued focus to drive step change in reduction

·      31 water fountains installed to date across London in partnership with the Mayor of London

·      Re-opened a London cycle route made from the equivalent of 1 million recycled plastic bags

·      Conducted 37,430 smarter home visits, saving 2.75 million litres of water every day. 270,000 visits since the programme launched in 2015, with over 22 million litres of water saved each day

·      Three per cent year-on-year reduction in greenhouse gas emissions

·      Generated a total of 162.42 GWh of renewable electricity, a 6.5% year-on-year increase, and the equivalent of £17.8 million in electricity costs, including 151.45 GWh of electricity from sludge

Transformational investment programme

·      Biggest leakage reduction in 20 years - 11% reduction from 683 Ml/d to 606Ml/d, after increasing resourcing and productivity; implementing better prevention and detection methods; and improved measurement techniques

·      Invested nearly £600 million in above and below ground assets, in projects such as upgrading water mains, metering, site security and connecting our network to the Thames Tideway Tunnel

·      Modernising an ageing network, with c.62% of our pipe network more than 60 years old - 81km of water mains rehabilitated during the six months

·      Deephams sewage treatment works upgrade wins prestigious 'Greatest Contribution to London' trophy at the ICE London Civil Engineering Awards in May 2019

·      Completed innovative sewer replacement at Baker Street, winning "Best Operations and Maintenance" at the British Construction Industry Awards

Building a collaborative and capable team

·      Four appointments to the Executive team: John Bentley, Capital Delivery Director; Nicola Cocks, Regulation Director; Lynne Graham, Human Resources Director and George Mayhew, Corporate Affairs Director

·      Ian Pearson, Independent Non-Executive Director, appointed Workforce engagement lead to strengthen the voice of the employee in the Boardroom

·      22% reduction in injuries leading to absence from work

·      239 people seeking advice and support through mental health first aider programme, leading to 93% of those employees remaining in work

·      Awarded Disability Confident Leader status in July 2019

Financial Summary

Six months ended	30 September 2019			30 September 20181
	Underlying	BTL	Total	Underlying	BTL	Total
Revenue (£m)	1,065.3	31.2	1,096.5	1,001.1	24.5	1,025.6
Operating expenses (£m)	(807.9)	(0.1)	(808.0)	(812.1)	(0.1)	(812.2)
Other operating income (£m)	43.8	-	43.8	35.0	-	35.0
Operating profit (£m)	301.2	31.1	332.3	224.0	24.4	248.4
Net finance expense (£m)	(194.0)	-	(194.0)	(193.7)	-	(193.7)
Net (loss)/gain on financial instruments (£m)	(161.5)	-	(161.5)	12.1	-	12.1
(Loss)/profit before tax (£m)	(54.3)	31.1	(23.2)	42.4	24.4	66.8
(Loss)/profit after tax (£m)	(42.8)	29.2	(13.6)	42.3	23.0	65.3
Capital expenditure including intangibles (£m)	599.1	-	599.1	586.6	-	586.6
Net debt (£m)*	11,768.3	-	11,768.3	11,619.8	-	11,619.8
Dividends paid (£m)	28.0	-	28.0	-	-	-
Gearing (%)**	81.7	-	-	81.1	-	-
Credit rating***	-	-	Baa1 negative	-	-	Baa1 negative
* Statutory basis   ** Ratio of covenant net debt to Regulatory Capital Value ("RCV")  *** Representing the consolidated Corporate Family Rating assigned by Moody's 1 Restated following transition to IFRS 16 on 1 April 2019. See Note 22.

The interim report and condensed 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 https://corporate.thameswater.co.uk/about-us/our-investors

External shareholders - this is the term used to describe the ultimate owners of the company. Most of our external shareholders are pension funds. They own the shares in our ultimate parent company, Kemble Water Holdings Limited.

About Thames Water

Thames Water is the UK's biggest water and wastewater services provider. We invested more than £1 billion again in 2018/19, leading to a total of £15 billion in the past 15 years, improving service for over 15 million customers across London, the Thames Valley and surrounding areas. For an average of just over £1 a day for our households, we provide 2.7 billion litres of clean drinking water and safely remove 4.4 billion litres of wastewater - every day, 365 days a year. We are regulated by Ofwat, the Environment Agency and Drinking Water Inspectorate and, as part of our draft £10.9 billion business plan for 2020-25, propose to invest record amounts on improving resilience, service and efficiency, as well as providing more support for customers in vulnerable circumstances.

Media contacts

Thames Water:

Sunny Tucker                                          07747 644 747

[email protected]

Stuart White                                           0203 577 4364 

[email protected]

Maitland:

Neil Bennett                                            07900 000777

James McFarlane                                    07584 142665

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