Thames Water Interim Results

Highlights of the interim results

• Capital investment up 10% on the preceding period to GBP526.7m from GBP478.2m. By Year End the company expects to invest GBP1bn on improvements for the second consecutive year
• Turnover up 4.8% on the preceding period from GBP745.0m to GBP780.5m, within price limits set by Ofwat
• Operating expenditure at GBP294.4million represents a fall of 0.4% from GBP295.6million in the preceding period
• Operating profit up from GBP292.3million to GBP323.2million (an increase of 11%).

Thames Water CEO, David Owens, said: "These are a sound set of results, reflecting continued emphasis placed on improving productivity as well as strong financial management. Our focus on tightly managing operating costs and maximising efficiency has helped us reduce the impact of rising power costs and the increased cost of borrowing. Operating profit has improved steadily which is essential to allow us to maintain our high levels of investment. And for every GBP1 of profit, we have re-invested GBP2.70.

"Since the change of ownership and management two years ago, we will invest a second annual total of GBP1billion in maintaining and upgrading our network and improving customer service - the largest investment in the industry.

Operational highlights

• The company remains on target to maintain its best ever performance for drinking water quality which was achieved in 2007/08
• Progress on tackling leakage continues, with current performance indicating leakage targets will be met for the current year. If successful, this would be the third year in succession the company will have met the targets agreed with the industry regulator Ofwat.
• All 349 sewage treatment works are on course to meet strict environmental guidelines for the second consecutive year.
• A 0.4% reduction in operating expenditure has been achieved in the face of rising power costs (up by GBP19million on the previous year).

Mr Owens said: "In August we submitted our draft five-year Business Plan for the next price review period (2010-2015) to our regulator, Ofwat, which proposes our largest-ever investment programme of GBP6.5billion. If approved, the plans would see almost five thousand homes protected from sewer flooding; leakage levels reduced by a further eighteen per cent; one million meters installed and the first phase of construction starting on the London Tideway Tunnels scheme.

Business Plan (2010 - 2015)

The 16-week public consultation on Thames Water's draft Business Plan for 2010 to 2015 closed on 6 November 2008 and is the largest ever undertaken by the company. A proposed investment of GBP6.5billion will be the largest ever undertaken by a UK water company, however by 2015, customers will still be paying less than £1 a day on average for all their water and waste water needs.

Tackling leakage

Reducing leakage remains the company's highest priority and it expects to meet the leakage target for the third consecutive year. By 2010, leakage will have been reduced by one third - enough to supply 1.5 million people a day. Over 900 miles of ageing Victorian water mains in London have been replaced in just over five years. This figure is set to rise to 1,300 miles by 2010. The company spends GBP500,000 everyday on leakage reduction works.

Sewer flooding alleviation

We are working to reduce the threat of sewer flooding during heavy rain to over 5,500 homes by 2010. However, the combination of more intense storms resulting from climate change, increased housing development and the loss of green spaces to development, means more homes will remain at risk. Therefore, an investment programme of GBP485million is proposed to protect almost 5,000 more properties between 2010 and 2015.

Metering

Company research has shown that customers recognise that metering promotes wise use of water, and agree it is the fairest way to pay for water. The company believes metering will have an important role to play in managing demand. Thames Water proposes to install one million water meters between 2010 and 2015, increasing household penetration to 54%.

The company aims to save 20 million litres of water a day by 2015 by promoting the wise use of water.

Water quality

Drinking water quality is at an all time high. The Drinking Water Inspectorate confirmed in their most recent water quality results that Thames' water is the best of all the water and sewerage companies in England and Wales, 99.98% compliant with European standards.

The company's London On Tap campaign - to promote tap water in the capital's restaurants and bars - has gone from strength to strength with 115 London designers entering the competition to design an iconic and sustainable Carafe for London. The Mayor of London will announce the winner on 1 December 2008, with the winning carafe to be manufactured in 2009.

Ten for Ten

In June this year, the company announced a ten-point plan, at a cost of GBP10million, to benefit disadvantaged customers and fund community projects. The initiative, called Ten for Ten, will see half the money endowed to a charitable trust to help disadvantaged customers in difficult circumstances, and the other half spent on new community and educational activities. The scheme, which is financed from the company's profits, will pay for special projects that fall outside day-to-day business activities. This includes bursaries for disadvantaged school leavers to study engineering; the clean up of the ‘Greenway' in east London between West Ham and Beckton Sewage Treatment Works, and improved visitor facilities at key sites.

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